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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F/A
(Amendment No. 1)
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
 or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
 For the fiscal year ended March 31, 2006.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
 For the transition period from  to
 o
    
    SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
 Commission file number 000-27663
 Sify Limited
  
 
 
      o þ
 þ o
  þ o
  Large accelerated filer o
    
    Accelerated filer þNon-accelerated filer o
  o þ
  o þ




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Table of Contents
 ItemExplanatory NoteCurrency of Presentation and Certain Defined TermsPART IIIItem 18. Financial StatementsItem 19. ExhibitsEXHIBIT 12.1EXHIBIT 12.2EXHIBIT 13.1EXHIBIT 13.2EXHIBIT 15.2




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Explanatory Note
     1




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Currency of Presentation and Certain Defined Terms
 Online
   www.sifycorp.com
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3




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Consolidated
Financial statements together with Auditors Report
 as of March 31, 2006 and 2005(unaudited) and for the years ended March 31, 2006 and
2005(unaudited)
 Contents
    
    PageReport of Independent Registered Public Accounting Firm
    
    
    5Consolidated Statements of Financial Condition
    
    
    6Consolidated Statements of Income
    
    
    7Consolidated Statements of Stockholders Equity
    
    
    8Consolidated Statements of Cash Flows
    
    
    9Notes to the Consolidated Financial Statements
    
    
    10  22
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Mumbai, India
    
    KPMGOctober 12 , 2006.
 5




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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 In Rupees thousands, except share data and as otherwise stated
 As of March 312006
    
    
    2005UnauditedAssetsCash
    
    Rs
    93,739
    
    
    Rs
    93,927Cash-restricted
    
    
    1,039,115
    
    
    
    895,733Interest bearing deposits with bank
    
    
    102,250
    
    
    
    Deposits with clearing organizations and others
    
    
    438,103
    
    
    
    120,854Receivable from broker-dealers and clearing organizations
    
    
    138,301
    
    
    
    133,484Receivable from customers (Net of allowances of Rs 3,100
Previous year Rs 500)
    
    
    621,233
    
    
    
    394,620Securities owned:Marketable, at market value
    
    
    12,605
    
    
    
    32,857Not readily marketable, at estimated fair value
    
    
    2,927
    
    
    
    Memberships in exchanges:Owned, at adjusted cost (fair value Rs.4,387 Previous year Rs
14,473)
    
    
    4,387
    
    
    
    14,473Furniture and equipment-net
    
    
    60,029
    
    
    
    43,295Other assets
    
    
    89,619
    
    
    
    54,169Deferred tax asset
    
    
    5,223
    
    
    
    17,634Total assets
    
    Rs
    2,607,531
    
    
    Rs
    1,801,046LiabilitiesPayable to broker dealers and clearing organizations
    
    
    366,210
    
    
    
    246,254Payable to customers
    
    
    1,271,821
    
    
    
    778,461Accounts payable, accrued expenses, and other liabilities
    
    
    200,838
    
    
    
    137,762Total liabilities
    
    
    1,838,869
    
    
    
    1,162,477Commitments, contingencies and guarantees (Refer note 15)Stockholders equityCommon stock at Rs. 10 par value: 65,000,000 shares authorized
(2005 - 65,000,000); Issued and outstanding: 51,894,182 shares as
of March 31, 2006 and 51,894,182 shares as of March 31, 2005
    
    
    518,942
    
    
    
    518,942Additional paid-in capital
    
    
    28,968
    
    
    
    28,968Retained earnings
    
    
    220,752
    
    
    
    90,659Total stockholders equity
    
    
    768,662
    
    
    
    638,569Total liabilities and stockholders equity
    
    Rs
    2,607,531
    
    
    Rs
    1,801,046
 See accompanying notes to consolidated financial statements
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Consolidated Statements of Income
 In Rupees thousands, except share data and as otherwise stated
 Year ended March 312006
    
    
    2005UnauditedRevenuesCommissions
    
    Rs
    674,045
    
    
    Rs
    410,038Depository and Clearing fees
    
    
    28,350
    
    
    
    22,219Interest and Dividends
    
    
    64,910
    
    
    
    56,718Other income
    
    
    29,304
    
    
    
    15,316Total
    
    Rs
    796,609
    
    
    Rs
    504,291ExpensesEmployee compensation and benefits
    
    
    259,099
    
    
    
    124,324Exchange expenses and clearance fees
    
    
    27,479
    
    
    
    21,417Brokerage to other broker-dealers
    
    
    96,168
    
    
    
    52,771Communications and data processing
    
    
    12,949
    
    
    
    11,423Interest
    
    
    9,967
    
    
    
    12,347Occupancy (Includes depreciation Rs 21,274
Previous year: Rs 17,165; includes amortization of
membership right of BSEL Rs 1,188, Previous year: Rs
2,337)
    
    
    67,616
    
    
    
    63,478Other expenses
    
    
    98,887
    
    
    
    56,383Loss on Exchange Membership Rights (Refer note 7)
    
    
    5,980
    
    
    
    Total
    
    
    578,145
    
    
    
    342,143Income before income taxes
    
    
    218,464
    
    
    
    162,148Income tax expense
    
    
    (88,371
    )
    
    
    (63,121
    )Net income
    
    Rs
    130,093
    
    
    Rs
    99,027
 See accompanying notes to consolidated financial statements
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Consolidated Statement of Stockholders Equity  In Rupees thousands, except share data and as otherwise stated
 Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    StockholdersShares
    
    
    Capital
    
    
    Earnings
    
    
    EquityNo. of shares
    
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    RsBalance as of March 31, 2004(Unaudited)
    
    
    38,727,002
    
    
    
    387,270
    
    
    
    
    
    
    
    (8,368
    )
    
    
    378,902Issue of common stock (Unaudited)
    
    
    13,167,180
    
    
    
    131,672
    
    
    
    28,968
    
    
    
    
    
    
    
    160,640Net Income(Unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,027
    
    
    
    99,027Balance as of March 31, 2005
    
    
    51,894,182
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    90,659
    
    
    
    638,569Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,093
    
    
    
    130,093Balance as of March 31, 2006
    
    
    51,894,182
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    220,752
    
    
    
    768,662
 See accompanying notes to consolidated financial statements
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Consolidated Statements of Cash Flows In Rupees thousands, except share data and as otherwise stated
 Year ended March 31,2006
    
    
    2005UnauditedRs
    
    
    RsCash flows from operating activitiesNet income
    
    
    130,093
    
    
    
    99,027Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    22,414
    
    
    
    19,502Loss on Exchange Membership Rights (Refer note 7)
    
    
    5,980
    
    
    
    Deferred tax expense
    
    
    12,411
    
    
    
    10,671Others
    
    
    35
    
    
    
    515Changes in operating assets and liabilities:Interest bearing deposits with banks
    
    
    (102,250
    )
    
    
    149,455Deposits with clearing organizations and others
    
    
    (317,249
    )
    
    
    66,566Net receivable from broker-dealers and clearing organizations
    
    
    (4,817
    )
    
    
    (112,053
    )Net receivable from customers
    
    
    (226,613
    )
    
    
    (326,844
    )Marketable securities, net
    
    
    20,252
    
    
    
    42,973Not readily marketable securities
    
    
    (10
    )
    
    
    Other, net
    
    
    (35,479
    )
    
    
    34,951Increase (decrease) in operating liabilities:Payable to broker dealers and clearing organizations
    
    
    119,956
    
    
    
    22,761Payable to customers
    
    
    493,360
    
    
    
    (2,289,997
    )Accounts payable, accrued expenses, and other liabilities
    
    
    66,546
    
    
    
    (385,037
    )Net cash provided by / (used in) operating activities
    
    
    184,629
    
    
    
    (2,667,510
    )Cash flows from investing activitiesExpenditure on furniture and equipment
    
    
    (38,770
    )
    
    
    (20,830
    )Net movement in cash-restricted
    
    
    (143,382
    )
    
    
    2,222,653Proceeds from sale of furniture, equipment
    
    
    806
    
    
    
    Net cash used in investing activities
    
    
    (181,346
    )
    
    
    2,201,823Cash flows from financing activitiesPayment of bank loans
    
    
    (3,471
    )
    
    
    (781
    )Proceeds from issue of equity shares
    
    
    
    
    
    
    160,641Net cash (used in)/ provided by financing activities
    
    
    (3,471
    )
    
    
    159,860Net decrease in cash
    
    
    (188
    )
    
    
    (305,827
    )Cash at the beginning of the year
    
    
    93,927
    
    
    
    399,754Cash at the end of the year
    
    
    93,739
    
    
    
    93,927Supplementary information:Cash paid for:Interest
    
    
    1,893
    
    
    
    570Taxes
    
    
    91,875
    
    
    
    64,051
  See accompanying notes to consolidated financial statements
 9




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Notes to the Consolidated Financial Statements
 1.
    
    Organization and Nature of BusinessMan Financial-Sify Securities India Private Limited (formerly Refco-Sify Securities
India Private Limited) (the Company) was incorporated on 29 December 1999 as a private
limited company under the Indian Companies Act 1956.The Company is a joint venture between Man Financial Holding Limited, UK, and Sify Limited,
India with 70.15% and 29.85% share respectively. Man Financial Holding Limited became the
holding company of the Company by virtue of the acquisition of 70.15% of the total equity
share capital from Refco Group Inc.,USA (Refco).The principal activity of the Company is to act as a stock and commodity broker for foreign
institutional investors (FIIs), mutual funds, domestic financial institutions and retail
investors. The Company also acts as a depository participant and provides depository
services to foreign institutional investors (FIIs), mutual funds, domestic financial
institutions and retail investors.2.
    
    Significant accounting policiesBasis of presentationThe accompanying financial statements have been prepared in accordance with United States
generally accepted accounting principles (U.S. GAAP).Use of EstimatesIn conformity with U.S. GAAP, management of the Company has made a number of estimates and
assumptions relating to the reporting of assets, liabilities, revenues and expenses, and
the disclosure of contingent assets and liabilities to prepare these consolidated financial
statements. Some of the more significant estimates include allowances for doubtful
accounts, depreciation of assets, valuation allowance for deferred tax assets and valuation
of memberships in exchanges. Actual results could differ from those estimates.Principles of consolidationThe consolidated financial statements of Man Financial-Sify Securities India Private
Limited include the amounts of the Company and all of its majority-owned subsidiaries,
where Man Financial-Sify Securities India Private Limited is able to exercise control over
the operating and financial policies of the investees. All significant inter-company
accounts and transactions are eliminated on consolidation.Securities TransactionsThe Company executes transactions on behalf of its clients and does not trade on its own
account. Transactions executed as agents for customers are recorded on trade date basis.
The Commission income and related expenses are reported on the trade date basis.
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Amounts receivable and payable for securities transactions that have not reached their
contracted settlement date are recorded net on the statement of financial condition.Marketable securities are valued at market value and securities not readily marketableare valued at fair value as determined by management.RevenueCommission, Clearing fees and related expenses are recorded on a trade-date basis as
securities transactions occur.Interest income and depository fees are recognized on an accrual basis.Foreign Currencies transactionsThe consolidated financial statements are reported in Indian Rupees (Rs), the national
currency of India, which is also the functional currency of the Company. Assets and
liabilities denominated in foreign currencies are expressed in the functional currency at the
rates of exchange as of the balance sheet date. The unrealized gain or loss resulting from
this translation is reflected in the statements of income. Income and expenses in foreign
currencies are expressed in the functional currency at exchange rates prevailing when income
is earned or expenses are incurred.Furniture and equipmentFurniture and equipments are stated at cost of acquisition less accumulated depreciation
thereon. Cost includes all expenses incidental to the acquisition of fixed assets, while
maintenance and repairs are charged to expense when incurred.Depreciation is provided over the estimated useful lives of the assets on the
double-declining balance method.Capitalized costs of computer software obtained for internal use represent costs incurred to
purchase computer software from third parties. Capitalized costs are amortized on a
straight line basis over the estimated useful life of the software.
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Exchange membership rightsThe Company has recognised the Exchange Membership Rights of Bombay Stock Exchange
Limited (BSEL) (initial Membership Card of The Stock Exchange, Mumbai) as an intangible.
The Exchange Membership Rights are amortised over their respective estimated useful lives to
their estimated residual values, and reviewed for impairment in accordance with SFAS
Statement No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.Income TaxesIncome taxes are accounted for using the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss carry-forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount considered more
likely than not to be realized.Retirement benefits to employees
 Provident Fund
  Gratuity
 Employers Accounting for Pensions
 12




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3.
    
    Cash-restrictedRestricted cash as of March 31, 2006 includes fixed deposits of Rs 750,615 thousands (Rs
474,489 thousands as at March 31, 2005) placed with banks as margins for bank guarantees
issued to clearing organisations and fixed deposits of Rs 288,500 thousands (Rs 421,244
thousands as at March 31, 2005) specifically earmarked as liens to clearing organizations
towards margins.4.
    
    Receivable from and Payable to Broker-Dealers and Clearing OrganizationsAmounts receivable from and payable to broker-dealers and clearing organizations at 31
March 2006 consist of the following:
 As of March 31, 20062006
    
    
    
    
    
    
    2005Receivable
    
    
    Payable
    
    
    Receivable
    
    
    PayableUnaudited(Rs. in thousands)Clearing organizations -- Unsettled trade
    
    
    133,898
    
    
    
    83,344
    
    
    
    121,616
    
    
    
    23,358- Margin deposit
    
    
    
    
    
    
    26,960
    
    
    
    
    
    
    
    17,400Broker-Dealer
    
    
    4,403
    
    
    
    255,906
    
    
    
    11,868
    
    
    
    205,496Total
    
    
    138,301
    
    
    
    366,210
    
    
    
    133,484
    
    
    
    246,254
 5.
    
    Receivable From and Payable to CustomersAccounts receivable from and payable to customers include amounts due on cash and margin
transactions. Securities owned by customers are held as collateral for receivables.6.
    
    SecuritiesMarketable securities consist of investments in units of mutual funds. These are
considered to be trading securities and are reported at fair value. Securities not readily
marketable represent investments in equity shares of Bombay Stock Exchange Limited, obtained
by the Company pursuant to the exchange transaction explained in Note 7.
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7.
    
    Membership in ExchangesExchange Membership Rights to the BSEL consists of a trading right (intangible) which
represents right to conduct business on the exchange and equity shares of the exchange
(securities not readily marketable), which represents ownership rights.The Company acquired the BSE membership rights on 6 December 2000. This was classified as an
intangible asset and is being amortised over a period of 10 years, the useful life as
estimated by the management.During the year, The Bombay Stock Exchange (Corporatisation and Demutualisation) Scheme 2005
(the scheme) was approved by Securities Exchange Board of India (SEBI) (with effect from
19 August 2005 (the due date)) which converted The Stock Exchange, Mumbai (BSE) from an
Association of Person to a corporate body in the name of Bombay Stock Exchange Limited
(BSEL).In accordance with the scheme, the members of the former BSE, in exchange of their initial
BSE membership rights received fresh membership rights of BSEL (i.e. right to trade on BSEL
without placement of cash deposit) as well as equity shares of BSEL.The carrying value of the initial BSE membership rights on the due date in the records of the
Company was Rs 13,570 thousands. Consequent to the corporatisation of BSE, the Company
computed the fair value of the membership rights of BSEL and shares of BSEL as follows:
 Membership rights BSEL
    
    On the basis of the benefits which the Company
would get over the current deposit based
membership right of BSELEquity shares of BSEL
    
    On the basis of the fair value of the equity
shares of BSEL determined by the management
  Carrying Value
    
    
    Fair Value as at
    
    
    Write off to Profitas at 19 August 2005
    
    
    19 August 2005
    
    
    & Loss Account(Rs in thousands)
    
    
    (Rs in thousands)
    
    
    (Rs in thousands)Initial BSE Membership Card
    
    
    13,570
    
    
    
    4,673
    
    
    
    8,897Shares in BSE Limited at cost
    
    
    
    
    
    
    2,917
    
    
    
    (2,917
    )Total
    
    
    13,570
    
    
    
    7,590
    
    
    
    5,980
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8.
    
    Furniture and equipment
  As of March 31,2006
    
    
    2005Unaudited(Rs. in thousands)Furniture, fixtures and equipment
    
    
    18,323
    
    
    
    10,841Computer hardware and software
    
    
    122,738
    
    
    
    92,295Vehicles
    
    
    6,108
    
    
    
    6,390147,169
    
    
    
    109,526Less : Accumulated depreciation and amortization
    
    
    87,140
    
    
    
    66,231Furniture and equipment-net
    
    
    60,029
    
    
    
    43,295
 9.
    
    Other assets
  As of March 31,2006
    
    
    2005Unaudited(Rs in thousands)Interest accrued but not due
    
    
    27,034
    
    
    
    14,557Prepaid expenses
    
    
    20,901
    
    
    
    14,161Advance-tax net of provision for tax
    
    
    31,948
    
    
    
    16,036Loans to staff
    
    
    1,905
    
    
    
    3,195Others
    
    
    7,831
    
    
    
    6,220Total
    
    
    89,619
    
    
    
    54,169
 10.
    
    Accounts payable, accrued expenses and other liabilities
  As of March 312006
    
    
    2005Unaudited(Rs in thousands)Accrued expenses
    
    
    97,457
    
    
    
    69,104Withholding tax payable
    
    
    30,394
    
    
    
    21,752Provision for Gratuity
    
    
    1,404
    
    
    
    2,048Bank overdraft
    
    
    54,547
    
    
    
    25,145Others
    
    
    17,036
    
    
    
    19,713Total
    
    
    200,838
    
    
    
    137,762
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11.
    
    Employee benefits
  As of March 31,2006
    
    
    2005Unaudited(Rs in thousands)Change in benefit obligationsProjected benefit obligations at beginning of the year
    
    
    2,100
    
    
    
    1,233Service cost
    
    
    1,416
    
    
    
    785Interest cost
    
    
    157
    
    
    
    82Benefits payments
    
    
    
    
    
    
    Actuarial (gain)/loss on obligations
    
    
    457
    
    
    
    Projected benefit obligations at the end of the year
    
    
    4,130
    
    
    
    2,100Change in plan assetsFair value of plan assets at beginning of the year
    
    
    
    
    
    
    Return on plan assets
    
    
    
    
    
    
    Employer contributions
    
    
    2,264
    
    
    
    Actual benefits paid
    
    
    
    
    
    
    Plan assets at the end of the year
    
    
    2,264
    
    
    
    Funded status
    
    
    (1,866
    )
    
    
    (2,100
    )Unrecognized actuarial loss
    
    
    
    
    
    
    Net prepaid (accrued) gratuity cost
    
    
    (1,866
    )
    
    
    Accumulated benefit obligation
    
    
    1,341
    
    
    
    1,181
  As of March 31,2006
    
    
    2005Unaudited(Rs. in thousands)Service cost
    
    
    1,416
    
    
    
    785Interest cost
    
    
    157
    
    
    
    82Expected return on assets
    
    
    
    
    
    
    Net gratuity cost
    
    
    1,573
    
    
    
    867
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As of March 31,2006
    
    
    2005UnauditedDiscount rate
    
    
    7.50
    %
    
    
    7.00
    %Rate of increase in compensation levels
    
    
    6.00
    %
    
    
    5.00
    %Rate of return on plan assets
    
    
    7.50
    %
    
    
    7.00
    %
  Investment strategy for plan assets maintained by the LIC
   (Rs. inthousands)Future estimated payments during the year ending March 31,2007
    
    
    692008
    
    
    1202009
    
    
    3862010
    
    
    7302011
    
    
    1,074Thereafter
    
    
    8,426Total
    
    
    10,805
  Provident fund
  17




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12.
    
    Income taxes
 Components of the deferred tax balances
   As of March 31,2006
    
    
    2005Unaudited(Rs. in thousands)Deferred tax assetsFurniture and equipment
    
    
    12,185
    
    
    
    18,024Allowances for Debtors
    
    
    1,009
    
    
    
    168Gratuity
    
    
    470
    
    
    
    690Membership in exchanges
    
    
    3,881
    
    
    
    2,27217,545
    
    
    
    21,154Valuation allowance
    
    
    (3,881
    )
    
    
    (2,272
    )Total deferred tax asset
    
    
    13,664
    
    
    
    18,882Deferred tax liabilityUndistributed earnings of subsidiaries
    
    
    8,441
    
    
    
    1,248Net deferred tax asset/(liability)
    
    
    5,223
    
    
    
    17,634
    18




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Year ended March 31,2006
    
    2005Unaudited(Rs in thousands)Income before income taxes
    
    
    218,464
    
    
    
    162,148Statutory tax rate
    
    
    33.66
    %
    
    
    36.59
    %Income tax expense at the statutory tax rate
    
    
    73,534
    
    
    
    59,330Increase/(reduction) in taxes on account of:Loss on misdeal
    
    
    2,446
    
    
    
    Change in valuation allowance
    
    
    1,609
    
    
    
    524Changes in statutory tax rate
    
    
    
    
    
    
    1,751Income charged at rates other than statutory tax rate
    
    
    804
    
    
    
    263Fringe benefit tax
    
    
    994
    
    
    
    Tax on undistributed earnings of subsidiaries
    
    
    7,192
    
    
    
    1,248Others
    
    
    1,792
    
    
    
    5Income tax expense reported
    
    
    88,371
    
    
    
    63,121
 Components of income tax expense/(benefit) from continuing operations
  Year ended March 31,2006
    
    2005Unaudited(Rs. in thousands)Current
    
    
    75,960
    
    
    
    52,450Deferred
    
    
    12,411
    
    
    
    10,671Income tax expense/(benefit) reported
    
    
    88,371
    
    
    
    63,121
  13.
    
    Stockholders equity
  19




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##### Table of Contents



14.
    
    Financial Instruments
 Financial Instruments With Off-Balance-Sheet Risk
    Concentrations of Credit Risk
  20




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15.
    
    Commitments and Contingent LiabilitiesOperating Lease CommitmentsThe Company and its subsidiaries have obligations under long term operating leases with
initial noncancelable terms in excess of one year. Aggregate annual rentals for office space
at March 31, 2006, are approximately as listed below:
  Rs. inthousandsLease rental commitments for the years ending March 31,2007
    
    
    18,0362008
    
    
    16,5722009
    
    
    5,5302010
    
    
    Thereafter
    
    
    Total minimum lease commitments
    
    
    40,138
 Rent expense for the current year aggregated to Rs 11,878 thousands and is included in the
occupancy expense line item on the Consolidated Statement of Income.GuaranteesFASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, requires the Company to
disclose information about its obligations under certain guarantee arrangements and to record
a liability at inception of the guarantee. FIN 45 defines guarantees as contracts and
indemnification agreements that contingently require a guarantor to make payments to the
guaranteed party based on changes in an underlying (such as an interest or foreign exchange
rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified
event) related to an asset, liability or equity security of a guaranteed party. FIN 45 also
defines guarantees as contracts that contingently require the guarantor to make payments to
the guaranteed party based on another entitys failure to perform under an agreement as well
as indirect guarantees of the indebtedness of others.The Company has outstanding financial guarantees granted on behalf of its subsidiary Man
Financial Commodities, for statutory purposes. These guarantees are provided to trading
exchanges. The current carrying amount of the liability and the maximum potential amount of
future payments the Company could be required to make under the guarantee amounts to Rs
95,000 thousands as of March 31, 2006 (Rs 95,000 thousands as of March 31, 2005).Exchange Member GuaranteesThe Company is a member of various exchanges that trade and clear securities, commodities
and/or futures contracts. Associated with its membership, the Company may be required to pay
a proportionate share of the financial obligations of another member who may default on its
obligations to the exchange. While the rules governing different exchange memberships vary,
in general the Companys guarantee obligations would be restricted only to the extent of
amounts due/receivable from the Exchange and would arise only if the exchange had previously
exhausted its resources. In addition, any such guarantee obligation would be apportioned
among the other non-defaulting members of the exchange. Any potential contingent liability
under these membership agreements cannot be estimated. The Company has not recorded any
contingent liability in the consolidated financial statements for these agreements and
believes that any potential requirement to make payments under these agreements is remote.
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##### Table of Contents



16.
    
    Related party transactionsThe Company has entered into transactions with the following related parties:
 
    
    Significant stakeholders;
    
    Affiliates of significant stakeholders; and
    
    Employees/Directors of the Company.
 Other IncomeOther income includes service fee income and reimbursement for rent and electricity expenses
of Rs 4,329 thousands (Rs 240 thousands during March 31, 2005) received from affiliates of
significant stakeholders.Other ExpensesOther expenses include internet expenses of Rs 1,399 thousands (Rs 7,459 thousand during
March 31, 2005) paid to significant stakeholder-SIFY.Due from affiliates of significant stakeholdersBalances with affiliates of significant stakeholders as of March 31, 2006 amounts to Rs 73
thousands (Rs. 646 thousands as of March 31, 2005) representing amount receivable for common
expenses.Due from EmployeesThe Company has advanced general purpose loans to employees bearing interest rates of 4% per
annum, with an average tenure of 1 year. The loans are generally secured by the assets
acquired by the employees. Employee loan balances outstanding as of March 31, 2006 was Rs
1,905 thousands (Rs 3,195 thousands as of March 31, 2005) are included in other assets. The
interest income of these loans amounts to Rs 128 thousands for the year ended 31 March 2006
(Rs 64 thousands for the year ended 31 March 2005)RentDuring the year ended March 31, 2006, the Company paid rent for premises to immediate
families of management personnel amounting to Rs. 996 thousands (Rs.1,055 thousand during
March 31, 2005).17.
    
    Fair Value of Financial InstrumentsCash, Deposits with clearing organizations, receivable/payables to broker-dealers and
clearing organizations, accounts payable, accrued expenses and other liabilities,
receivable/payable to customers approximate fair value because of short term maturity of
these instruments.Securities owned are reported at fair value.
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##### Table of Contents



Item 19. Exhibits
 Number
    
    Description1.1
    
    Amended Articles of Association of Sify Limited. (1)1.2
    
    Memorandum of Association of Sify Limited. (2)1.3
    
    Amendment of Memorandum of Association. (3)2.1
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Limited, Citibank, N.A. and holders from time
to time of American Depositary Receipts issued thereunder (including, as an exhibit, the form of American
Depositary Receipt). (4)2.2
    
    Amendment No. 1 to Deposit Agreement among Sify Limited, Citibank, N.A. and holders from time to time of
American Depositary Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (4)2.3
    
    Amendment No. 2 to Deposit Agreement among Sify Limited, Citibank, N.A. and holders from time to time of
American Depositary Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (5)2.4
    
    Subscription Agreement dated November 10, 2005 between Sify Limited and Infinity Capital Ventures, LP. (9)2.5
    
    Standstill Agreement dated November 10, 2005 by and among Sify Limited, Infinity Capital Ventures, LP and
Mr Raju Vegesna. (9)2.6
    
    Shareholders Agreement dated December 20, 2005 between Sify Limited, Infinity Satcom Universal (P)
Limited, and Sify Communications Limited. (10)2.7
    
    Shareholders Agreement dated November 25, 2005 between Sify Limited and Man Financial. (11)4.1
    
    Associate Stock Option Plan 2000 (6)4.2
    
    Associate Stock Option Plan 2002 (6)4.3
    
    Associate Stock Option Plan 2005 (12)4.4
    
    Form of Indemnification Agreement. (7)4.5
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1,
2002 by and between Sify Limited and the Government of India, Ministry of Communications and Information
Technology, Department of Telecommunications, Telecom Commission. (3)4.6
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.7
    
    Agreement, dated November 10, 2004, between Sify Limited, Satyam Computer Services Limited, SAIF
Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8)8.1
    
    List of Subsidiaries. (12)11.1
    
    Code of Conduct and Conflict of Interest Policy (6)12.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer12.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer13.1
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    Section 1350 Certification of Chief Financial Officer15.1
    
    Consent of KPMG (12)15.2
    
    Consent of KPMG
 
 (1)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
February 17, 2005 and incorporated herein by reference.(2)
    
    Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1
filed with the Commission on October 4, 1999 and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
July 1, 2002 and incorporated herein by reference.(4)
    
    Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with
the Commission on January 5, 2000 and incorporated herein by reference.(5)
    
    Previously filed as an exhibit to the Registration Statement on Form S-8 (File No.
333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference.(6)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
June 29, 2004 and incorporated herein by reference.(7)
    
    Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2
filed with the Commission on October 13, 1999 and incorporated herein by reference.(8)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
November 30, 2004 and incorporated herein by reference.(9)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
November 21, 2005 and incorporated herein by reference.(10)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
December 7, 2005 and incorporated herein by reference.(11)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
December 23, 2005 and incorporated herein by reference.(12)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
June 30, 2006 and incorporated herein by reference.




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##### Table of Contents



SIGNATURES
  SIFY LIMITEDBy:
    /s/ Raju VegesnaName:
    Raju VegesnaTitle:
    Chief Executive Officer & Managing DirectorBy:
    /s/ Durgesh MehtaName:
    Durgesh MehtaTitle:
    Chief Financial Officer




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##### Table of Contents



Exhibit Index
 Number
    
    Description1.1
    
    Amended Articles of Association of Sify Limited. (1)1.2
    
    Memorandum of Association of Sify Limited. (2)1.3
    
    Amendment of Memorandum of Association. (3)2.1
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Limited, Citibank, N.A. and holders from time
to time of American Depositary Receipts issued thereunder (including, as an exhibit, the form of American
Depositary Receipt). (4)2.2
    
    Amendment No. 1 to Deposit Agreement among Sify Limited, Citibank, N.A. and holders from time to time of
American Depositary Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (4)2.3
    
    Amendment No. 2 to Deposit Agreement among Sify Limited, Citibank, N.A. and holders from time to time of
American Depositary Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (5)2.4
    
    Subscription Agreement dated November 10, 2005 between Sify Limited and Infinity Capital Ventures, LP. (9)2.5
    
    Standstill Agreement dated November 10, 2005 by and among Sify Limited, Infinity Capital Ventures, LP and
Mr Raju Vegesna. (9)2.6
    
    Shareholders Agreement dated December 20, 2005 between Sify Limited, Infinity Satcom Universal (P)
Limited, and Sify Communications Limited. (10)2.7
    
    Shareholders Agreement dated November 25, 2005 between Sify Limited and Man Financial. (11)4.1
    
    Associate Stock Option Plan 2000 (6)4.2
    
    Associate Stock Option Plan 2002 (6)4.3
    
    Associate Stock Option Plan 2005 (12)4.4
    
    Form of Indemnification Agreement. (7)4.5
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1,
2002 by and between Sify Limited and the Government of India, Ministry of Communications and Information
Technology, Department of Telecommunications, Telecom Commission. (3)4.6
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.7
    
    Agreement, dated November 10, 2004, between Sify Limited, Satyam Computer Services Limited, SAIF
Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8)8.1
    
    List of Subsidiaries. (12)11.1
    
    Code of Conduct and Conflict of Interest Policy (6)12.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer12.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer13.1
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    Section 1350 Certification of Chief Financial Officer15.1
    
    Consent of KPMG (12)15.2
    
    Consent of KPMG
 
 (1)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
February 17, 2005 and incorporated herein by reference.(2)
    
    Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1
filed with the Commission on October 4, 1999 and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
July 1, 2002 and incorporated herein by reference.(4)
    
    Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with
the Commission on January 5, 2000 and incorporated herein by reference.(5)
    
    Previously filed as an exhibit to the Registration Statement on Form S-8 (File No.
333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference.(6)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
June 29, 2004 and incorporated herein by reference.(7)
    
    Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2
filed with the Commission on October 13, 1999 and incorporated herein by reference.(8)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
November 30, 2004 and incorporated herein by reference.(9)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
November 21, 2005 at incorporated herein by reference.(10)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
December 7, 2005 and incorporated herein by reference.(11)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
December 23, 2005 and incorporated herein by reference.(12)
    
    Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on
June 30, 2006 and incorporated herein by reference.