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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended March 31, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from  to
 Commission File Number 000-30735
 REDIFF.COM INDIA LIMITED
  
 
 
  Title of each Class
    
    Name of each exchange on which registeredNone
    
    Not Applicable
  
  
   o þ
  þ o
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  U.S. GAAP þ
    
    International Financial Reporting Standards as
issued by the International Accounting Standards
Board o
    
    Other o
  o o
  o þ




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TABLE OF CONTENTS
 PageCROSS REFERENCE TO FORM 20-F ITEM HEADINGS
    
    
    1CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
    
    
    4FORWARD-LOOKING STATEMENTS
    
    
    5EXCHANGE RATES
    
    
    6SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    7BUSINESS
    
    
    28MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    43MANAGEMENT
    
    
    58RELATED PARTY TRANSACTIONS
    
    
    68EXCHANGE CONTROLS
    
    
    69TRADING MARKET
    
    
    73RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
    
    
    74PRINCIPAL SHAREHOLDERS
    
    
    81TAXATION
    
    
    83CONTROLS AND PROCEDURES
    
    
    90PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    92PRESENTATION OF FINANCIAL INFORMATION
    
    
    93ADDITIONAL INFORMATION
    
    
    94EXHIBIT INDEX
    
    
    101INDEX TO FINANCIAL STATEMENTS
    
    
    F-1EX-12.1EX-12.2EX-13.1EX-13.2EX-15.1




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CROSS REFERENCE TO FORM 20-F ITEM HEADINGS
 PART IItem 1.
    
    Identity of Directors, Senior Management and AdvisersNot applicable.Item 2.
    
    Offer Statistics and Expected TimetableNot applicable.Item 3.
    
    Key InformationSee Exchange Rates, Risk Factors and Selected Consolidated Financial Data.Item 4.
    
    Information on the CompanySee Business, Managements Discussion and Analysis of Financial Condition and
Results of Operations and Additional Information.Item 4A.
    
    Unresolved Staff CommentsNot applicable.Item 5.
    
    Operating and Financial Review and ProspectsSee Risk Factors and Managements Discussion and Analysis of Financial Condition and
Results of Operations.Item 6.
    
    Directors, Senior Management and EmployeesSee Management and Principal Shareholders.Item 7.
    
    Major Shareholders and Related Party TransactionsSee Principal Shareholders, Related Party Transactions and Additional
Information.Item 8.
    
    Financial InformationSee the Report of Independent Registered Public Accounting Firm, U.S. GAAP Consolidated
financial statements and the notes thereto for Rediff.com India Limited for the fiscal
years ended March 31, 2007, 2008 and 2009 and the related three-year period ended March
31, 2009. Also see Business  Legal Proceedings and Managements Discussion and
Analysis of Financial Condition and Results of Operations.Item 9.
    
    The Offer and ListingSee Trading Market.Item 10.
    
    Additional InformationSee Managements Discussion and Analysis of Financial Condition and Results of
Operations  Acquisitions and Divestments  Value Communications Corporation,
Exchange Controls, Restriction on Foreign Ownership of Indian Securities,
Taxation and Additional Information.
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Item 11.
    
    Quantitative and Qualitative Disclosures About Market RiskSee Managements Discussion and Analysis of Financial Condition and Results of
Operations  Market Risks.Item 12.
    
    Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13.
    
    Defaults, Dividend Arrearages and DelinquenciesNot applicable.Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of ProceedsSee Additional Information  Memorandum and Articles of Association.Item 15.
    
    Controls and ProceduresSee Controls and Procedures.Item 16A.
    
    Audit Committee Financial ExpertSee Management.Item 16B.
    
    Code of EthicsSee Management.Item 16C.
    
    Principal Accountant Fees and ServicesSee Principal Accountant Fees and Services.Item 16D.
    
    Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated PurchasersNot applicable.Item 16F.
    
    Change in Registrants Certifying AccountantNot applicable.Item 16G.
    
    Corporate GovernanceSee Management  NASDAQ Corporate Governance Requirements.
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PART IIIItem 17.
    
    Financial StatementsNot applicable.Item 18.
    
    Financial StatementsSee the Report of Independent Registered Public Accounting Firm, U.S. GAAP Consolidated
financial statements and the notes thereto for Rediff.com India Limited and its
consolidated subsidiaries for the fiscal years ended March 31, 2007, 2008 and 2009 and
the related three-year period ended March 31, 2009.Item 19.
    
    ExhibitsSee the Exhibit Index and the attached exhibits.
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CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
    4




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FORWARD-LOOKING STATEMENTS
  
    
    our goals and strategies;
    
    our recently acquired businesses and other acquisitions, investments and divestments;
    
    the impact of regulations and court orders on our business;
    
    our future investments, costs and working capital;
    
    the importance and expected growth of Internet technology,
including sales of personal computers and mobile phones;
    
    the pace of change in the Internet market;
    
    the demand for Internet services; and
    
    advertising demand and revenues.
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EXCHANGE RATES
   Fiscal Year Ended March 31,
    
    Period End
    
    Average(1)(2)
    
    High
    
    Low(Rs.)2005
    
    
    43.75
    
    
    
    44.98
    
    
    
    46.46
    
    
    
    43.362006
    
    
    44.61
    
    
    
    44.30
    
    
    
    46.33
    
    
    
    43.302007
    
    
    43.59
    
    
    
    45.22
    
    
    
    46.95
    
    
    
    43.142008
    
    
    39.97
    
    
    
    40.13
    
    
    
    43.15
    
    
    
    39.272009
    
    
    50.95
    
    
    
    46.46
    
    
    
    52.06
    
    
    
    39.89
 
 Notes:(1)
    
    The average rate for each period differed from the exchange rates used
in the preparation of our financial statements.(2)
    
    The column titled Average represents the average of the closing rate
as at the last day of each month during the period.  Month
    
    High
    
    Low(Rs.)March 2009
    
    
    52.06
    
    
    
    50.14April 2009
    
    
    50.53
    
    
    
    49.49May 2009
    
    
    49.83
    
    
    
    47.19June 2009
    
    
    48.91
    
    
    
    46.84July 2009
    
    
    49.40
    
    
    
    47.79August 2009
    
    
    48.98
    
    
    
    47.54
  6




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SELECTED CONSOLIDATED FINANCIAL DATA
  Fiscal Years Ended March 31,2005
    
    2006
    
    2007
    
    2008
    
    2009(in US$ thousands, except per share data)Statement of Operations data:Revenues
    
    
    12,627
    
    
    
    18,701
    
    
    
    28,676
    
    
    
    32,249
    
    
    
    25,429Cost of revenues
    
    
    5,113
    
    
    
    5,039
    
    
    
    5,416
    
    
    
    6,000
    
    
    
    6,306Operating expenses
    
    
    9,227
    
    
    
    12,683
    
    
    
    20,061
    
    
    
    28,368
    
    
    
    34,658(Loss)/ Income from continuing operations
    
    
    (1,220
    )
    
    
    1,213
    
    
    
    6,963
    
    
    
    4,908
    
    
    
    (11,258
    )(Loss)/ Income from discontinued operations
    
    
    (208
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss)/ income
    
    
    (1,428
    )
    
    
    1,213
    
    
    
    6,963
    
    
    
    4,908
    
    
    
    (11,258
    )(Loss)/ Earnings per Equity Share(from continuing operations)  basic
    
    US$
    (0.10
    )
    
    US$
    0.09
    
    
    US$
    0.48
    
    
    US$
    0.34
    
    
    US$
    (0.77
    )(from discontinued operations)  basic
    
    US$
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss)/ Earnings per Equity Share  basic
    
    US$
    (0.11
    )
    
    US$
    0.09
    
    
    US$
    0.48
    
    
    US$
    0.34
    
    
    US$
    (0.77
    )(Loss)/ Earnings per Equity Share(from continuing operations)  diluted
    
    US$
    (0.10
    )
    
    US$
    0.09
    
    
    US$
    0.47
    
    
    US$
    0.33
    
    
    US$
    (0.77
    )(from discontinued operations)  diluted
    
    US$
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) Earnings per Equity Share  diluted
    
    US$
    (0.11
    )
    
    US$
    0.09
    
    
    US$
    0.47
    
    
    US$
    0.33
    
    
    US$
    (0.77
    )Weighted average number of equity shares- Basic
    
    
    12,850
    
    
    
    13,487
    
    
    
    14,543
    
    
    
    14,607
    
    
    
    14,615- Diluted
    
    
    12,850
    
    
    
    13,764
    
    
    
    14,924
    
    
    
    14,772
    
    
    
    14,615
 As of March 31,2005
    
    2006
    
    2007
    
    2008
    
    2009(in US$ thousands)Balance Sheet Data:Cash and cash equivalents
    
    
    10,069
    
    
    
    53,094
    
    
    
    53,546
    
    
    
    59,033
    
    
    
    45,521Current assets
    
    
    15,323
    
    
    
    60,652
    
    
    
    65,851
    
    
    
    74,208
    
    
    
    54,345Current liabilities
    
    
    5,878
    
    
    
    7,239
    
    
    
    8,933
    
    
    
    10,998
    
    
    
    7,289Total assets
    
    
    25,690
    
    
    
    74,110
    
    
    
    86,493
    
    
    
    101,850
    
    
    
    71,973Total shareholders equity
    
    
    19,797
    
    
    
    66,870
    
    
    
    77,223
    
    
    
    90,150
    
    
    
    64,007
 
 *
    
    The selected financial data set forth above should be read in
conjunction with the section entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations and the
financial statements and the notes to those statements included
elsewhere in this annual report. 7




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RISK FACTORS
 An investment in our ADSs involves a high degree of risk. You should carefully consider the
following information about risks, together with the other information contained in this annual
report on Form 20-F, including our consolidated financial statements and related notes, before you
decide to buy our ADSs. If any of the circumstances or events described below actually arises or
occurs, our business, results of operations and financial condition would likely suffer. In any
such case, the market price of our ADSs could decline, and you may lose all or part of your
investment. This annual report also contains forward-looking information that involves risks and
uncertainties. Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of many factors, including the risks faced by us described
below and elsewhere in this annual report.
 Risks Related to our Business
 We face significant competition for users, advertisers, publishers and distributors, principally
from Google, Yahoo and MSN but also from other smaller competitors
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The ongoing global slowdown, especially in India and the United States, could continue to
negatively impact revenues from some of our key customer segments
    Our publication business in the United States and Canada faces competition
  We may be required to record a significant charge to earnings if our goodwill, long lived
assets, or investments in equity interests become impaired
  We have a history of losses. We may incur losses in the future and we may not achieve or maintain
profitability
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Our revenues could be adversely affected if we are unable to successfully adapt to new forms
of pricing for the services and products we offer
  
    
    loss of visitors and decreased website traffic;
    
    loss of paid subscribers;
    
    loss of advertisers;
    
    reduced operating margins;
    
    loss of market share; and
    
    diminished value in our services.
  Increasing consumer resistance to online advertising may result in loss of revenues
  Our quarterly operating results may fluctuate significantly and may fail to meet the expectations
of securities analysts and investors, which may cause the price of our ADSs to decline
  10




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
    
    increased competition;
    
    continuing slowdown in the Indian and global economies
    
    lower than expected revenues from one or more of our customers;
    
    changes in prices for our product and service offerings;
    
    increases in personnel, marketing and other operating expenses;
    
    our ability to attract new users and to retain existing users at reasonable costs;
    
    our ability to adequately maintain, upgrade and develop our website,
our computer network and the systems that we use to process customer
orders and payments;
    
    the timing of our expansion plans in India and other geographic markets;
    
    seasonality in retail sales;
    
    technical difficulties, system or website downtime or Internet service disruptions; and
    
    entry into new businesses or development of new products or services requiring
substantial investments.
  We may not be able to grow our business if online advertising in our markets does not expand
 Online Advertising
  
    
    our ability to attract and retain advertisers at profitable rates in light of intense competition;
    
    our ability to generate and continue to grow a large community of
users with demographics attractive to advertisers;
    
    advertisers acceptance of the Internet as an effective and sustainable medium;
    
    the effectiveness of our advertising delivery, tracking and reporting systems; and
    
    our ability to adapt, including technologically, to new forms of Internet advertising.
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Newspaper Advertising
  The loss of one or more significant advertisers could adversely affect our revenues
  Our operations could be disrupted by unexpected network interruptions caused by system failures,
natural disasters or unauthorized tampering of our systems
  12




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
    
    system failures and outages caused by fire, floods, earthquakes,
tsunamis, power loss, telecommunications failures and similar events;
    
    software errors; computer viruses, break-ins and similar disruptions
from unauthorized tampering with our computer systems;
    
    security breaches related to the storage and transmission of
proprietary information, such as credit card numbers or other personal
information; and
    
    terrorist acts
     We may lose a significant portion of our assets if banks in India collapse following the ongoing
financial crisis affecting the United States and elsewhere
  We may not benefit from our acquisitions and investments and our acquired businesses could increase
our net losses
  
    
    the failure to identify operating weaknesses of the acquired business
during the course of due diligence and negotiations of these
transactions;
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
    
    the difficulty of assimilating the operations, third-party
relationships and personnel of the acquired companies with our
operations;
    
    the potential disruption to our ongoing business and distraction of
management during the acquisition and integration process;
    
    the difficulty of incorporating acquired technology, software or
content into our products, and unanticipated expenses related to such
integration;
    
    the impairment of relationships with employees and customers as a
result of any integration of new management personnel;
    
    the potential unknown liabilities associated with acquired businesses;
    
    the failure to develop successfully new products or technologies;
    
    the failure to popularize such products or technologies and/or derive
expected revenues therefrom;
    
    unfavorable changes in business environment and government regulations;
    
    unfavorable changes in accounting rules and guidelines relating to our acquisitions; and
    
    the failure of companies in which we invest to raise sufficient
capital to maintain their business.
  Our business and growth will be impaired if we are unable to retain our existing key personnel and
hire additional skilled employees
  We are dependent on our agreements with mobile service providers for service delivery and fee
collection
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We rely on increased sales of, and high renewal rates for, our subscription and fee based products
and services
  We depend on mobile operators to reach out to their customers
  Potential liability for information we publish may require us to defend against legal claims, which
may cause significant operational expenditures
   We may be liable to third parties for information uploaded on or retrieved from our website
    15




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
    
    unsolicited e-mail;
    
    lost or misdirected e-mail;
    
    illegal or fraudulent use of e-mail;
    
    interruptions or delays in e-mail service; and
    
    loss or deletion of data stored in mailboxes.
    We may be liable to third parties for the products they purchase online
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Privacy concerns may prevent us from selling demographically targeted advertising in the future and
make us less attractive to advertisers
  Indian and/or overseas regulators and other telecommunications operators may challenge our ability
to offer a PC-to-PC voice facility as one of the features of our Rediff BOL instant messenger
service
  We may not be able to manage our operations effectively if we grow, which could harm our business
  Currency exchange rate fluctuations may adversely impact our operating results and financial
condition
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If we are unable to develop new services or enhance existing services in anticipation of our users
needs, our business could suffer
  A small group of our existing shareholders control our Company and may have interests which
conflict with those of our other shareholders or owners of our ADSs
   
    
    amending our Articles of Association;
    
    issuing additional shares of capital stock, except for pro rata issuance to existing shareholders;
    
    commencing any new line of business; and
    
    commencing liquidation.
    The laws of India do not protect intellectual property rights to the same extent as those of the
United States, and we may be unsuccessful in protecting our intellectual property rights, which
could lead to a reduction in our revenues and an increase in our expenses
  18




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The limited installed personal computer base in India limits our pool of potential customers and
restricts the growth of our business
  The success of technological infrastructure and consumer base for our products and services depends
on the acceptance of the Internet in India, which may be slowed by cost and affordability issues,
technical obstacles and unfavorable Government policies
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The success of our e-commerce platform depends on its acceptance and growth in India, which is
uncertain
  
    
    inconsistent quality of service;
    
    lack of legal infrastructure relating to e-commerce in India;
    
    lack of security of commercial data such as credit card numbers;
    
    low number of Internet users in India; and
    
    low levels of credit card penetration in India.
  Compliance with new and changing corporate governance and public disclosure requirements may add
uncertainty and increase our costs of compliance
    20




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Risks Related to Investments in Indian Companies
  Terrorist attacks and other acts of violence or war involving India, the United States, and other
countries could adversely affect the financial markets, result in a loss of business confidence and
adversely affect our business, results of operations and financial condition
  If communal disturbances or riots erupt in India, or if regional hostilities increase, this would
adversely affect the Indian economy, the health of which our business depends upon
   Future political instability in India could halt or delay the liberalization of the Indian economy
and adversely affect economic conditions in India generally and our business in particular
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Indian law limits our ability to raise capital and the ability of others to acquire us, which could
prevent us from operating our business or entering into a transaction that is in the best interests
of our shareholders
   Our ability to acquire companies organized outside of India may depend on the approval of the
Government of India and the Reserve Bank of India. Our failure to obtain approval for acquisitions
of companies organized outside India may restrict our growth, which could negatively affect our
revenues
   Statistical and third-party data in this document and documents incorporated by reference herein
may be incomplete or unreliable
  It may be difficult for you to enforce any judgment obtained in the United States against us or our
affiliates
  22




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
    
    effect service of process upon us outside India or these persons
outside the jurisdiction of their residence; or
    
    enforce against us in courts outside of India or these persons outside
the jurisdiction of their residence, judgments obtained in U.S.
courts, including judgments predicated upon the federal securities
laws of the United States.
  
    
    was not rendered by a court of competent jurisdiction;
    
    was not rendered on the merits of the case;
    
    appears on the face of the proceedings to be founded on an incorrect
view of international law or a refusal to recognize the law of India
in cases in which such law is applicable;
    
    was obtained in proceedings which are opposed to natural justice; or
    
    sustains a claim founded on a breach of any law in force in India.
 Risks Related to the ADSs and Our Trading Market
 An active or liquid market for our ADSs is not assured
   Currently there is no public trading market for our Equity Shares in India or elsewhere which,
together with existing Indian laws that restrict the conversion of outstanding equity shares into
ADSs, reduce your ability to sell our Equity Shares represented by ADSs
  23




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
    
    if the consideration payable for the transfer does not exceed Rs.2.0
million, at a price mutually agreed upon by the seller and the buyer,
based on any recognized valuation methodology currently in use, on
submission of a certificate from the statutory auditors of the Indian
company whose equity shares are proposed to be transferred, regarding
the valuation of such equity shares; and
    
    if the consideration payable for the transfer exceeds Rs.2.0 million,
at a price arrived at, at the sellers option, in any of the following
manners, namely: (i) a price based on earnings per share (EPS linked
to the Price Earning (P/E) multiple), or a price based on the Net
Asset Value (NAV) linked to book value multiple, whichever is
higher; or (ii) a price which is the lower of the two independent
valuations of the equity shares being transferred, one prepared by the
statutory auditors of the company and the other by a Chartered
Accountant or a Merchant Banker in Category 1 registered with
Securities and Exchange Board of India.
 Our management has broad discretion in using the proceeds from our securities offerings and cash
from operations and therefore investors will be relying on the judgment of our management to invest
those funds effectively
   Our ADS market price is highly volatile and could drop unexpectedly in the future. Should our ADS
market price drop below $1.00, our ADSs may be delisted from the NASDAQ Global Market
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Owners of our ADSs may be restricted in their ability to exercise preemptive rights and thereby may
suffer future dilution of their ownership position
  Owners of our ADSs may be restricted in their ability to exercise voting rights because of the
practical and legal limitations associated with instructing our Depositary to vote on your behalf
    We do not plan to pay dividends in the foreseeable future
  25




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We may be classified as a passive foreign investment company for United States federal income tax
purposes, which could subject United States investors in the ADSs or Equity Shares to adverse tax consequences
  Sales of substantial amounts of securities in the public market could depress the price of our ADSs
and could impair our ability to raise capital through the sale of additional Equity Shares
  We may be required to list our Equity Shares on an Indian stock exchange. If we were to list our
Equity Shares on an Indian stock exchange, conditions in the Indian securities market may affect
the price or liquidity of our Equity Shares
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27




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BUSINESS
 Overview
       Goodwill and Other Intangible Assets"
 28




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Our Markets
       Our Opportunity
  
    
    We are an early entrant in the Indian internet market and our
brand is recognized and trusted by Indian Internet users;
    
    We offer services based on contemporary technology, thus making
them easy to use and accessible through both PCs and mobile
phones.
    
    We are one of the few Internet companies in India offering
complete website services, such as e-mail, search, community,
instant messaging, blogs, news and online shopping;
 29




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
    
    Anticipated improvement in broadband access, online payment
infrastructure, distribution and fulfillment facilities, and
increase in credit and debit card penetration rates and the
development of alternative payment mechanisms for online
purchases, such as cash on deliveries is expected to fuel the
growth of e-commerce in India; and
    
    Expected growth over time in internet access through mobile phones.
  Our Strategy
  
    
    Online advertising services on our Rediff.com website, revenues
from which currently account for a significant portion of our
India Online business. These include banner advertising,
performance based advertising, e-mail and text link campaigns and
sponsorship of online events. Our target client base for
advertising and sponsorships include global companies doing
business in India, domestic corporations and small and medium
enterprises.
    
    Our Rediff LocalAds platform, an advertising service for small
and local advertisers which is currently being tested . Users can
post and view local ads on both personal computers as well as
mobile phones.
    
    Community and social networking platforms which connect people
through an online network. Our community products and platforms
include Get Ahead Q&A and Rediff iLand. We believe our video,
audio and photo-sharing platform , iShare, is a leader in its
category
    
    News and information services, including breaking news, our money
channel Moneywiz as well as message boards for users to post their
opinions, a facility for users to personalize news to suit their
interests and periodic newsletters they can receive in their
e-mail boxes. Our news and information channels cover politics,
business, entertainment and sports.
    
    Communication services, including e-mail and instant messaging.
E-mail services are provided in a number of Indian languages.
    
    Mobile services, including facilities for downloading ringtones,
mobile games, wallpapers, chat and e-mail. We provide these
services for both 2G and 2.5G mobile services.
    
    Services for small and medium businesses such as webhosting,
domain name registration which are offered on a subscription
basis.
    
    Search services, including facilities to locate local information
on domestic airfares, train fares, job listings, images and
products.
    
    Online shopping services, including a platform for merchants in
India to create online shops, package tracking facilities, and a
facility for consumers to rate merchants. We offer a wide range of
payment options to our consumers.
    
    In the United States, publication of India Abroad and India in
New York, as well as providing online services to the Asian
Indian community.
 30




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##### Table of Contents



India Online Business
   Information and Content
    
    
    Current affairs, Business and Finance, Movies , SportsWe
provide our users with up-to-date news of interest to Indians,
including feature stories, interviews and online chats with
leading Indian personalities in public life as well as sports and
entertainment, breaking news and in-depth coverage of significant
events. We use our in-house staff to generate this content as well
as freelancers and news feeds from wire services and other online
and offline media houses. This content can be in text , audio
and video format and we offer our users tools to search this
content as well as opt to get news items by email or on their
mobile phones.
 Community Features and Products
  31




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##### Table of Contents



E-mail
  
    
    Rediffmail, our flagship e-mail service, is provided free of
charge to our users. In fiscal 2009 we enabled integration of
feeds from social networking sites Orkut, Facebook and Linkedin
into the Rediffmail inbox, enabling users to get updates of their
friends activities through Rediffmail.
    
    Rediffmail Pro is a subscription e-mail service targeted at
business users. Rediffmail Pro            offers small businesses the
ability to select and configure, subject to availability, e-mail
addresses. Subscribers are given five e-mail addresses and 1GB of
storage space, which can be allocated among different users and
increased without limitation at an additional charge. Rediffmail
Pro also offers enhanced address book features and enhanced virus
and spam protection. Users may also access their e-mail accounts
using POP access through their Rediffmail Pro accounts. Rediffmail
Enterprise Pro is a web based e-mail service primarily for
companies with a significant number of agents/sales
associates/dealers.
    
    Rediff Business Solution is aimed at the small and medium
enterprise (SME) segment in India. Through this product, we
offer SMEs a range of web management services such as domain name
registration, web hosting and business e-mail. Features offered
include 100MB web hosting service, a choice of Windows or Linux
platforms, POP3 business e-mail service and the ability to
register domain names for up to ten years.
 Instant Messaging
  Blogs
  Social Networking
  32




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##### Table of Contents



Finance Channel
  Search Services
  
    
    Fare Search, which allows users to search for and compare
transportation fares. Features of Fare Search include the Lowest
Fare Finder search tool, which charts out the lowest price points
for up to 90 days. Fare search offerings include searching for
schedules, seat availability, fares and reservation status for
trains in the India Railway System. Further, it provides search
facility for tickets and schedules for approximately 20,000 buses
that commute daily between approximately 10,000 locations in
India. In addition, users can search for hotel accommodation
across a large number of Indian cities with the Hotel Search
facility. Users can also access Fare Search on GPRS enabled mobile
phones.
    
    Job Search, which allows users to search for jobs across multiple
job sites as well as private company and government job openings.
Job Search also includes a tool that allows human resource
consultants and recruiters to upload job vacancies, at no cost,
directly to the Job Search website. We recently introduced the
addition of a free e-mail alert feature that allows users to stay
updated on the latest job openings in their desired categories.
    
    Product Search, which allows users to search for and compare
product features and prices across major Indian cities. Product
Search features a Price history feature that enables users to
track prices of different products on a month-on-month basis.
    
    Video Search, we offer video search as part of its vertical search
offerings and this helps users to search and find videos from a
database of over two million online videos.
    
    Other search services, which include Image Search, Book Search,
and Ringtone Search. We also enhanced our language search
crawling technology to identify and reach more Indian language
websites.
 Mobile Value Added Services
  33




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
    
    Downloads. Users can download ringtones, polyphonic ringtones,
logos, picture messages, wallpapers and games from our website. We
have introduced search of ringtones on mobile phones. Downloads
include popular Indian content, such as Indi-pop ringtones, Indian
cricket team logos and wallpapers featuring Bollywood movie stars.
In addition, users have the ability to customize and download
images of their choice.
    
    Contests. Users can participate in contests in which they can win
prizes by correctly answering questions sent to them by SMS. Users
are charged for the cost of each outgoing SMS message that
responds to a question.
    
    Services. We offer users a variety of mobile phone related
services by SMS, such as the ability to search, seek and interact
with other users, play interactive games, and receive jokes and
astrological predictions. Users are charged for the cost of each
outgoing SMS message requesting the service. We also provide
enterprise solutions through access to short code services on
keywords using 57333.
    
    News and Information. Users can stay updated on current events by
receiving cricket scores, news and stock quotes by an SMS message.
Users are charged for the cost of each outgoing SMS message
requesting the news and information. Information search of utility
services such as railways, air fares and travel visa application
and status of many countries is also made available on mobile
phones.
    
    Subscription. Subscription based services have been introduced
where customers can choose to subscribe for a monthly/weekly/daily
and on demand service for receiving SMS based information, jokes,
or astrology related services as well as proprietary rediff
services such as email alerts, job alerts and stock alerts for a
fixed fee.
    
    E-mail and Instant Messaging. Rediffmail and Rediff BOL
subscribers can receive, read and reply to e-mails and instant
messages by SMS. Users are charged a fee for each outgoing SMS
which contains the e-mail or instant message. We also introduced a
Hindi language feature for Rediff BOL and a downloadable program
for subscribers with Symbian OS mobile phones.
  Online Shopping
   34




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Our Revenue Sources
  Online Advertising
     Fee-based services
     35




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Our Infrastructure
 Technology
   Online Advertising
    Online Shopping
   36




---



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Electronic Payments
    United States Publishing Business
  Rediff India Abroad website
  India Abroad
    37




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India in New York
  Competition
 Online
     Print
  Intellectual Property
   38




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Facilities
 India
   United States
  Seasonality
  39




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Legal Proceedings
 Action Relating to Access to Pornographic Material
 Sunil
N. Phatarphekar & Ors. v. Abhinav Bhatt and Ors.
  Action Relating to Copyright Violation
  Actions Relating to Trademark Infringement
  40




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th
   41




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Actions Relating to Patent Infringement
   Other proceedings
  Subsidiaries
   42




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
       
    
    India Online business, which primarily includes revenues from
online advertising and fee-based services. Online advertising
includes revenues largely from display and performance based
advertising and to a lesser extent from sponsorships. Fee-based
services include revenues from online shopping, subscription
services and mobile value-added services.
 
    
    US Publishing business, which primarily includes revenues from the
Rediff India Abroad website and revenues from the print newspapers
India Abroad and India in New York.
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For the Fiscal Years Ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$India Online business
    
    
    20,759,227
    
    
    
    23,649,363
    
    
    
    19,707,381US Publishing business
    
    
    7,916,298
    
    
    
    8,599,840
    
    
    
    5,722,571Total revenues
    
    
    28,675,525
    
    
    
    32,249,203
    
    
    
    25,429,952
 Critical Accounting Policies
   Revenue Recognition
 India Online business
    44




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US Publishing business
   Allowances for doubtful accounts receivable and other recoverables
  Depreciation and amortization
  Goodwill
  45




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Acquisitions and Divestments
 Value Communications Corporation
 Accounting for the Impairment or Disposal of
Long-Lived Assets
 India Abroad Publications, Inc.
    Goodwill Impairment
   Current Trading and Business Outlook
  46




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Operating Results
  Fiscal Year Ended March 31, 2009 compared to Fiscal Year Ended March 31, 2008
 Revenues
 India Online business
 47




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US Publishing business
 Cost of revenues
  Sales and marketing expenses
  Product development expenses
  Depreciation and amortization expenses
 General and administrative expenses
 Goodwill impairment
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Long-lived assets impairment
 Foreign exchange gain or (loss).
 Other income (expenses), net
 Interest income
 Investment impairment
 Equity in net earnings of affiliate.
 Net income
 Fiscal Year Ended March 31, 2008 compared to Fiscal Year Ended March 31, 2007
 Revenues
 India Online business
 
    
    advertising revenues by US$1.7 million, primarily as a result of
an increase in Internet advertising on our website by existing and
new advertisers; and
 
    
    fee-based services by US$1.2 million due to an increase in
revenues from our subscription services, mobile value-added
services and our online shopping marketplace. This resulted from
greater usage of these services.
 US Publishing business
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Cost of revenues
 Sales and marketing expenses
 Product development expenses
 Depreciation and amortization expenses
 General and administrative expenses Share-based payments
 Foreign exchange gain or (loss). W
 Other income (loss), net
 Net income
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Liquidity and Capital Expenditures
     Cash Flows
 For the Fiscal Year Ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$Net cash
generated from operating activities
    
    
    65,62,814
    
    
    
    81,21,165
    
    
    
    4,700,113Net cash used in investing activities
    
    
    (8,248,943
    )
    
    
    (8,772,985
    )
    
    
    (6,659,162
    )Net cash generated from financing
activities
    
    
    482,916
    
    
    
    32,851
    
    
    
    Effect of exchange rate changes on cash
    
    
    16,55,878
    
    
    
    6,105,359
    
    
    
    (11,552,468
    )Net (decrease)/increase in cash and
cash equivalents
    
    
    (12,03,213
    )
    
    
    (618,969
    )
    
    
    (19,59,049
    )
 Fiscal Year Ended March 31, 2009
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Fiscal Year Ended March 31, 2008
     Fiscal Year Ended March 31, 2007
     Contractual Obligations
  52




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Operating Leases
    
    Capital CommitmentsYears ended March 31,
    
    US$
    
    US$2010
    
    
    981,024
    
    
    
    4,4112011
    
    
    677,198
    
    
    
    2012
    
    
    232,320
    
    
    
    2013
    
    
    199,617
    
    
    
    2014
    
    
    211,450
    
    
    
    And there after
    
    
    951,921
    
    
    
    Total payments
    
    
    3,253,710
    
    
    
    4,411
 Capital Expenditures
   Dividends
   Income Tax Matters
  2007
    
    2008
    
    2009US$
    
    US$
    
    US$Income (loss) before income taxes
    
    
    7,045,602
    
    
    
    5,341,606
    
    
    
    (11,084,921
    )Indian statutory income tax rate
    
    
    33.66
    %
    
    
    33.99
    %
    
    
    33.99
    %Expected income tax expense (benefit)
    
    
    2,371,550
    
    
    
    1,815,612
    
    
    
    (3,767,765
    )Tax effect of:-Adjustments to reconcile expected income tax expense to reported income tax expenseEmployee stock based compensation
    
    
    210,636
    
    
    
    638,221
    
    
    
    395,857Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    1,806,229Change in valuation allowance
    
    
    (1,946,731
    )
    
    
    (415,016
    )
    
    
    1,545,471Gain on sale of investment taxed at capital gains rate
    
    
    (38,223
    )
    
    
    (663,050
    )
    
    
    Tax in foreign jurisdictions
    
    
    (513,961
    )
    
    
    (964,584
    )
    
    
    1,010Others
    
    
    (197
    )
    
    
    22,191
    
    
    
    59,198Income tax expense
    
    
    83,074
    
    
    
    433,374
    
    
    
    40,000
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Market Risks
 Foreign Currency Exchange Rate Risk
   54




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As of March 31, 2009(in US$ thousands)Accounts payable in U.S. dollars
    
    
    2,116Accounts receivable in U.S. dollars, net of allowance
    
    
    757Cash balances held in U.S. dollars
    
    
    25Net foreign currency exchange exposure
    
    
    1,334
  Interest Rate Risk
  Off-balance Sheet Arrangements
  New Accounting Pronouncements
     55




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The Fair Value Option for Financial Assets
and Financial Liabilities
     56




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Employers Disclosures about Postretirement
Benefit Plan Assets Employers Disclosures
about Pensions and Other Postretirement Benefits
    57




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MANAGEMENT
  Name
    
    Age
    
    PositionAjit Balakrishnan(1)(2)
    
    
    61
    
    
    Chairman and Managing DirectorJoy Basu
    
    
    48
    
    
    Chief Financial OfficerDiwan Arun Nanda(1)(2)
    
    
    66
    
    
    DirectorSunil N. Phatarphekar(1)(2)(3)
    
    
    45
    
    
    DirectorPulak Prasad(1)
    
    
    41
    
    
    DirectorAshok Narasimhan(1)
    
    
    61
    
    
    DirectorSridar Iyengar(1)(3)
    
    
    62
    
    
    DirectorRashesh C. Shah(1) (3)
    
    
    45
    
    
    Director
 
 (1)
    
    Member of the Board of Directors(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Audit Committee Ajit Balakrishnan
 Joy Basu
 Diwan Arun Nanda
 Sunil N. Phatarphekar
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Pulak Prasad
 Ashok Narasimhan
 Sridar A. Iyengar
 Rashesh Shah
 Board Composition
  
    
    Ajit Balakrishnan, Diwan Arun Nanda and Rediffusion Holdings
Private Limited (earlier called Rediffusion Advertising Private
Limited), are entitled to appoint and have appointed Mr.
Balakrishnan as Director on the Board and Chairman of Rediff.com
India Ltd. so long as they
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hold, singly or jointly, not less than
10.0% of the issued, subscribed and paid up capital of Rediff.com
India Ltd. Mr. Balakrishnan serves an indefinite term and is not
required to retire by rotation.
    
    The remaining directors on the Board of Directors are
non-permanent directors who are appointed by shareholders and
retire by rotation. Sridar Iyengar and Pulak Prasad retired by
rotation and were re-elected by the shareholders at our last
annual general meeting held on September 24, 2008. Ashok
Narasimhan and Rashesh Shah will retire by rotation at our next
Annual General Meeting of shareholders, which is scheduled to be
held on or before September 30, 2009.
   Code of Ethics
   Audit Committee
   Audit Committee Financial Expert
  Compensation Committee
  NASDAQ Corporate Governance Requirements
  60




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(i) Rule 5250(d)(2) and Rule 5250 (d)(3)  Distribution of quarterly and interim reports
  (ii) Rule 5605(b)(1)  Independent Directors
  (iii) Rule 5605(b)(2)  Executive sessions of Independent Directors
  (iv) Rule 5605(d)  Compensation of Officers
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(v) Rule 5605(e)  Nomination of Directors
  (vi) Rule 5620(c)  Quorum
  (vii) Rule 5620(b)  Solicitation of Proxies
   Employees
  As at March 31,Department
    
    2007
    
    2008
    
    2009Technology and Product Development
    
    
    46
    
    
    
    89
    
    
    
    112Sales and Marketing
    
    
    134
    
    
    
    128
    
    
    
    92Editorial
    
    
    61
    
    
    
    74
    
    
    
    64General & Administration
    
    
    26
    
    
    
    35
    
    
    
    30Creative
    
    
    14
    
    
    
    15
    
    
    
    18Production & Circulation
    
    
    12
    
    
    
    8
    
    
    
    7Total
    
    
    293
    
    
    
    349
    
    
    
    323
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Compensation
   Name
    
    Salary and other compensation (US$)Ajit Balakrishnan
    
    
    200,000
    (1)Joy Basu
    
    
    80,382Sridar A. Iyengar
    
    
    25,000
    (1)Sunil Phatarphekar
    
    
    17,500
    (1)
 
 (1)
    
    Each of Mr. Balakrishnan, Mr. Iyengar and Mr. Phatarphekar receive a
salary from Rediff Holdings, Inc., our wholly-owned U.S.-incorporated
subsidiary, in their capacity as directors of Rediff Holdings, Inc.
None of them receive any salary from Rediff.com India Limited. Employee Benefit Plans
 Employee Stock Option Plan 1999
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Associate Stock Option Plan 1999
    2002 Stock Option Plan
  64




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2004 Stock Option Plan
    2006 Employee Stock Option Plan
   65




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2006 ADR Linked Employee Stock Option Plan
   Retirement Plans
 Gratuity
   Fiscal Years ended March 31,2007
    
    
    2008
    
    
    2009US$
    
    
    US$
    
    
    US$Change in benefit obligationBenefit obligation at the beginning of the year
    
    
    105,679
    
    
    
    198,777
    
    
    
    286,524Actuarial(gain) loss
    
    
    81,386
    
    
    
    12,708
    
    
    
    9,659Service cost
    
    
    21,769
    
    
    
    53,468
    
    
    
    60,933Interest cost
    
    
    7,950
    
    
    
    20,639
    
    
    
    28,214Benefits paid
    
    
    (23,997
    )
    
    
    (17,504
    )
    
    
    (27,888
    )Effect of exchange rate changes
    
    
    5,990
    
    
    
    18,436
    
    
    
    (69,306
    )Benefit obligation at the end of the year
    
    
    198,777
    
    
    
    286,524
    
    
    
    288,136
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Fiscal Years ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$Service cost
    
    
    21,769
    
    
    
    53,468
    
    
    
    60,933Interest cost
    
    
    7,950
    
    
    
    20,639
    
    
    
    28,214Recognized net actuarial (gain) loss
    
    
    81,386
    
    
    
    12,708
    
    
    
    9,659Net gratuity cost
    
    
    111,105
    
    
    
    86,815
    
    
    
    98,806
  Fiscal Years ended March 31,2007
    
    
    2008
    
    
    2009Discount rate
    
    
    10
    %
    
    
    9.25
    %
    
    
    9.00
    %Rate of increase in compensation
    
    10% for first 5 years
    
    10% for first 4 years
    
    10% for first 3 yearsand 7% thereafter
    
    and 7% thereafter
    
    and 7% thereafter
 Provident Fund
  Compensated Absences
  67




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RELATED PARTY TRANSACTIONS
  Advertising and Mobile Revenues
   Product Development Expenses
   68




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EXCHANGE CONTROLS
 Restrictions on Conversion of Rupees
    Restrictions on Sale of the Equity Shares Underlying the ADSs and for Repatriation of Sale Proceeds
   69




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Restriction on Foreign Ownership and Indian Securities
  An Active or Liquid Market for Our ADSs Is Not Assured
  Restriction on Debt Issues
   
    
    All-in cost ceiling does not exceed 300 basis points over the
six-month LIBOR for the respective currency of borrowing, in the
case of ECBs with a minimum average maturity of three to five
years, and 500 basis points over the six-month LIBOR for the
respective currency of borrowing, in the case of ECBs with a
minimum average maturity of more than five years. Borrowers
proposing to avail of ECBs beyond the permissible all-in-cost
ceilings must seek prior RBI approval.
    
    Proceeds from ECBs may only be raised for permitted purposes, such
as capital investments, overseas direct investment in a joint
venture or a wholly-owned foreign subsidiary. ECB proceeds cannot
be used for on-lending, for investing in capital markets and real
estate, for working capital and general corporate purposes or for
refinancing existing domestic loans.
    
    ECBs may be secured by assets of the borrower subject to
compliance with the relevant regulations issued by the Reserve
Bank of India.
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
    
    Pre-payment or redemption of ECBs prior to maturity in amounts up
to US$500 million is permitted without prior Reserve Bank of India
approval, provided that any such prepayment and redemption can
only be undertaken if the same complies with the stipulated
average maturity period of three years, in the case an ECB of up
to US$20 million, and five years, in the case of an ECB of up to
US$500 million.
    
    Preference shares and convertible debentures that are not
mandatorily and fully convertible into equity shares would be
treated as ECBs for all purposes under the law.
    
    
    the buyback value of the FCCB shall be at a minimum discount of 15 per cent on the book
value;
    
    the funds used for the buyback shall be out of existing foreign currency funds held either
in India (including funds held in Exchange Earners Foreign Currency Account (EEFC)
account) or abroad and / or out of fresh ECB raised in conformity with the current ECB norms;
and
    
    where the new ECB is co-terminus with the outstanding maturity of the original FCCB and is
for less than three years, the all-in-cost ceiling should not exceed 6 months Libor plus 200
bps, as applicable to short term borrowings.
  
    
    the buyback value of the FCCB shall be at a minimum discount of 25, 35 or 50 (as the case
may be) per cent on the book value;
    
    the funds used for the buyback shall be out of internal accruals, to be evidenced by
Statutory Auditor and designated AD Category  I banks certificate; and
    
    the total amount of buyback shall not exceed USD 100 million of the redemption value, per
company.
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Fungibility of ADSs
  
    
    the shares of the Indian company are purchased on a recognized stock exchange in India;
    
    the shares of the Indian company are purchased on a recognized stock exchange with the
permission of the domestic custodian for the ADSs and such shares
are deposited with the custodian after purchase;
    
    the Indian company has authorized the custodian to accept shares from non-resident
investors for re-issuance of ADSs;
    
    the number of shares of the Indian company so purchased does not exceed the ADSs
converted into underlying shares; and
    
    compliance with the provisions of the ADR Scheme and the guidelines issued thereunder.
 Sponsored ADR Schemes
  
    
    The facility to sell the shares would be available pari passu to all categories of shareholders.
    
    The sponsoring company whose shareholders propose to divest
existing shares in the overseas market through issue of ADRs will
give an option to all its shareholders indicating the number of
shares to be divested and mechanism how the price will be
determined under the ADR norms. If the shares offered for
divestment are more than the pre-specified number to be divested,
shares would be accepted from the existing shareholders in
proportion to their existing shareholdings.
    
    The proposal for divestment of the shares would have to be
approved by a special resolution of the Indian company.
    
    The proceeds of the ADR issue raised abroad shall be repatriated
into India within a period of one month from the closure of the
issue. However, the proceeds of the ADR issue can also be retained
abroad to meet the future foreign exchange requirements of the
company.
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TRADING MARKET
 General
    Annual and Quarterly high-low price history:
 Price Per ADS(in U.S. dollars)High
    
    LowFiscal year ended March 31, 2005
    
    
    15.47
    
    
    
    5.25Fiscal year ended March 31, 2006
    
    
    33.75
    
    
    
    6.07Fiscal year ended March 31, 2007
    
    
    25.00
    
    
    
    11.16Fiscal year ending March 31, 2008First Quarter (April 2007 to June 2007)
    
    
    19.20
    
    
    
    15.90Second Quarter (July 2007 to September 2007)
    
    
    27.50
    
    
    
    13.68Third Quarter (October 2007 to December 2007)
    
    
    20.13
    
    
    
    10.25Fourth Quarter (January 2008 to March 2008)
    
    
    11.29
    
    
    
    6.46Fiscal year ending March 31, 2009First Quarter (April 2008 to June 2008)
    
    
    9.77
    
    
    
    6.19Second Quarter (July 2008 to September 2008)
    
    
    7.71
    
    
    
    4.00Third Quarter (October 2008 to December 2008)
    
    
    4.19
    
    
    
    1.90Fourth Quarter (January 2009 to March 2009)
    
    
    2.38
    
    
    
    1.40Fiscal year ending March 31, 2010First Quarter (April 2009 to June 30, 2009)
    
    
    4.50
    
    
    
    1.75Second Quarter (July 01, 2009 to August 31, 2009)
    
    
    3.57
    
    
    
    2.16
 Monthly high-low price history for previous six months:
 Price Per ADS(in U.S. dollars)Previous six months
    
    High
    
    LowMarch 2009
    
    
    2.03
    
    
    
    1.40April 2009
    
    
    2.35
    
    
    
    1.75May 2009
    
    
    4.50
    
    
    
    2.16June 2009
    
    
    3.79
    
    
    
    2.30July 2009
    
    
    3.20
    
    
    
    2.16August 2009
    
    
    3.57
    
    
    
    2.75
 73




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##### Table of Contents



RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
  Regulations
  ADR Guidelines
   Foreign Direct Investment
  Transfer of Shares of an Indian company by a Person Resident outside India
  74




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##### Table of Contents



(i)
    
    investments in excess of specified sectoral caps or in sectors in which foreign direct
investment is not permitted or in sectors which specifically require approval of the FIPB;(ii)
    
    investment by any foreign investor who has or had any existing joint venture or technology
transfer or trademark agreement in India in the same field as the Indian company in which the
foreign direct investment is proposed. However, no prior approval is required if:
 (a)
    
    the investor is a venture capital fund registered with SEBI,(b)
    
    in the existing joint venture, investment by either of the parties is less
than 3%, or(c)
    
    the existing joint venture or collaboration is either defunct or a sick
industrial company; In so far as joint ventures entered into after January 12, 2005,
the joint venture agreement may include a conflict of interest clause to help
safeguard the interests of the joint venture partners in the event one of the partners
desires to set up another joint venture or a wholly-owned subsidiary in the same field
of economic activity.
 (iii)
    
    The activity of the issuer company does not require an industrial license under the
provisions of the Industries (Development & Regulation) Act, 1951 or under the location policy
notified by Government of India under the Industrial Policy of 1991, as amended from time to
time.(iv)
    
    All proposals relating to the acquisition of existing shares of an Indian company by a
foreign investor (including a non-resident Indian) beyond specified sectoral caps or in
sectors in which FDI is not permitted or in case such proposals do not comply with certain
RBI pricing guidelines.
    (i)
    
    business of chit fund;(ii)
    
    nidhi company;(iii)
    
    agricultural or plantation activities;
 75




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##### Table of Contents



(iv)
    
    real estate business or construction of farm houses; or(v)
    
    trading in Transferable Development Rights (TDRs).
   a)
    
    retail trading;b)
    
    atomic energy;c)
    
    lottery business;d)
    
    gambling and betting; ande)
    
    agriculture (excluding floriculture, horticulture, development of seeds,
animal husbandry, pisiculture and cultivation of vegetables, mushrooms etc. under
controlled conditions and services related to agro and allied sectors) and plantations
(other than tea plantations).
  Pricing
     Portfolio Investment by Non-Resident Indians
  76




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which were formerly classified as Overseas Corporate Bodies
 Portfolio Investment by Foreign Institutional Investors
    
    
    a public offer, where the price of the shares to be issued is not
less than the price at which the shares are issued to the
residents; or
 77




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##### Table of Contents




    
    by way of a private placement, where the price is not less than
the price according to the terms of the relevant guidelines or the
guidelines issued by the former Controller of Capital Issues.
  (a)
    
    any entity incorporated in a jurisdiction that requires filing of
constitutional and/or other documents with a registrar of companies or comparable
regulatory agency or body under the applicable legislation in that jurisdiction;(b)
    
    any entity that is regulated, authorized or supervised by a central bank or
any other similar body in any country, state or authority, provided that the entity
must not only be authorized but also be regulated by the aforesaid;(c)
    
    any entity that is regulated, authorized or supervised by a securities or
futures commission in any country, state or territory;(d)
    
    any entity that is a member of a self-regulating securities or futures
authority or commission within any country, state or territory, provided that the
aforementioned organizations which are in the nature of self-regulating organizations
are ultimately accountable to their respective securities or financial markets
regulators; and(e)
    
    any individual or entity (such as a fund, trust, collective investment
scheme, investment company or limited partnership) whose investment advisory function
is managed by an entity satisfying the criteria of (a), (b), (c) or (d) above.
    Takeover and Insider Trading Regulations
  78




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##### Table of Contents



Qualified Institutional Placement under the SEBI Disclosure and Investor Protection (DIP)
Guidelines
  
    
    Issuers. A company whose equity shares are listed on an Indian
stock exchange with nationwide trading terminals and which is in
compliance with the prescribed requirements of minimum public
shareholding in its listing agreement will be eligible to raise
funds in the domestic market by placing securities with Qualified
Institutional Buyers, or QIBs.QIBs are defined as:
 
    
    Public financial institution as defined in Section 4A of the Companies Act;
    
    Scheduled commercial banks;
    
    Mutual funds;
    
    FIIs registered with SEBI;
    
    Multilateral and bilateral development financial institutions;
    
    Venture capital funds registered with SEBI;
    
    Foreign venture capital investors registered with SEBI;
    
    State industrial development corporations;
    
    Insurance companies registered with the Insurance Regulatory and
Development Authority;
    
    Provident funds with minimum corpus of Rs.250 million; or
    
    Pension funds with minimum corpus of Rs.250 million.
 
    
    Securities: Securities which can be issued through the QIP program
are equity shares, fully convertible debentures (FCDs), partly
convertible debentures (PCDs) (nonconvertible debentures (NCDs)
with warrants or any securities (other than warrants), which are
convertible into or exchangeable with equity shares (hereinafter
referred to as specified securities). A security which is
convertible into or exchangeable with equity shares at a later
date, may be converted or exchanged into equity shares at any time
after allotment of security but not later than sixty months from
the date of allotment. The specified securities shall be made
fully paid up at the time of allotment.
    
    Investors/Allottees: The specified securities can be issued only
to QIBs, as defined above. Such QIBs shall not be promoters or
related to promoters of the issuer, either directly or indirectly.
Each placement of the specified securities issued through the QIP
program shall be on a private placement basis, in compliance with
the requirements of the Companies Act and the DIP Guidelines. A
minimum of 10% of the securities in each placement shall be
allotted to mutual funds. If no mutual fund agrees to take up the
minimum portion or any part thereof, such minimum portion or part
thereof may be allotted to other QIBs.
 79




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##### Table of Contents




    
    Issue Size: The aggregate funds that can be raised through the QIP
program in one financial year shall not exceed five times of the
net worth of the issuer as of the end of its previous financial
year.
    
    Placement Document: The issuer shall prepare a placement document
containing all the relevant and material disclosures. There will
be no pre-issue filing of the placement document with SEBI. The
placement document will be placed on the websites of the relevant
Indian stock exchanges and of the issuer, with appropriate
disclaimer to the effect that the placement is meant only for QIBs
on a private placement basis and is not an offer to the public.
    
    Pricing: The price of the shares issued under the QIP program must
not be less than the average of the weekly high and low of the
closing prices of the shares quoted on the stock exchange during
the two weeks preceding the relevant date. Relevant date has
been defined to mean the date of the meeting in which the Board of
the company or the Committee of Directors duly authorised by the
Board of the company decides to open the proposed issue. The issue
price is subject to adjustment in case of corporate actions such
as stock splits, rights issues and bonus issues.
  80




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PRINCIPAL SHAREHOLDERS
  
    
    each of the executive officers named in the summary compensation
table and each of our directors;
    
    all of our directors and executive officers as a group; and
    
    each person or group of affiliated persons who is known by us to
beneficially own 5.0% or more of our Equity Shares.
 Shares Beneficially
    
    Shares Beneficially
    
    Shares BeneficiallyOwned
    
    Owned
    
    OwnedAs of May 29, 2009
    
    As of August 6, 2008
    
    As of August 16, 2007Number
    
    Percent ofof
    
    total
    
    
    
    
    
    Percent of
    
    Number of
    
    Percent ofEquity
    
    Equity
    
    Number of
    
    total Equity
    
    Equity
    
    total EquityShares
    
    Shares
    
    Equity
    
    Shares
    
    Shares
    
    SharesName of Beneficial Owner
    
    held
    
    outstanding
    
    Shares held
    
    outstanding
    
    held
    
    outstandingOfficers and DirectorsAjit Balakrishnan(1)(1A)
(1B) (1C)
    
    
    3,463,982
    
    
    
    23.70
    %
    
    
    3,463,982
    
    
    
    23.70
    %
    
    
    3,463,982
    
    
    
    24
    %Diwan Arun Nanda(1)
    
    
    3,444,742
    
    
    
    23.57
    %
    
    
    3,444,742
    
    
    
    23.57
    %
    
    
    3,444,742
    
    
    
    24
    %All Directors and Officers as
a Group
(2 persons)
    
    
    6,920,724
    
    
    
    47.27
    %
    
    
    6,920,724
    
    
    
    47.27
    %
    
    
    6,908,724
    
    
    
    48
    %OtherShareholders holding more
than 5 % shareholdingRediffusion Holdings Private
Limited(1)
    
    
    2,200,002
    
    
    
    15
    %
    
    
    2,200,002
    
    
    
    15
    %
    
    
    2,200,002
    
    
    
    15
    %Draper-India International
    
    
    2,200,000
    
    
    
    15
    %
    
    
    2,200,000
    
    
    
    15
    %
    
    
    2,200,000
    
    
    
    15
    %Queenswood Investments Ltd
    
    
    2,008,000
    
    
    
    14
    %
    
    
    2,008,000
    
    
    
    14
    %
    
    
    2,008,000
    
    
    
    14
    %
 
 Notes:(1)
    
    Includes 2,200,002 Equity Shares held by Rediffusion Holdings Private
Limited, previously called Rediffusion Advertising Private Limited, of
which Ajit Balakrishnan is a 50.0% shareholder and Director and Diwan
Arun Nanda is a 50.0% shareholder and Director.(1A)
    
    Includes 144,540 Equity Shares held by Quintrol Technologies Private
Limited, of which Ajit Balakrishnan is a director as well as a 99.9%
stockholder.(1B)
    
    Includes 5,300 ADSs of the Company held by Mr. Ajit Balakrishnan.(1C)
    
    Includes 33,200 ADSs of the Company held by A B Technologies, LLC a
New York limited liability company, with respect to which Mr.
Balakrishnan holds a position as the Managing Member as well as 99.9%
stockholder. 81




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82




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TAXATION
 Indian Tax
  The following summary is not intended to constitute a complete analysis of the tax
consequences under Indian law of the acquisition, ownership and sale of our ADSs and our Equity
Shares by non-resident investors. Potential investors should, therefore, consult their own tax
advisers on the tax consequences of such acquisition, ownership and sale, including specifically
the tax consequences under Indian law, the law of the jurisdiction of their residence, any tax
treaty between India and their country of residence, and in particular the application of the
regulations implementing the Section 115AC regime.
 Residence
  Taxation of Distributions
  Taxation on Sale of ADSs
  Taxation on Redemption of ADSs
  83




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Taxation on Sale of Equity Shares
     84




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Rights
   Stamp Duty
  Other Taxes
  85




---



##### Table of Contents



Service Tax
  United States Federal Income Tax Considerations
     General
   86




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Distributions
  87




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##### Table of Contents



Sale or Other Disposition of ADSs or Equity Shares
  Passive Foreign Investment Company
   
    
    the gain or excess distribution would be allocated ratably over your
holding period for ADSs or Equity Shares;
    
    the amount allocated to the taxable year in which the gain or excess
distribution was realized, and any taxable year prior to the first
taxable year that you held our ADSs or our Equity Shares in which we
are classified as a PFIC (a pre-PFIC year), would be taxable as
ordinary income; and
    
    the amount allocated to each prior year, other than the current year
and any pre-PFIC year, would be subject to (i) tax at the highest tax
rate in effect for that year and (ii) an interest charge generally
applicable to underpayments of tax based on the amount of the tax
deferred during the time in which you owned ADSs or Equity Shares.
  88




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89




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CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
    90




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Changes in Internal Controls over Financial Reporting
  91




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PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fiscal year ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$Audit Fee
    
    
    116,742
    
    
    
    224,070
    
    
    
    160,448Audit-Related Fees
    
    
    5,597
    
    
    
    
    
    
    
    Tax Fees
    
    
    16,538
    
    
    
    23,620
    
    
    
    16,476
    92




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PRESENTATION OF FINANCIAL INFORMATION
   93




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ADDITIONAL INFORMATION
 Memorandum and Articles of Association
 Objectives and Purposes
  Description of Share Capital
  Share Capital
   Shareholder Rights Agreements
  Amended and Restated Shareholders Rights Agreement
  94




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Registration Rights
  
    
    more than two such registrations or qualifications pursuant to
such demand registration rights;
    
    a registration or qualification prior to the earlier of December
31, 2002, or six months after the effective date of any Indian
law, regulation or other governmental order which allows our
Equity Shares to be offered to the public on an Indian stock
exchange; or
    
    a registration for a period not to exceed 120 days, if our Board
of Directors has made a good faith determination that such
registration would be detrimental to us or our shareholders.
  
    
    more than once in a twelve month period;
    
    unless the registration relates to securities that are valued in excess of US$1,000,000; or
    
    if our Board of Directors has made a good faith determination that
such registration would be detrimental to us or our shareholders.
  Other Rights
  Dividends
  95




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
    
    the rate of the dividend to be declared shall not exceed 10.0% of
the companys its paid up capital or the average of the rate at
which dividends were declared by the company in the previous five
years, whichever is less;
    
    the total amount to be drawn from the accumulated profits earned
in the previous years and transferred to the reserves shall not
exceed an amount equivalent to 10.0% of itsthe companys paid up
capital and free reserves, and the amount so drawn is to be used
first to set off the losses incurred in the fiscal year before any
dividends in respect of preference or equity shares are declared;
and
    
    the balance of reserves after withdrawals shall not fall below
15.0% of itsthe companys paid up capital.
 Bonus Shares
  Preemptive Rights and Issue of Additional Shares
  96




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Annual General Meetings of Shareholders
    Voting Rights
       97




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##### Table of Contents



Register of Shareholders; Record Dates; Transfer of Shares
     Disclosure of Ownership Interest
  98




---



##### Table of Contents



Audit and Annual Report
  Company Acquisition of Equity Shares
  Liquidation Rights
  Material Contracts
  99




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DOCUMENTS ON DISPLAY
         100




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EXHIBIT INDEX
 Exhibit No.
    
    Description of Document*1.1
    
    Articles of Association, as amended.*1.2
    
    Memorandum of Association, as amended.*1.3
    
    Certificate of Incorporation, as amended.*2.1
    
    Form of Deposit Agreement among Rediff.com, Citibank, N.A.,
and holders from time to time of American Depository Receipts
issued thereunder (including as an exhibit, the form of
American Depository Receipt).*2.2
    
    Rediff.coms specimen certificate for equity shares.*2.3
    
    Amended and Restated Shareholder Rights Agreement dated
February 24, 2000 between Rediff.com and the shareholders of
Rediff.com.*4.1
    
    1999 Employee Stock Option Plan.*4.2
    
    1999 Associate Stock Option Plan.***4.3
    
    2002 Stock Option Plan.****4.4
    
    2004 Stock Option Plan.*******4.5
    
    2006 Employee Stock Option Plan.********4.6
    
    2006 ADR Linked Employee Stock Option Plan.*4.7
    
    Form of Indemnification Agreement.*******4.8
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Sridar A. Iyengar.*******4.9
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Ashok Narasimhan.*******4.10
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Pulak Chandan Prasad.*******4.11
    
    Indemnification Agreement dated November 8, 2005 between
Rediff.com and Joy Basu.*4.12
    
    Sublease dated July 5, 1999 between Shreenathji Balaji
Computech Private Limited and Rediff.com.*4.13
    
    Letter Agreement dated December 28, 1998 between
Rediffusion-Dentsu, Young & Rubicam Limited and Rediff.com.*4.14
    
    Promoters Agreement dated January 9, 1996 between Ajit
Balakrishnan and Diwan Arun Nanda.**4.15
    
    Stock Purchase Agreement among Rediff.com, ValuCom and
shareholders of ValuCom dated March 21, 2001.**4.16
    
    Stock Purchase Agreement among Rediff.com, India Abroad and
shareholders of India Abroad dated March 21, 2001, as amended
on April 27, 2001.**4.17
    
    Amended and Restated Agreement and Plan of Reorganization
among Rediff.com, Thinkindia.com, Inc., Rediff Holdings, Inc.,
the principal stock holders of Think India and certain other
parties thereto dated February 27, 2001.*****4.18
    
    Agreement for sale of assets of Value Communications
Corporation dated April 8, 2004.******4.19
    
    Underwriting Agreement dated November 9, 2005 between
Rediff.com and Deutsche Bank Securities Inc.12.1
    
    Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.13.1
    
    Certification of Principal Executive Officer pursuant to 18.
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.13.2
    
    Certification of Principal Financial Officer pursuant to 18.
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.15.1
    
    Consent of Independent Registered Public Accounting Firm
 101




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##### Table of Contents



*
    
    Incorporated by reference to exhibits filed with the Registrants
Registration Statement on Form F-1 (File No. 333-37376).*
    
    Incorporated by reference to exhibits filed with the Registrants
Form 20-F for the fiscal year ended March 31, 2001.***
    
    Incorporated by reference to exhibits filed with the Registrants
Form 20-F for the fiscal year ended March 31, 2003.****
    
    Incorporated by reference to exhibits filed with the Registrants
Form S-8 filed on December 30, 2004.*****
    
    Incorporated by reference to exhibits filed with the Registrants
Form 20-F for the fiscal year ended March 31, 2004.******
    
    Incorporated by reference to exhibits filed with the Registrants
Form 6-K filed on November 9, 2005.*******
    
    Incorporated by reference to exhibits filed with the Registrants
Form 20-F for the fiscal year ended March 31, 2006.********
    
    Incorporated by reference to exhibits filed with the Registrants
Form 20-F for the fiscal year ended March 31, 2007.
    
    Filed herewith. 102




---



##### 



INDEX TO FINANCIAL STATEMENTS
 Page(s)Reports of Independent Registered Public Accounting Firm
    
    F-2  F-3Consolidated Balance Sheets as of March 31, 2008 and 2009
    
    F-4Consolidated Statements of Operations for the years ended
March 31, 2007, 2008 and 2009
    
    F-5Consolidated Statements of Changes in Shareholders Equity for
the years ended March 31, 2007, 2008 and 2009
    
    F-6Consolidated Statements of Cash Flows for the years ended
March 31, 2007, 2008 and 2009
    
    F-7  F-8Notes to Consolidated Financial Statements
    
    F-9  F-32Schedule II- Valuation and Qualifying Accounts
    
    F-33
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 
 F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 
 F-3




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED BALANCE SHEETS
as of March 31, 2008 and 2009
 2008
    
    
    2009US$
    
    
    US$AssetsCurrent AssetsCash and cash equivalents
    
    
    59,032,690
    
    
    
    45,521,173Trade accounts receivable (net of allowances of
US$3,540,173 and US$3,935,812 as of March 31, 2008
and 2009, respectively)
    
    
    12,036,874
    
    
    
    6,418,615Prepaid expenses and other current assets (See Note 4)
    
    
    3,138,545
    
    
    
    2,405,421Total current assets
    
    
    74,208,109
    
    
    
    54,345,209Property, plant and equipment  net (See Note 5)
    
    
    14,384,360
    
    
    
    7,925,807Investments in equity method investees
    
    
    581,054
    
    
    
    1,740,457Goodwill (See Note 7)
    
    
    7,314,468
    
    
    
    2,000,000Recoverable taxes
    
    
    4,278,241
    
    
    
    4,728,393Other non-current assets
    
    
    1,083,677
    
    
    
    1,233,381Total assets
    
    
    101,849,909
    
    
    
    71,973,247Liabilities and Shareholders EquityLiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities (See Note 8)
    
    
    9,313,979
    
    
    
    6,020,080Customer advances and unearned revenues
    
    
    1,684,186
    
    
    
    1,268,845Total current liabilities
    
    
    10,998,165
    
    
    
    7,288,925Other non- current liabilities
    
    
    701,273
    
    
    
    677,323Total liabilities
    
    
    11,699,438
    
    
    
    7,966,248Commitments and contingencies (See Note 19)Shareholders EquityEquity shares: par value  Rs.5, Authorized:24,000,000 equity shares as of March 31, 2008 and 2009 ;
Issued and outstanding: 14,615,800 equity shares and
14,615,800 equity shares as of March 31, 2008 and 2009,
respectively
    
    
    1,735,105
    
    
    
    1,735,105Additional paid- in- capital
    
    
    125,849,756
    
    
    
    127,014,384Accumulated other comprehensive income (loss)
    
    
    5,303,652
    
    
    
    (10,746,318
    )Accumulated deficit
    
    
    (42,738,042
    )
    
    
    (53,996,172
    )Total shareholders equity
    
    
    90,150,471
    
    
    
    64,006,999Total liabilities and shareholders equity
    
    
    101,849,909
    
    
    
    71,973,247
 See accompanying notes to consolidated financial statements
 F-4




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
For each of the years ended March 31, 2007, 2008 and 2009
 2007
    
    
    2008
    
    
    2009US$
    
    
    US$
    
    
    US$RevenuesIndia Online
    
    
    20,759,227
    
    
    
    23,649,363
    
    
    
    19,707,381U.S. Publishing
    
    
    7,916,298
    
    
    
    8,599,840
    
    
    
    5,722,571Total revenues
    
    
    28,675,525
    
    
    
    32,249,203
    
    
    
    25,429,952Cost of revenuesIndia Online
    
    
    2,357,178
    
    
    
    2,961,442
    
    
    
    3,441,736U.S. Publishing
    
    
    3,059,138
    
    
    
    3,038,119
    
    
    
    2,864,552Total cost of revenues
    
    
    5,416,316
    
    
    
    5,999,561
    
    
    
    6,306,288Operating expensesSales and marketing
    
    
    5,856,640
    
    
    
    6,892,522
    
    
    
    5,303,783Product development
    
    
    3,845,304
    
    
    
    5,983,067
    
    
    
    6,412,705Depreciation and amortization
    
    
    3,105,878
    
    
    
    5,902,705
    
    
    
    6,248,129General and administrative
    
    
    7,387,144
    
    
    
    8,989,078
    
    
    
    8,943,852Goodwill impairment (See Note 7)
    
    
    
    
    
    
    
    
    
    
    5,314,468Long-lived assets impairment (See
Note 5)
    
    
    
    
    
    
    
    
    
    
    2,528,261Foreign exchange (gain) loss, net
    
    
    (133,873
    )
    
    
    601,137
    
    
    
    (92,393
    )Total operating expenses
    
    
    20,061,093
    
    
    
    28,368,509
    
    
    
    34,658,805Operating income (loss)
    
    
    3,198,116
    
    
    
    (2,118,867
    )
    
    
    (15,535,141
    )Other income (expense), netInterest income
    
    
    3,726,222
    
    
    
    5,509,753
    
    
    
    4,515,997Investment impairment
    
    
    
    
    
    
    
    
    
    
    (109,842
    )Miscellaneous income
    
    
    121,264
    
    
    
    1,950,720
    
    
    
    44,065Total other income (expense), net
    
    
    3,847,486
    
    
    
    7,460,473
    
    
    
    4,450,220Income (loss) before income taxes
and equity in net earnings of equity
method investees
    
    
    7,045,602
    
    
    
    5,341,606
    
    
    
    (11,084,921
    )Income tax expense
    
    
    (83,074
    )
    
    
    (433,374
    )
    
    
    (40,000
    )Equity in net earnings of equity
method investees
    
    
    
    
    
    
    
    
    
    
    (133,209
    )Net income (loss)
    
    
    6,962,528
    
    
    
    4,908,232
    
    
    
    (11,258,130
    )Weighted average number of equity
shares  basic
    
    
    14,543,360
    
    
    
    14,606,660
    
    
    
    14,615,800Weighted average number of equity
shares  diluted
    
    
    14,924,267
    
    
    
    14,772,824
    
    
    
    14,615,800(Loss) / earnings per share  basic
    
    
    0.479
    
    
    
    0.336
    
    
    
    (0.770
    )(Loss) / earnings per share  diluted
    
    
    0.467
    
    
    
    0.332
    
    
    
    (0.770
    )(Loss) / earnings per ADS  (where
2 ADSs represent 1 equity share) 
basic
    
    
    0.239
    
    
    
    0.168
    
    
    
    (0.385
    )(Loss) / earnings per ADS  (where 2
ADSs represent 1 equity share) 
diluted
    
    
    0.233
    
    
    
    0.166
    
    
    
    (0.385
    )Stock-based compensation expense
included in general and
administrative expenses
    
    
    1,233,127
    
    
    
    1,876,008
    
    
    
    1,164,628
 See accompanying notes to consolidated financial statements
 F-5




---



##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For each of the years ended March 31, 2007, 2008 and 2009
 Accumulated other
    
    
    
    
    
    
    TotalEquity share
    
    
    Additional paid-
    
    
    comprehensive
    
    
    Accumulated
    
    
    shareholders
    
    
    ComprehensiveNumber of
    
    
    capital
    
    
    in-capital
    
    
    income (loss)
    
    
    deficit
    
    
    equity
    
    
    income (loss)shares
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$Balance as of March
31, 2006
    
    
    14,539,600
    
    
    
    1,726,318
    
    
    
    122,233,641
    
    
    
    (2,480,881
    )
    
    
    (54,608,802
    )
    
    
    66,870,276Stock- based
compensation
    
    
    
    
    
    
    
    
    
    
    1,233,127
    
    
    
    
    
    
    
    
    
    
    
    1,233,127Stock options
exercised
    
    
    64,200
    
    
    
    7,286
    
    
    
    475,630
    
    
    
    
    
    
    
    
    
    
    
    482,916Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,962,528
    
    
    
    6,962,528
    
    
    
    6,962,528Foreign currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,673,902
    
    
    
    
    
    
    
    1,673,902
    
    
    
    1,673,9028,636,430Balance as of March
31, 2007
    
    
    14,603,800
    
    
    
    1,733,604
    
    
    
    123,942,398
    
    
    
    (806,979
    )
    
    
    (47,646,274
    )
    
    
    77,222,749Stock- based
compensation
    
    
    
    
    
    
    
    
    
    
    1,876,008
    
    
    
    
    
    
    
    
    
    
    
    1,876,008Stock options
exercised
    
    
    12,000
    
    
    
    1,501
    
    
    
    31,350
    
    
    
    
    
    
    
    
    
    
    
    32,851Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,908,232
    
    
    
    4,908,232
    
    
    
    4,908,232Foreign currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,110,631
    
    
    
    
    
    
    
    6,110,631
    
    
    
    6,110,63111,018,863Balance as of March
31, 2008
    
    
    14,615,800
    
    
    
    1,735,105
    
    
    
    125,849,756
    
    
    
    5,303,652
    
    
    
    (42,738,042
    )
    
    
    90,150,471Stock- based
compensation
    
    
    
    
    
    
    
    
    
    
    1,164,628
    
    
    
    
    
    
    
    
    
    
    
    1,164,628Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,258,130
    )
    
    
    (11,258,130
    )
    
    
    (11,258,130
    )Foreign currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,049,970
    )
    
    
    
    
    
    
    (16,049,970
    )
    
    
    (16,049,970
    )(27,308,100
    )Balance as of March
31, 2009
    
    
    14,615,800
    
    
    
    1,735,105
    
    
    
    127,014,384
    
    
    
    (10,746,318
    )
    
    
    (53,996,172
    )
    
    
    64,006,999
 See accompanying notes to consolidated financial statements
 F-6




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##### Table of Contents



REDIFF.COM INDIA LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years ended March 31,2007
    
    
    2008
    
    
    2009US $
    
    
    US $
    
    
    US $Cash flows from operating activitiesNet income (loss)
    
    
    6,962,528
    
    
    
    4,908,232
    
    
    
    (11,258,130
    )Adjustments to reconcile net income (loss) to net cash generated from operating activities:Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    5,314,468Long-lived assets impairment
    
    
    
    
    
    
    
    
    
    
    2,528,261Investment impairment
    
    
    
    
    
    
    
    
    
    
    109,842Equity in net earnings of equity method investees
    
    
    
    
    
    
    
    
    
    
    133,209Depreciation and amortization
    
    
    3,105,878
    
    
    
    5,902,705
    
    
    
    6,248,129Allowances for doubtful receivables
    
    
    948,934
    
    
    
    848,111
    
    
    
    1,238,400Loss (profit) on sale of investments
    
    
    113,556
    
    
    
    (1,950,720
    )
    
    
    Loss (profit) on sale of property, plant and equipment
    
    
    17,096
    
    
    
    (331
    )
    
    
    40,460Stock- based compensation expense
    
    
    1,233,127
    
    
    
    1,876,008
    
    
    
    1,164,628Unrealized exchange loss
    
    
    
    
    
    
    
    
    
    
    97,482Changes in assets and liabilities:Trade accounts receivable
    
    
    (6,225,855
    )
    
    
    (2,208,394
    )
    
    
    2,503,586Prepaid expenses and other current assets
    
    
    32,091
    
    
    
    (1,504,958
    )
    
    
    135,986Accounts payable and accrued liabilities
    
    
    1,904,774
    
    
    
    2,034,172
    
    
    
    (1,402,603
    )Customer advances and unearned revenues
    
    
    125,211
    
    
    
    395,284
    
    
    
    (356,881
    )Recoverable taxes
    
    
    (1,317,874
    )
    
    
    (2,444,532
    )
    
    
    (1,513,099
    )Other non-current assets
    
    
    (336,652
    )
    
    
    265,588
    
    
    
    (283,625
    )Net cash generated from operating activities
    
    
    6,562,814
    
    
    
    8,121,165
    
    
    
    4,700,113Cash flows from investing activitiesPayments to acquire property, plant and equipment
    
    
    (7,801,821
    )
    
    
    (10,332,440
    )
    
    
    (5,072,485
    )
 F-7




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##### Table of Contents



Years ended March 31,2007
    
    
    2008
    
    
    2009US $
    
    
    US $
    
    
    US $Purchase of investment in equity method investee
    
    
    (581,054
    )
    
    
    
    
    
    
    (1,516,696
    )Purchase of investments
    
    
    
    
    
    
    
    
    
    
    (109,842
    )Purchase of secured notes
    
    
    
    
    
    
    (400,000
    )
    
    
    Cash received from sale of investments
    
    
    113,656
    
    
    
    1,950,720
    
    
    
    Proceeds from sale of property, plant and
equipment
    
    
    20,276
    
    
    
    8,735
    
    
    
    39,861Net cash used in investing
activities
    
    
    (8,248,943
    )
    
    
    (8,772,985
    )
    
    
    (6,659,162
    )Cash flows from financing activitiesNet proceeds from issue of equity shares
    
    
    482,916
    
    
    
    32,851
    
    
    
    Net cash provided by financing
activities
    
    
    482,916
    
    
    
    32,851
    
    
    
    Net decrease in cash and cash
equivalents
    
    
    (1,203,213
    )
    
    
    (618,969
    )
    
    
    (1,959,049
    )Cash and cash equivalents at the beginning of the
year
    
    
    53,093,635
    
    
    
    53,546,300
    
    
    
    59,032,690Effect of exchange rate changes on
cash
    
    
    1,655,878
    
    
    
    6,105,359
    
    
    
    (11,552,468
    )Cash and cash equivalents at the end of the
year
    
    
    53,546,300
    
    
    
    59,032,690
    
    
    
    45,521,173Supplementary cash flow information:Income taxes paid
    
    
    50,405
    
    
    
    1,551,462
    
    
    
    1,318,052
 See accompanying notes to consolidated financial statements
 F-8




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##### Table of Contents



REDIFF.COM INDIA LIMITED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Business
    2. Significant accounting policies
 (a) Basis of preparation
  (b) Basis of consolidation
  (c) Investments in equity method investees
  (d) Use of estimates
  F-9




---



##### Table of Contents



(e) Revenue recognition
 India Online business
        F-10




---



##### Table of Contents



US Publishing business
    (f) Costs and expenses
  Cost of revenues
  Sales and marketing
   Product development
   General and administrative
  F-11




---



##### Table of Contents



(g) Cash and cash equivalents
   (h) Property, plant and equipment
  Furniture and fixtures
    
    10 yearsComputer equipment and software
    
    3 yearsOffice equipment
    

    3 to 10 yearsVehicles
    
    8 yearsLeasehold improvements
    
    6 yearsWebsite development costs
    
    3 years
  (i) Website development costs
  (j) Investments, at cost
  (k) Goodwill
   F-12




---



##### Table of Contents



(l) Foreign currency
   (m) Earnings per share
  (n) Income taxes
   F-13




---



##### Table of Contents



(o) Impairment or disposal of long-lived assets
  (p) Stock-based compensation
  (q) Allowances for doubtful trade accounts receivable
  (r) Compensated absences
  3. New Accounting Pronouncements
   F-14




---



##### Table of Contents



The Fair Value Option for Financial Assets
and Financial Liabilities
    F-15




---



##### Table of Contents



Employers Disclosures about Postretirement
Benefit Plan Assets Employers Disclosures
about Pensions and Other Postretirement Benefits"
    4. Prepaid Expenses and Other Current Assets
 F-16




---



##### Table of Contents



As of  March 31,2008
    
    2009US$
    
    US$Prepaid expenses
    
    
    1,740,897
    
    
    
    767,499Supplier advances
    
    
    130,429
    
    
    
    79,792Rent deposits
    
    
    654,229
    
    
    
    360,639Other advances and deposits
    
    
    221,527
    
    
    
    253,270Loans to employees
    
    
    130,568
    
    
    
    105,187Accrued interest
    
    
    260,895
    
    
    
    839,0343,138,545
    
    
    
    2,405,421
 5. Property, Plant and Equipment
  As of March 31,2008
    
    2009US$
    
    US$Furniture and fixtures
    
    
    523,228
    
    
    
    445,308Computer equipment and software
    
    
    25,987,850
    
    
    
    22,929,434Office equipment
    
    
    438,361
    
    
    
    331,272Vehicles
    
    
    398,892
    
    
    
    265,128Leasehold improvements
    
    
    479,244
    
    
    
    409,692Website development costs
    
    
    2,253,961
    
    
    
    1,249,529Property, plant and equipment  at cost
    
    
    30,081,536
    
    
    
    25,630,363Less: Accumulated depreciation and amortization
    
    
    (18,443,085
    )
    
    
    (18,959,762
    )11,638,451
    
    
    
    6,670,601Capital work- in- progress
    
    
    2,745,909
    
    
    
    1,255,206Property, plant and equipment  net
    
    
    14,384,360
    
    
    
    7,925,807
  6. Investment
  7. Goodwill
   F-17




---



##### Table of Contents



2008
    
    2009US$
    
    US$Balance as at beginning of the year
    
    
    7,314,468
    
    
    
    7,314,468Impairment charge
    
    
    
    
    
    
    5,314,468Balance as at end of the year
    
    
    7,314,468
    
    
    
    2,000,000
   8. Accounts payable and accrued liabilities
  As of March 31,2008
    
    2009US$
    
    US$Accounts payable
    
    
    3,173,410
    
    
    
    1,335,782Accrued expenses
    
    
    2,887,525
    
    
    
    1,972,375Income taxes payable
    
    
    741,930
    
    
    
    496,552Indirect taxes payable
    
    
    1,254,801
    
    
    
    772,664Staff incentive payable
    
    
    707,170
    
    
    
    857,072Other staff payables
    
    
    459,062
    
    
    
    505,539Other liabilities
    
    
    90,081
    
    
    
    80,096Total
    
    
    9,313,979
    
    
    
    6,020,080
 9. Sales and marketing
  10. Miscellaneous Income
  11. Related Party Transactions
  Advertising and Mobile Revenues
  F-18




---



##### Table of Contents



Product Development Expenses
    As of March 31,2008
    
    2009US$
    
    US$Account receivable for advertising income
    
    
    5,853
    
    
    
    Payable for product development expenses
    
    
    80,557
    
    
    
    
 12. Retirement Benefits
 Gratuity
   2007
    
    2008
    
    2009US$
    
    US$
    
    US$Change in benefit obligationBenefit obligation at the beginning of the year
    
    
    105,679
    
    
    
    198,777
    
    
    
    286,524Actuarial loss
    
    
    81,386
    
    
    
    12,708
    
    
    
    9,659Service cost
    
    
    21,769
    
    
    
    53,468
    
    
    
    60,933Interest cost
    
    
    7,950
    
    
    
    20,639
    
    
    
    28,214Benefits paid
    
    
    (23,997
    )
    
    
    (17,504
    )
    
    
    (27,888
    )Effect of exchange rate changes
    
    
    5,990
    
    
    
    18,436
    
    
    
    (69,306
    )Benefit obligation at the end of the year
    
    
    198,777
    
    
    
    286,524
    
    
    
    288,136
   F-19




---



##### Table of Contents



2007
    
    2008
    
    2009US$
    
    US$
    
    US$Service cost
    
    
    21,769
    
    
    
    53,468
    
    
    
    60,933Interest cost
    
    
    7,950
    
    
    
    20,639
    
    
    
    28,214Recognized net actuarial loss
    
    
    81,386
    
    
    
    12,708
    
    
    
    9,659Net gratuity cost
    
    
    111,105
    
    
    
    86,815
    
    
    
    98,806
  2007
    
    2008
    
    2009Discount rate
    
    
    10
    %
    
    
    9.25
    %
    
    
    9.00
    %Rate of increase in compensation
    
    10% for first 5 years
    
    10% for first 4 years
    
    10% for first 3 yearsand 7% thereafter
    
    and 7% thereafter
    
    and 7% thereafter
   Years ending March 31,
    
    US$2010
    
    
    19,6862011
    
    
    25,1422012
    
    
    32,2672013
    
    
    41,0212014
    
    
    56,0742015-2019
    
    
    429,578
  F-20




---



##### Table of Contents



Provident Fund
  13. Income Taxes
  2007
    
    2008
    
    2009US$
    
    US$
    
    US$- Domestic
    
    
    5,370,138
    
    
    
    2,371,338
    
    
    
    (5,885,632
    )- Foreign
    
    
    1,675,464
    
    
    
    2,970,268
    
    
    
    (5,199,289
    )Income (loss) before income
taxes and equity in net
earnings of affiliates
    
    
    7,045,602
    
    
    
    5,341,606
    
    
    
    (11,084,921
    )
  2007
    
    2008
    
    2009US$
    
    US$
    
    US$Current taxes- Domestic
    
    
    33,074
    
    
    
    388,364
    
    
    
    - Foreign
    
    
    50,000
    
    
    
    45,010
    
    
    
    40,000Net income tax expense
    
    
    83,074
    
    
    
    433,374
    
    
    
    40,000
  2007
    
    2008
    
    2009US$
    
    US$
    
    US$Income (loss) before income taxes
    
    
    7,045,602
    
    
    
    5,341,606
    
    
    
    (11,084,921
    )Indian statutory income tax rate
    
    
    33.66
    %
    
    
    33.99
    %
    
    
    33.99
    %Expected income tax expense (benefit)
    
    
    2,371,550
    
    
    
    1,815,612
    
    
    
    (3,767,765
    )Tax effect of:-Adjustments to reconcile expected income tax expense
to reported income tax expenseEmployee stock based compensation
    
    
    210,636
    
    
    
    638,221
    
    
    
    395,857Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    1,806,229Change in valuation allowance
    
    
    (1,946,731
    )
    
    
    (415,016
    )
    
    
    1,545,471Gain on sale of investment taxed at capital gains rate
    
    
    (38,223
    )
    
    
    (663,050
    )
    
    
    Tax in foreign jurisdictions
    
    
    (513,961
    )
    
    
    (964,584
    )
    
    
    1,010Others
    
    
    (197
    )
    
    
    22,191
    
    
    
    59,198Income tax expense
    
    
    83,074
    
    
    
    433,374
    
    
    
    40,000
 F-21




---



##### Table of Contents



As of March 31,2008
    
    2009US$
    
    US$Deferred income tax assets:Net operating loss carry forwards
    
    
    8,891,214
    
    
    
    6,108,274Depreciation and amortization
    
    
    1,322,332
    
    
    
    2,026,113Allowance for doubtful accounts receivables
    
    
    1,225,763
    
    
    
    1,368,545Retirement benefits
    
    
    192,879
    
    
    
    194,588Minimum alternate tax credit
    
    
    428,321
    
    
    
    336,016Others
    
    
    282,445
    
    
    
    125,755Gross deferred tax assets
    
    
    12,342,954
    
    
    
    10,159,291Valuation allowance
    
    
    (12,342,954
    )
    
    
    (10,159,291
    )Net deferred tax assets
    
    
    
    
    
    
    
  As of March 31,2008
    
    2009US$
    
    US$Balance as at beginning of the year
    
    
    12,220,549
    
    
    
    12,342,954Change during the year
    
    
    (415,016
    )
    
    
    1,545,471Expired net operating carry forward losses
    
    
    (193,000
    )
    
    
    (1,855,526
    )Reduction on account of unrecognized tax benefit
    
    
    
    
    
    
    (43,960
    )Effect of currency translation
    
    
    730,421
    
    
    
    (1,829,648
    )Balance as at end of the year
    
    
    12,342,954
    
    
    
    10,159,291
        F-22




---



##### Table of Contents



2008
    
    2009US$
    
    US$Unrecognized tax benefits balance at beginning of the year
    
    
    
    
    
    
    Gross increase for tax positions of prior years
    
    
    
    
    
    
    43,960Unrecognized tax benefits balance at end of the year
    
    
    
    
    
    
    43,960
  14. Segments
   (i)
    
    India Online business, which primarily includes revenues from online
advertising and fee-based services. Online advertising includes
revenues largely from display and performance based advertising and to
a lesser extent from sponsorships. Fee-based services include revenues
from online shopping, subscription services and mobile value-added
services.(ii)
    
    US Publishing business, which primarily includes revenues from the
Rediff India Abroad website and revenues from the print newspapers,
India Abroad and India in New York.
  2007
    
    2008
    
    2009India
    
    US
    
    
    
    
    
    India
    
    US
    
    
    
    
    
    India
    
    USOnline
    
    Publishing
    
    
    
    
    
    Online
    
    Publishing
    
    
    
    
    
    Online
    
    PublishingBusiness
    
    Business
    
    Total
    
    Business
    
    Business
    
    Total
    
    Business
    
    Business
    
    TotalUS$
    
    US$
    
    US$
    
    US$
    
    US$
    
    US$
    
    US$
    
    US$
    
    US$Revenues from
external customers:Advertising
    
    
    16,176,418
    
    
    
    7,113,880
    
    
    
    23,290,298
    
    
    
    17,397,492
    
    
    
    8,012,081
    
    
    
    25,409,573
    
    
    
    14,053,368
    
    
    
    5,277,561
    
    
    
    19,330,929Fee based services
    
    
    4,582,808
    
    
    
    802,419
    
    
    
    5,385,227
    
    
    
    6,251,871
    
    
    
    587,759
    
    
    
    6,839,630
    
    
    
    5,654,013
    
    
    
    445,010
    
    
    
    6,099,02320,759,227
    
    
    
    7,916,298
    
    
    
    28,675,525
    
    
    
    23,649,363
    
    
    
    8,599,840
    
    
    
    32,249,203
    
    
    
    19,707,381
    
    
    
    5,722,571
    
    
    
    25,429,952Inter segment
revenues:Advertising
    
    
    246
    
    
    
    
    
    
    
    246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    20,759,473
    
    
    
    7,916,298
    
    
    
    28,675,771
    
    
    
    23,649,363
    
    
    
    8,599,840
    
    
    
    32,249,203
    
    
    
    19,707,381
    
    
    
    5,722,571
    
    
    
    25,429,952Cost of revenues
    
    
    2,357,178
    
    
    
    3,059,138
    
    
    
    5,416,316
    
    
    
    2,961,442
    
    
    
    3,038,119
    
    
    
    5,999,561
    
    
    
    3,441,736
    
    
    
    2,864,552
    
    
    
    6,306,288Segment Results
    
    
    18,402,295
    
    
    
    4,857,160
    
    
    
    23,259,455
    
    
    
    20,687,921
    
    
    
    5,561,721
    
    
    
    26,249,642
    
    
    
    16,265,645
    
    
    
    2,858,019
    
    
    
    19,123,664Segment Assets
    
    
    75,351,008
    
    
    
    11,060,461
    
    
    
    86,411,469
    
    
    
    88,338,771
    
    
    
    12,849,478
    
    
    
    101,188,249
    
    
    
    62,676,949
    
    
    
    7,474,998
    
    
    
    70,151,947Capital expenditures
    
    
    7,801,821
    
    
    
    
    
    
    
    7,801,821
    
    
    
    10,332,440
    
    
    
    
    
    
    
    10,332,440
    
    
    
    5,072,485
    
    
    
    
    
    
    
    5,072,485
 F-23




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##### Table of Contents



2007
    
    2008
    
    2009US$
    
    US$
    
    US$Segment result
    
    
    23,259,455
    
    
    
    26,249,642
    
    
    
    19,123,664Inter segment revenue
    
    
    (246
    )
    
    
    
    
    
    
    Operating expenses
    
    
    (20,061,093
    )
    
    
    (28,368,509
    )
    
    
    (34,658,805
    )Other income
    
    
    3,847,486
    
    
    
    7,460,473
    
    
    
    4,450,220Net income (loss) before
income taxes
    
    
    7,045,602
    
    
    
    5,341,606
    
    
    
    (11,084,921
    )
  As at March 31,2008
    
    2009US$
    
    US$India Online business
    
    
    88,338,771
    
    
    
    62,676,949US Publishing business
    
    
    12,849,478
    
    
    
    7,474,998Total segment assets
    
    
    101,188,249
    
    
    
    70,151,947Investments in equity method investees
    
    
    581,054
    
    
    
    1,740,457Phone card business
    
    
    80,606
    
    
    
    80,843Total assets
    
    
    101,849,909
    
    
    
    71,973,247
   Years ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$United States and Canada
    
    
    7,507,998
    
    
    
    8,003,947
    
    
    
    5,292,299India
    
    
    20,890,345
    
    
    
    23,865,583
    
    
    
    19,664,404Rest of the world
    
    
    277,182
    
    
    
    379,673
    
    
    
    473,249Total revenues
    
    
    28,675,525
    
    
    
    32,249,203
    
    
    
    25,429,952Intersegment revenues:Advertising
    
    
    246
    
    
    
    
    
    
    
    Total revenues
    
    
    28,675,771
    
    
    
    32,249,203
    
    
    
    25,429,952
   F-24




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##### Table of Contents



As of March 31,2008
    
    2009US$
    
    US$United States and Canada
    
    
    7,433,016
    
    
    
    2,160,507India
    
    
    18,544,053
    
    
    
    12,493,693Total
    
    
    25,977,069
    
    
    
    14,654,200
 15. Concentration of credit risk
     16. Stock-based compensation
 1999 Stock Option Plans
      F-25




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##### Table of Contents



WeightedWeighted
    
    averageaverage
    
    remainingNumber of
    
    exercise
    
    contractual
    
    AggregateOptions
    
    options
    
    price
    
    term (year)
    
    intrinsic valueUS$
    
    
    
    
    
    US$Outstanding as at April 1, 2008
    
    
    45,000
    
    
    
    9.62Expired
    
    
    (17,000
    )
    
    
    9.31Outstanding as at March 31, 2009
    
    
    28,000
    
    
    
    9.81
    
    
    
    0.37
    
    
    
    Exercisable as at March 31, 2009
    
    
    28,000
    
    
    
    9.81
    
    
    
    0.37
    
    
    
    
  WeightedWeighted
    
    averageaverage
    
    remainingNumber of
    
    exercise
    
    contractual
    
    Aggregate intrinsicOptions
    
    options
    
    price
    
    term (year)
    
    valueUS$
    
    
    
    
    
    US$Outstanding as at April 1, 2008
    
    
    6,000
    
    
    
    12.93Outstanding as at March 31, 2009
    
    
    6,000
    
    
    
    12.93
    
    
    
    0.5
    
    
    
    Exercisable as at March 31, 2009
    
    
    6,000
    
    
    
    12.93
    
    
    
    0.5
    
    
    
    
  2002 Stock Option Plan
    WeightedWeighted
    
    averageaverage
    
    remaining
    
    Aggregateexercise
    
    contractual
    
    intrinsicOptions
    

Number of Options
    
    price
    
    term (year)
    
    valueUS$
    
    
    
    
    
    US$Outstanding as at April 1, 2008
    
    
    62,625
    
    
    
    4.94Forfeited
    
    
    (250
    )
    
    
    10.78Outstanding as at March 31, 2009
    
    
    62,375
    
    
    
    4.91
    
    
    
    4.1
    
    
    
    55,080Exercisable as at March 31, 2009
    
    
    62,375
    
    
    
    4.91
    
    
    
    4.1
    
    
    
    55,080
 F-26




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##### Table of Contents



2004 Stock Option Plan
    WeightedWeighted
    
    averageaverage
    
    remaining
    
    AggregateNumber of
    
    exercise
    
    contractual
    
    intrinsicOptions
    
    options
    
    price
    
    term (year)
    
    valueUS$
    
    
    
    
    
    US$Outstanding as at April 1, 2008
    
    
    169,053
    
    
    
    13.54Forfeited
    
    
    (10,938
    )
    
    
    19.29Outstanding as at March 31, 2009
    
    
    158,115
    
    
    
    13.14
    
    
    
    5.7
    
    
    
    Exercisable as at March 31, 2009
    
    
    146,990
    
    
    
    12.41
    
    
    
    5.6
    
    
    
    
   2006 Stock Option Plan
   F-27




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##### Table of Contents



WeightedWeighted
    
    averageaverage
    
    remainingNumber of
    
    exercise
    
    contractual
    
    AggregateOptions
    
    options
    
    price
    
    term (year)
    
    intrinsic valueUS$
    
    
    
    
    
    US$Outstanding as at April 1, 2008
    
    
    257,125
    
    
    
    15.74Granted
    
    
    7,000
    
    
    
    17.36Forfeited
    
    
    (64,163
    )
    
    
    16.12Outstanding as at March 31,
    
    
    199,963
    
    
    
    15.67
    
    
    
    7.6
    
    
    
    289,9152009Exercisable as at March 31,
    
    
    109,388
    
    
    
    15.63
    
    
    
    7.5
    
    
    
    160,5942009
    Years ended March 31,2007
    
    
    2008
    
    
    2009Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected term
    
    4-5 Years
    
    
    3-5 years
    
    
    4 yearsRisk free interest rates
    
    
    4.43-4.56
    %
    
    
    3.73%-3.97
    %
    
    
    2.43
    %Volatility
    
    
    91.68-97.63
    %
    
    
    56.51%-69.42
    %
    
    
    57.95
    %
  17. Earnings (loss) per share and ADS
  F-28




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##### Table of Contents



Year ended March 31,2007
    
    2008
    
    2009Net income (loss)
    
    US$
    6,962,528
    
    
    US$
    4,908,232
    
    
    US$
    (11,258,130
    )Weighted average equity shares for
basic earnings (loss) per share
    
    
    14,543,360
    
    
    
    14,606,660
    
    
    
    14,615,800Weighted average effect of dilutive
shares:Employee Stock Options
    
    
    380,907
    
    
    
    166,164
    
    
    
    Weighted average equity shares for
diluted earnings per share
    
    
    14,924,267
    
    
    
    14,772,824
    
    
    
    14,615,800Earnings /
(loss) per share  basic
    
    
    0.479
    
    
    
    0.336
    
    
    
    (0.770
    ) diluted
    
    
    0.467
    
    
    
    0.332
    
    
    
    (0.770
    )Earnings /
(loss) per ADS  basic
    
    
    0.239
    
    
    
    0.168
    
    
    
    (0.385
    ) diluted
    
    
    0.233
    
    
    
    0.166
    
    
    
    (0.385
    )
  18. Dividends
  19. Commitments and contingencies
 Operating Leases
  Years ended March 31,2007
    
    2008
    
    2009US$
    
    US$
    
    US$Office premises
    
    
    505,465
    
    
    
    759,589
    
    
    
    1,030,766Residential apartments for employees
    
    
    185,315
    
    
    
    246,889
    
    
    
    222,955Total operating lease expense
    
    
    690,780
    
    
    
    1,006,478
    
    
    
    1,253,721
  As at March 31,
    
    US$2010
    
    
    981,2042011
    
    
    677,1982012
    
    
    232,3202013
    
    
    199,6172014
    
    
    211,450and there after
    
    
    951,921
 F-29




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##### Table of Contents



Litigation and Other Legal Matters
 Action Relating to Access to Pornographic Material
 Sunil N.
Phatarphekar & Ors. v. Abhinav Bhatt and Ors.
  Action Relating to Copyright Violation
  F-30




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##### Table of Contents



Actions Relating to Trademark Infringement
    F-31




---



##### Table of Contents



Actions Relating to Patent Infringement
   F-32




---



##### Table of Contents



Schedule II
 Valuation and Qualifying Accounts
  Balance at
    
    
    
    
    
    
    
    
    
    Effect of
    
    Balance atBeginning of
    
    Charged to cost as
    
    
    
    
    
    exchange rate
    
    endDescription
    
    Period
    
    expenses
    
    Write offs
    
    changes
    
    of periodUS$
    
    US$
    
    US$
    
    US$
    
    US$Fiscal 2009
    
    
    3,540,173
    
    
    
    1,238,400
    
    
    
    
    
    
    
    (842,761
    )
    
    
    3,935,812Fiscal 2008
    
    
    2,697,334
    
    
    
    848,111
    
    
    
    
    
    
    
    (5,272
    )
    
    
    3,540,173Fiscal 2007
    
    
    1,766,424
    
    
    
    948,934
    
    
    
    
    
    
    
    (18,024
    )
    
    
    2,697,334
 F-33




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##### Table of Contents



SIGNATURE
  REDIFF.COM INDIA LIMITEDBy:
    /s/ Ajit BalakrishnanName:
    Ajit BalakrishnanTitle:
    Chairman and Managing Director
(Principal Executive Officer)




---



##### Table of Contents



SIGNATURE
  REDIFF.COM INDIA LIMITEDBy:
    /s/ Joy BasuName:
    Joy BasuTitle:
    Chief Financial Officer
(Principal Financial Officer)