UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 20-F
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION12(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, 2008.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
1934.For the transition period fromtoo
    
    SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.Date of event requiring this shell company report
 Commission file number 000-27663
 Sify Technologies Limited
 
 
 
 
 Securities registered or to be registered pursuant to Section 12(b) of the ActTitle of each class
    
    Name of each exchange on which registeredNone
    
    Not ApplicableSecurities registered or to be registered pursuant to Section 12(g) of the ActTitle of each class
    
    Name of each exchange on which registeredAmerican Depositary Shares,
each representing one Equity Share, par value Rs.10 per share
    
    NASDAQSecurities for which there is a reporting obligation pursuant to Section 15(d) of the ActTitle of each classNone
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Table of Contents
 Item
    
    
    
    PageCurrency of Presentation and Certain Defined Terms
    
    
    3Forward-Looking Statements May Prove Inaccurate
    
    
    4PART I
    
    
    
    
    5Item 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    5Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    5Item 3.
    
    Key Information
    
    
    5Item 4.
    
    Information on the Company
    
    
    22Item 4A.
    
    Unresolved Staff Comments
    
    
    35Item 5.
    
    Operating and Financial Review and Prospects
    
    
    35Item 6.
    
    Directors, Senior Management and Employees
    
    
    46Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    50Item 8.
    
    Financial Information
    
    
    53Item 9.
    
    The Offer and Listing
    
    
    54Item 10.
    
    Additional Information
    
    
    55Item 11.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    68Item 12.
    
    Description of Securities Other Than Equity Securities
    
    
    69PART II
    
    
    
    
    69Item 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    69Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    69Item 15.
    
    Controls and Procedures
    
    
    70Item 16A.
    
    Audit Committee Financial Expert
    
    
    72Item 16B.
    
    Code of Ethics
    
    
    72Item 16C.
    
    Principal Accountant Fees and Services
    
    
    72Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    73Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    73PART III
    
    
    
    
    73Item 17.
    
    Financial Statements
    
    
    73Item 18.
    
    Financial Statements
    
    
    73Item 19.
    
    Exhibits
    
    
    161
  2




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Currency of Presentation and Certain Defined Terms
 Online
   www.sifycorp.com
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Forward-Looking Statements May Prove Inaccurate
 WWW.SEC.GOV
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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers.
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 Selected Financial Data
       5




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Year ended March 31,
    
    
    Year ended March 31,Particulars
    
    2008
    
    
    2007
    
    
    2008(In thousands, except share
    
    
    
    
    
    
    
    
    
    Convenienceand per share data)
    
    
    
    
    
    
    
    
    
    translation into US$(see note 1 below)Consolidated income statementRevenues
    
    
    6,006,215
    
    
    
    5,444,853
    
    
    
    150,080Revenue from related parties
    
    
    -
    
    
    
    2,494
    
    
    
    -Total Revenue
    
    
    6,006,215
    
    
    
    5,447,347
    
    
    
    150,080Cost of goods sold and
services rendered
    
    
    3,419,122
    
    
    
    2,939,329
    
    
    
    85,438Selling, general and
administrative expenses
    
    
    2,434,715
    
    
    
    2,094,971
    
    
    
    60,838Depreciation and amortization
expenses
    
    
    394,337
    
    
    
    463,780
    
    
    
    9,854Other income, net (4)
    
    
    (46,152
    )
    
    
    (66,320
    )
    
    
    (1,153
    )Total operating expenses
    
    
    6,202,022
    
    
    
    5,431,760
    
    
    
    154,975Operating (loss) / profit
    
    
    (195,807
    )
    
    
    (15,587
    )
    
    
    (4,895
    )Net finance income
    
    
    104,101
    
    
    
    128,642
    
    
    
    2,603Share of profit of equity
accounted investee (net of
income tax)
    
    
    181,127
    
    
    
    61,030
    
    
    
    4,526Profit / (Loss) before income
taxes and minority interest
    
    
    89,421
    
    
    
    205,259
    
    
    
    2,232Income taxes
    
    
    63,975
    
    
    
    (66,113
    )
    
    
    1,599Profit / (Loss) before
minority interest
    
    
    25,446
    
    
    
    271,372
    
    
    
    633Minority interest
    
    
    30,142
    
    
    
    30,531
    
    
    
    752Net (loss) / Profit
    
    
    (4,696
    )
    
    
    240,841
    
    
    
    (119
    )Net (loss)/Profit per share (2)- Basic
    
    
    (0.11
    )
    
    
    5.64
    
    
    
    (0.003
    )- Diluted
    
    
    (0.11
    )
    
    
    5.63
    
    
    
    (0.003
    )Weighted-average number of
equity shares used in
computing earnings per equity
share- Basic
    
    
    42,877,726
    
    
    
    42,704,619
    
    
    
    42,877,726- Diluted
    
    
    43,039,675
    
    
    
    42,792,514
    
    
    
    43,039,675
 6




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Particulars
    
    Indian Rupees(1)
    
    
    Conveniencetranslation intoUS$March 31,
    
    
    (see note 2 below)(In thousands, except share and per share data)
    
    2008
    
    
    2007
    
    
    2008Balance Sheet data:Cash and cash equivalents
    
    
    1,507,327
    
    
    
    3,071,157
    
    
    
    37,664Total assets
    
    
    7,710,760
    
    
    
    7,321,891
    
    
    
    192,673Total equity attributable to equity
shareholders of the Company
    
    
    4,694,984
    
    
    
    4,538,906
    
    
    
    117,316Cash Flow DataNet cash provided by (used in):Operating activities
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (20,987
    )Investing activities
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (18,898
    )Financing activities
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    (14,622
    )Other
Financial Data 
Reconciliation of Adjusted EBITDA
to net profit / (loss)Adjusted EBITDA from operations (3)
    
    
    379,658
    
    
    
    540,397
    
    
    
    9,487Add: Interest income
    
    
    161,783
    
    
    
    154,192
    
    
    
    4,043Less: Depreciation and amortization
    
    
    394,337
    
    
    
    463,780
    
    
    
    9,854Less: Interest expense
    
    
    57,682
    
    
    
    25,550
    
    
    
    1,440Less: Income tax expense / (benefit)
    
    
    63,975
    
    
    
    (66,113
    )
    
    
    1,599Net Profit / (loss)
    
    
    25,446
    
    
    
    271,372
    
    
    
    633
 Notes
 1.
    
    Convenience translation to U.S. Dollars done at the noon buying rate on March 31, 2008 of
Rs.40.02 per $1.00, which should not be construed as a representation that those Indian rupee
or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Indian
rupees, as the case may be, at this rate or at all.2.
    
    Reference to shares and per share amounts refer to our equity shares. Our outstanding equity shares include equity shares held by a depositary underlying our ADSs. [Effective September
24, 2002, one ADS represented one equity share].3.
    
    Adjusted EBITDA from continuing operations represents earnings (loss) from continuing
operations before interest, taxes, depreciation and amortization.4.
    
    Refer to note 28 of the financial statements for the components of other income.
 7




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Exchange Rates
  Month
    
    High
    
    LowRs.
    
    Rs.January 2008
    
    
    39.55
    
    
    
    39.13February 2008
    
    
    40.11
    
    
    
    39.12March 2008
    
    
    40.46
    
    
    
    39.76April 2008
    
    
    40.45
    
    
    
    39.73May 2008
    
    
    42.93
    
    
    
    40.45June 2008
    
    
    42.97
    
    
    
    42.38July 2008
    
    
    43.29
    
    
    
    41.10August 2008
    
    
    43.74
    
    
    
    42.01
  Fiscal Year EndedMarch 31
    
    Period
    
    Average
    
    High
    
    LowendRs.
    
    Rs.
    
    Rs.
    
    Rs.2004
    
    
    43.40
    
    
    
    43.46
    
    
    
    47.46
    
    
    
    43.402005
    
    
    43.62
    
    
    
    44.86
    
    
    
    46.45
    
    
    
    43.272006
    
    
    44.48
    
    
    
    44.34
    
    
    
    44.58
    
    
    
    44.092007
    
    
    43.10
    
    
    
    45.12
    
    
    
    46.83
    
    
    
    42.782008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.48
  Capitalization and indebtedness
  Reasons for the offer and use of proceeds
  8




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RISK FACTORS
 The following risk factors, among others, could cause actual results to differ materially from
those contained in forward-looking statements in this Annual Report on Form 20-F for the year ended
March 31, 2008. Such factors, among others, could have a material adverse effect upon our
business, results of operations and financial condition. This could cause the trading price of our
ADSs to decline and a loss of all or part of your investment.
 Please refer to the discussion of Forward-Looking Statements on page 5 of this Annual Report
on Form 20-F in connection with your consideration of the risk factors and other important factors
that may affect future results described below.
 Risks Related to Sify Technologies Limited
 We have added a number of new lines of business in the last five years, including the operation
and licensing of public Internet cafés, as well as the provision of broadband services,
security services, e-learning software development services, managed network services and
infrastructure management services. It is therefore difficult to evaluate our company based
on our historical results of operations.
  
    
    continue to develop and upgrade our technology;
    
    maintain and develop strategic relationships with business partners;
    
    offer compelling online services and content; and
    
    promptly address the challenges faced by early stage companies, which do not have an
experience or performance base to draw on.
  For the fiscal year ended March 31, 2008, we incurred net losses of Rs. 4.696 million and for
the fiscal year ended 31 March, 2007 we made net profit of Rs. 240.841 million. We may incur
additional losses in the future because our business plan inter alia calls for additional
corporate customers and subscribers to maintain profitability and failure to attract such
corporate customers may adversely affect our business and result of operations.
  We may be required to further modify the rates we charge for our services in response to new
pricing models introduced by new and existing competition which would significantly affect our
revenues.
  9




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We are required to comply with certain conditions imposed by the Government of India or GOI in
connection with the National Long Distance/International Long Distance or NLD/ILD licenses
issued to Sify Communications Limited (Sify Comm), our subsidiary company, on a continuous
basis during the validity of the licence period.
  
    
    Sify Comm is required to ensure that the foreign holding does not exceed 74% of its
outstanding capital, which is the threshold limit of Foreign Direct Investment for the
Telecom sector.
    
    The Managing Director, Chief Technical Officer and Chief Financial Officer shall be
resident Indian citizens.
    
    Sify Comm shall maintain its net worth as well as paid up capital of Rs.250 million.
    
    Sify Comm shall pay an annual fee at 6% of the Adjusted Gross Revenue to Department of
Telecommunications or DOT.
    
    In addition to the above, Sify Comm is required to furnish all information to DOT and
Telecom Regulatory Authority of India or TRAI.
 Our marketing campaign to establish brand recognition and loyalty for the Sify Broadband, Sify
Max , Sify and iway brands could be unsuccessful, which could adversely affect our business and
results of operations.
 iway
 If our efforts to retain our customers through past investment in network infrastructure and
ongoing investment in online content offerings and customer and technical support are
unsuccessful, our revenues will decrease without a corresponding reduction in costs.
  10




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Despite the companys best efforts to optimize costs, our future operating results could
fluctuate in part because our expenses are relatively fixed in the short term while future
revenues are uncertain, and any adverse fluctuations could negatively impact the price of our
ADSs.
  
    
    the range of corporate network/data services provided by us and the usage thereof by
our customers;
    
    the number of subscribers to our ISP services and the prevailing prices charged.
    
    advertising revenue generated by our online portal services.
    
    the timing and nature of any agreements we enter into with strategic partners of our
corporate network/data services division;
    
    services, products or pricing policies introduced by our competitors;
    
    capital expenditure and other costs relating to our operations;
    
    the timing and nature of our marketing efforts;
    
    our ability to successfully integrate operations and technologies from any
acquisitions, joint ventures or other business combinations or investments;
    
    the introduction of alternative technologies; and
    
    technical difficulties or system failures affecting the telecommunication
infrastructure in India, the Internet generally or the operation of our websites.
   We lack full redundancy for our computer systems and a system failure could prevent us from
operating our business for a significant time, which could have an adverse effect on our
business and results of operations.
   11




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Security breaches could damage our reputation or result in liability to us.
   Over the past several years we have experienced significant growth, and continuing this pace of
growth could put excessive strain on our resources, which in turn could adversely affect our
results of operations.
  We face a competitive labor market for skilled personnel and therefore are highly dependent on
our existing key personnel and on our ability to hire additional skilled employees.
  The failure to keep our technical knowledge confidential could erode our competitive
advantage.
  12




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Compliance with new and changing corporate governance and public disclosure requirements adds
uncertainty to our compliance policies and increases our costs of compliance.
  We may inadvertently fail to comply with local laws of other countries in connection with the
negotiation and execution of operational agreements.
  If there is an adverse outcome in the class action litigation that has been filed against us,
our business may be harmed.
 In re Satyam Infoway Ltd.
 We face risks associated with potential acquisitions, investments, strategic partnerships or
other ventures, including whether any such transactions can be identified, completed and the
other party integrated with our business on favorable terms.
  13




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Our financial results are impacted by the financial results of entities that we do not
control.
  Our inter-city network is leased from other service providers and is dependent on their
quality and availability.
  A significant majority of the iway cybercafés are franchised operations that we do not operate
or control. We also provide Internet access services through a network of Cable Television
Operators, or CTOs, whom we do not control.
 iway
 The legal system in India does not protect intellectual property rights to the same extent as
the legal system of the United States, and we may be unsuccessful in protecting our
intellectual property rights.
    14




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Our current infrastructure and its scalability may not accommodate increased use while
maintaining acceptable overall performance.
  Success of the acquired on line travel business in the United States depends on various
factors, and to a large extent, beyond our control.
  
    
    How quickly we integrate an airlines on line platform for ticketing;
    
    Our ability to quickly improve our online sales in the United States;
    
    The growth of the tourism and the hospitality industry;
    
    The threat of terrorism and outbreak of any epidemic;
    
    Lost revenue from credit card fraud.
  We do not plan to pay dividends in the foreseeable future.
  Risks Related to the ADSs and Our Trading Market
 The
interests of our significant shareholder, Infinity Capital Ventures, L.P., USA (Infinity
Capital) may differ from your interests.
  
    
    altering our Articles of Association;
    
    issuing additional shares of capital stock, except for pro rata issuances to existing
shareholders;
    
    commencing any new line of business; and
    
    commencing a liquidation.
  15




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Holders of ADSs are restricted in their ability to exercise preemptive rights under Indian law
and thereby may suffer future dilution of their ownership position.
   Holders of ADSs may be restricted in their ability to exercise voting rights and the
information provided with respect to shareholder meetings.
    The market price of our ADSs has been and may continue to be highly volatile.
  
    
    perception of the level of political and economic stability in India;
    
    actual or anticipated variations in our quarterly operating results;
    
    announcement of technological innovations;
    
    conditions or trends in the corporate network/data services, Internet and electronic
commerce industries;
 16




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
    
    the competitive and pricing environment for corporate network/data services and Internet
access services in India and the related cost and availability of bandwidth;
    
    the perceived attractiveness of investment in Indian companies;
    
    acquisitions and alliances by us or others in the industry;
    
    changes in estimates of our performance or recommendations by financial analysts;
    
    market conditions in the industry and the economy as a whole;
    
    introduction of new services by us or our competitors;
    
    changes in the market valuations of other Internet service companies;
    
    announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
    
    our failure to integrate successfully our operations with those of any acquired
companies;
    
    additions or departures of key personnel; and
    
    other events or factors, many of which are beyond our control.
  We may not be able to maintain our Nasdaq Global Market listing.
  An active or liquid market for the ADSs is not assured.
  The future sales of securities by our company or existing shareholders may reduce the price of
our ADSs.
  Forward-looking statements contained in this report may not be realized.
  17




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Risks Related to Investments in Indian Companies
  Political instability in India and around the world could halt or delay the liberalization of
the Indian economy and adversely affect business and economic conditions in India generally and
our business in particular.
  Conflicts in South Asia and terrorist attacks in the United States, South Asia and around the
world could adversely affect the economy and cause our business to suffer.
  We are subject to foreign investment restrictions under Indian law that limit our ability to
attract foreign investors which, together with the lack of a public market for our equity
shares, may adversely impact the value of our ADSs.
   Because we operate our business in India, exchange rate fluctuations may affect the value of
our ADSs independent of our operating results.
  18




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The Government of India may change its regulation of our business or the terms of our license
to provide Internet access services, Voice over Internet Protocol (VoIP) and VPN services
without our consent, and any such change could decrease our revenues and/or increase our costs,
which would adversely affect our operating results.
    The Government of India has brought out new guidelines for grant of licence for operating
internet services, which is applicable to the new entrants. The Government is also likely to
bring out new guidelines for grant of licence for operating internet services for the existing
licence holders, which may be difficult to comply with by us and any such change could decrease
our revenues and/or increase our costs, which would adversely affect our operating results.
    Changes in Indian income taxes will increase our tax liability and decrease any profits we
might have in the future.
  19




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Risks Related to the Internet Market in India
  The success of our business depends on the acceptance of the Internet in India, which may be
slowed or halted by high bandwidth costs and other technical obstacles in India.
  The limited installed personal computer base in India limits our pool of potential customers
and restricts the amount of revenues that our Internet access services division may generate.
  The high cost of accessing the Internet in India limits our pool of potential customers and
restricts the amount of revenues that our Internet access services division might generate.
  The success of our business depends on the acceptance and growth of electronic commerce in
India, which is uncertain, and, to a large extent, beyond our control.
  
    
    inconsistent quality of service;
    
    the need to deal with multiple and frequently incompatible vendors;
    
    inadequate legal infrastructure relating to electronic commerce in India;
    
    a lack of security of commercial data, such as credit card numbers; and
    
    low number of Indian companies accepting credit card numbers over the Internet.
  20




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Risks Related to the Internet
 We may be liable to third parties for information retrieved from the Internet.
  The success of our strategy depends on our ability to keep pace with technological changes.
  Our business may not be compatible with delivery methods of Internet access services developed
in the future.
  Our service offerings may not be compatible with industry standards developed in the future.
  21




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Item 4. Information on the Company
 History and Development
   www.sify.com
 Online Online Online Online
 iways iways
   Initial Public Offering and Subsequent Financing Transactions
   22




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Investment Strategy
  Sify Networks Private Limited (formerly E Alcatraz Consulting Private Limited)
  Globe Travels, USA.
  Business Overview
  
    
    Corporate Network/Data Services. We offer a suite of technology and network-based services
that provide our corporate customers with comprehensive Internet and private network access.
Our services enable our corporate customers to offer a full range of business-to-business and
electronic commerce related services. We also provide managed infrastructure services and
managed securities services in all aspects of infrastructure services, network security and
hosting, with digital certificates based authentication service.
 23




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
    
    Internet Access Services. We offer dial-up Internet access, e-mail and web page hosting to
consumers in India through convenient online registration and user-friendly software. In
addition, we offer public Internet access to consumers through a retail chain of iway
cybercafés. We also have agreements with certain cable television operators through which we
offer Internet access through cable. As of March 31, 2008, we had approximately 1 million
retail Internet access subscribers.
    
    Online Portal Services. We operate online portals, such as www.sify.com,
www.samachar.com and www.sifymax.in, that function as principal entry points
and gateway for accessing the Internet by providing useful web-related services and links. We
also offer related content sites specifically tailored to Indian interests worldwide.
    
    Other.We facilitate web based learning for various organizations by digitizing and uploading
content to facilitate the same.
 www.sify.com www.sifymax.in www.samachar.com Sify.com
    Industry Overview
 Development of the Internet
 Special Communications Needs of Businesses
 The Opportunity in India
 24




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Sify Business Model
  
    
    End-to-end network solutions for business customers.We provide our business
customers with a comprehensive range of Internet, connectivity, security and
consulting, hosting and managed service solutions complemented by a broad base of
web-based business applications. Our corporate services range from dial-up and
dedicated Internet access, virtual private networks, security, web implementation,
electronic commerce solutions and web hosting. Our end-to-end solutions enable our
corporate customers to address their networking and data communication needs
efficiently without having to assemble products and services from different value-added
resellers, Internet service providers and information technology firms.
    
    National private Internet protocol network backbone and Wireless delivery on
the last mile. We operate a large national Internet protocol data network in India. As
of March 31, 2008, we owned and operated 481 points of presence serving more than 400
cities across India, which we believe represents an estimated 95% of the installed
personal computer base in India. Our network provides the platform for the national
delivery of Internet access to consumers as well as the backbone for our full range of
corporate network/data services. A significant portion of our last mile delivery for
corporates, and almost the entire iway cybercafe network and hispeed / broadband
delivery to homes, is on the wireless mode, thereby enabling us to implement and
deliver superior services compared to the wireline medium.
    
    Internet content and electronic commerce websites customized for the Indian
market. We view the Indian market as a series of specific market segments with unique
cultural and topical interests, rather than an extension of a homogeneous, worldwide
Internet market. We have assembled a team of India-based employees familiar with the
local culture, language and business environments in our markets to develop Internet
content and electronic commerce websites tailored for the Indian market. We regularly
incorporate new and original third-party content suited to our local and regional
audiences to enhance our customers online experience and to attract new users both
within India and abroad. As a result of our local market knowledge, we have been able
to increase traffic flow to our websites and to create brand awareness for our
SifyOnlineaccess service.
    
    Managed Infrastructure services and Managed Security Services. We have customer
engagements in all aspects of infrastructure services, networks security and hosting,
with digital certificates based authentication service. We have experience in providing
information assurance and compliance certification, following frameworks such as
Committee of Sponsoring Organizations of the Treadway Commission (COSO) / Control
Objectives for Information and related Technology (COBIT). We believe that our managed
infrastructure and security services utilise our experience and skill sets to provide
constant value to our customers, better service levels and reduced costs. We constantly
look at ways to efficiently manage customer assets remotely thus providing focused
superior service at lower cost.
 25




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Strategy
  
    
    Invest in the continued enhancement and expansion of our network infrastructure
to support customer growth, enter new markets and accommodate increased customer usage.
We intend to continue to increase the capacity and geographic reach of our network in
order to support subscriber growth, enter new markets and accommodate increased
customer usage. We are committed to using proven technologies and equipment and to
providing superior network performance. We have deployed asynchronous transfer mode, or
ATM, switches on nine points of presence along our network. The rest of our network is
based on Internet Protocol, or IP, and we are the first Indian service provider to have
made our network Multi Protocol Label Switching (MPLS) compliant. As of March 31, 2008,
we had substantial capacity of bandwidth lines, all from major telecommunications
companies . We have also leased intercity links from multiple suppliers including BSNL,
Bharti, Reliance and Power Grid corporation, such that each one of our nodes are
accessible from at least two other nodes, if not by two long distance operators. We
believe that as the size and capacity of our network infrastructure grows, its large
scale and national coverage will create economies of scale. Being vendor neutral, we
are able to procure bandwidth in a cost effective manner.
    
    Increase penetration in our existing markets by expanding awareness of the
Sify brand name to capitalize on our first mover advantage in India.We intend to
capitalize on our first-to-market advantage in India to establish national service and
a brand name in advance of other private competitors. As of March 31, 2008, we had
approximately 1 million retail Internet subscribers and 3,887 cybercafés, of which 34
were owned by us and 3,853 were franchised. Approximately 99% of these iwaysare on
broadband, which provides the user with significantly faster access speeds. Our
marketing strategy includes print, television and radio advertising, direct mailing
campaigns targeting personal computer owners and operating cybercafés. We are also
actively promoting our broadband services to homes through cable television operators.
As of March 31, 2008, we had agreements with more than 1,966 cable television operators
across 136 cities in India. We believe that increased focus on delivery of broadband
services by the Government of India, availability of broadband content, reduced cost of
personal computers and increased purchasing capacity of the middle class in India will
drive this business forward in the future. We are also continuously working on better
alternative wireless technology to overcome the last mile challenges and to offer
superior connectivity to homes.
    
    Expand our services with new technologies to enable our customers to use the
Internet more effectively.We continually seek to expand the breadth of our service
offerings with new technologies. Our cybercafés prominently display the Sify and
SifyOnlinebrands and offer a full range of our Internet connectivity services. We have
previously introduced a number of other services, including VoIP, video conferencing,
e-mail designed for regional Indian dialects, a user customized portal site and
micro-payments
    
    Provide more value added services by leveraging on the rapid growth of wireless
Internet and mobile services in India and strengthen our Internet portal with more
content tailored to Indian interests worldwide.Our portals www.sify.comand
www.samachar.com, function as initial gateways to the Internet, the users starting
point for web browsing and other Internet services, for our consumer Internet service
provider subscribers and cybercafé users. We believe that our portals are media rich
and user friendly, and the portals are interactive websites offering hyperlinks to a
wide variety of websites and services, including our own websites. Our websites cater
to a variety of Indian interests within and outside of India. To achieve our goal of
developing the premier Internet portal focused on the Indian market, we intend to
continue to expand and improve the quality of www.sify.com, and are developing
additional content oriented towards topical and cultural interests of Indians worldwideDuring the course of 2004-05, we also developed a broadband channel, Sify Max, that
provides audio visual content to Sify subscribers including city live visuals relating
to Mumbai, Delhi, Chennai, Bangalore and Hyderabad. We also created a short code 54545
for downloading ring tones and sending SMS to tap the growing mobile user market. To
expand our short code product offering, we are also forming business alliances with
copyright owners and mobile service providers. In addition, we are forming strategic
alliances with several offline media partners to deliver content to our users. As the
availability of Internet access expands in India, we believe that increasing numbers of
Internet users will be attracted to our high quality websites and online content
designed specifically for the Indian consumer. We will seek to attract advertisers,
electronic commerce merchants and third-party content providers trying to reach our
users in order to generate additional revenues for
sify.com.
    
    Expand our customer distribution channels through strategic alliances to take
advantage of the sales and marketing capabilities of our strategic partners.We intend
to continue to expand our customer acquisition
channels, for both our consumer Internet access and corporate network/data services. We
have arrangements with leading personal computer manufacturers to bundle our SifyOnline
Internet access service with the sale of their personal computers in India.
 26




---



##### 




    
    Pursue selective strategic investments, alliances and acquisitions to expand
our customer base, increase utilization of our network and add new technologies to our
service mix.We believe that our growth can be supplemented by selective acquisitions
of complementary businesses. We may seek to expand our market presence in our
corporate network business through the acquisition of web hosting, data center, web
implementation and/or systems integration companies serving India, the United States or
other markets. We will also consider acquisitions of Internet service providers that
have a significant or growing customer base in our current or targeted markets.
    
    Expand into international markets for providing managed network services.Our
network and application level support can be provided remotely with a minimum of
on-site presence. We are seeking to provide these services to international markets.
The tools utilized to provide these services were developed in-house on Linux/open
source platforms, and we plan to upgrade these tools in the future to meet customer
requirements. We expect our expertise in network management, to enable us to perform
these services to international customers at lower costs. We also intend to provide
managed security solutions, including monitoring and vulnerability assessment, in
addition to managed firewall and intrusion detection services.
    
    Superior end-user performance and customer support.We believe that we provide
a high level of customer service, network performance and technical support to maximize
customer satisfaction. A significant number of our employees are engaged in our
customer service or technical support departments, which operate 24-hours-a-day,
seven-days-a-week. Our network engineers continually monitor network traffic and
congestion points to deliver high quality consistent network performance. Our backend
processes are ISO 9001:2000 compliant for network operations, data center operations
and customer care. Our strategy of providing superior network performance and customer
service is designed to result in significant customer growth from referrals and
industry recognition.
 Service Offerings
 Corporate network/data services.
  
    
    SiteConnect (TM) which offers site-to-site managed MPLS-enabled IPVPN solutions for securely
connecting regional and large branch offices within India to the corporate Intranet.
    
    GlobalSiteConnect, an international site-to-site managed MPLS-enabled IPVPN solution, is
used for securely connecting international branch offices to the corporate It provides
connectivity anywhere in the world through Sifys alliances and partnerships with global
overseas service providers such as Global Crossing (GC), Asia Net.Com (ANC), and PCCW Global
to name a few.
    
    ExpressConnect, which offers a premium range of high-performance Internet bandwidth solutions
for connecting regional offices, branch offices and remote locations to the corporate network.
These solutions complement our SiteConnectrange of MPLS enabled IPVPN solutions, provide
high-speed bandwidth in those situations where basic connectivity and cost are the top
concerns
 27




---



##### 




    
    RoamConnect, is our national and international remote access VPN, which is used for securely
connecting employees, while they are traveling, to the corporate intranet. RoamConnect
features single number access to SifyNet from anywhere in the country and provides access
from anywhere in the world through Sifys alliances with overseas service providers such as
Verizon, IPASS and Fiberlink.
    
    PartnerConnect is our remote access VPN offering, for providing secure and restricted dial-up
access to business partners such as dealers, distributors and suppliers to the corporate
extranet.
   Application Services iway
 Security and Assurance Services.
 Data Centers
 Digital Certification
 Remote Management Services
  28




---



##### 



VOIP Services.
 Internet access services
 iway
 Public Internet Access. iway iway iways
 iways iway
 
    
    conducting a market survey and deciding on the best location for the cybercafé;
    
    installing the broadband receiver equipment on the roof of the cybercafé and linking it to
one of our broadcasting towers;
    
    obtaining the regulatory approvals for wireless transmission at the allotted frequency range;
    
    installing the wiring from the receiver unit to the individual personal computers;
    
    assistance in obtaining facilities, including computers and furnishings; and
    
    providing an operations manual with instructions and guidelines for running the cybercafé.
 iway iways iways iways iways
 Sify e-port. iways e-port Xpress
 Voice Over Internet Protocol iways iways
 29




---



##### 



iways Sifytalk
    iways
  Online Portal Services
 www.sifymax.in www.sify.com www.samachar.com www.sifmax.in sify.com Online iway
 www.walletwatch.com www.khel.com www.bawarchi.com
 www.mumbailive.in www.bangalorelive.in www.hyderabadlive.in www.delhilive.in www.chennailive.in
 30




---



##### 



www.samachar.com,
    Corporate Customers
  Customer Service and Technical Support
  Sales and Marketing
 Corporate Offerings
 Consumer Offerings
  Technology and Network Infrastructure
  31




---



##### 



Geographic Coverage
 Network Architecture
   Network Operations Center
 Data Centre Infrastructure.
 Competition
 General
 Corporate Network/Data Services
 Internet Access Services
 iways
 32




---



##### 



Online Portal Services
   
    
    larger production and technical staff;
    
    greater name recognition and larger marketing budgets and resources; and
    
    substantially greater financial, technical and other resources.
  Intellectual Property
     Government Regulation
  33




---



##### 




    
    make recommendations on (i) the need and timing for the introduction of new
service providers, (ii) the terms and conditions of licenses granted to service
providers, (iii) the revocation of licenses for non-compliance, (iv) measures to
facilitate competition and promote efficiency in the operation of telecommunications
services so as to facilitate growth in such services, (v) technological improvements in
the services provided by service providers, (vi) the type of equipment to be used by
service providers, (vii) measures for the development of telecommunications technology
and the telecommunications industry and (viii) the efficient management of the
available spectrum;
    
    discharge the following functions: (i) ensure compliance of the terms and
conditions of licenses, (ii) fix the terms and conditions of interconnectivity between
service providers, (iii) ensure technical compatibility and effective interconnection
between service providers, (iv) regulate revenue sharing arrangements between service
providers, (v) establish standards of quality of service, (vi) establish time periods
for providing local and long distance telecommunications circuits between service
providers, (vii) maintain and keep for public inspection a register of interconnect
agreements and (viii) ensure effective compliance of universal service obligations;
    
    levy fees and other charges at such rates and in respect of such services as
may be determined by regulation; and
    
    perform such other functions as may be entrusted to it by the Government of
India or as may be necessary to carry out the provisions of the Telecom Regulatory
Authority of India Act.
  
    
    to call on service providers to furnish information relating to their
operations;
    
    to appoint persons to make official inquiries;
    
    to inspect the books of service providers; and
    
    to issue directives to service providers to ensure their proper functioning.
    34




---



##### 



th
 Organization Structure
  Property, Plant and Equipment
  
 Item 4A. Unresolved Staff Comments
 None.
 
 Item 5. Operating and Financial Review and Prospects
 The following discussion should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Annual Report. See Risk Factors regarding certain factors
known to Sify that could cause reported financial information not to be necessarily indicative of
future results, including discussions of the risks related to the development of new products and
services, our intellectual property, investments in Indian companies, the Internet and the Internet
market in India.
   
    
    a reconciliation of its equity reported under the previous GAAP (Generally Accepted
Accounting Principles) to its equity under IFRSs for both of the following dates i.e., the
date of transition to IFRS (April 1, 2006) and the end of the latest period presented in the
entitys most recent annual financial statements under previous GAAP (March 31, 2007).
    
    a reconciliation of the income statement under previous GAAP for the latest period.
  Overview
  35




---



##### 



Operating Results
  
    
    corporate network/data services, which include private network services,
messaging services, security services, remote management services and web hosting
for businesses;
    
    Internet access services;
    
    online portal services and content offerings; and
    
    other services, such as development of content for e-learning.
 Revenues
 Corporate network/data services
  Internet access services
  Online portal services and content offerings
 www.sifymall.com
 Other services
   Expenses
 Cost of goods sold and services rendered
 Corporate network/data services
  36




---



##### 



Internet access services
 iways
 Online portal services and content offerings
  Selling, general and administrative expenses
  Depreciation and amortization
  Stock compensation expense
  Results of Operations
 Year ended March 31, 2008 compared to year ended March 31, 2007
 Revenues
 37




---



##### 



Other income
 Cost of goods sold and services rendered
  38




---



##### 



Selling, general and administrative expenses
 Depreciation and Amortisation expenses
 Net finance income
 Share of profit of investment in associate
 39




---



##### 



Income tax expense
 Foreign Exchange Fluctuations and Forwards
  Liquidity and Capital Resources
  2008
    
    2007
    
    2008U.S. DollarsProfit / (loss) before tax
    
    
    89,421
    
    
    
    205,259
    
    
    
    2,232Other adjustments for non-cash items
    
    
    298,076
    
    
    
    503,978
    
    
    
    7,449Income taxes paid
    
    
    (168,426
    )
    
    
    (56,697
    )
    
    
    (4,209
    )Net decrease (increase) in working capital
    
    
    (1,058,940
    )
    
    
    (536,278
    )
    
    
    (26,460
    )Net cash from / (used in) operating activities
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (20,987
    )Net cash from / (used in) investing activities
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (18,898
    )Net cash from / (used in) financing activities
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    (14,622
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    (98
    )    
    
    (8,229
    )
    
    
    (3
    )Net increase / (decrease) in cash and cash equivalents
    
    
    (2,181,369
    )    
    
    255,885
    
    
    
    (54,507
    )
       Research and development
  40




---



##### 



Trends
  Off-balance sheet arrangements
  Contractual obligations
  Payments due by period (Rs 000s)Contractual Obligations
    
    Total
    
    
    Less
    
    
    1-3 years
    
    
    3-5 yearsthan 1 yearLong Term Debt Obligations
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Short term borrowings
    
    
    774,063
    
    
    
    774,063
    
    
    
    -
    
    
    
    -Finance Lease Obligations
    
    
    5,392
    
    
    
    2,899
    
    
    
    2,493
    
    
    
    -Non-cancellable Operating
Lease Obligations
    
    
    380,642
    
    
    
    73,200
    
    
    
    146,201
    
    
    
    161,041Purchase Obligations
    
    
    618,541
    
    
    
    618,541
    
    
    
    -
    
    
    
    -
 Note
    41




---



##### 



Recent Accounting Pronouncements
  
    
    IFRS 8 Operating Segments introduces the management approach to segment reporting,
whereby segment reporting is based on internal management reporting and replaces IAS 14.
IFRS 8 aligns segment reporting with the requirements of the US standard SFAS 131,
Disclosures about segments of an enterprise and related information. IFRS 8 which Sify
early adopted in 2008, will require the disclosure of segment information based on the
internal reports regularly reviewed by the Groups Chief Operating Decision Maker in order
to assess each segments performance and to allocate resources
to them.
    
    Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and
requires that an entity capitalizes borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset as part of the cost of that
asset. The revised IAS 23 will become mandatory for the Groups 2009 financial statements
and will constitute a change in accounting policy for the Group. Sify will not early
adopting IAS 23. The amendment is not expected to have a significant impact on Sify.
    
    IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that
operate, or otherwise participate in, customer loyalty programs for their customers. It
relates to customer loyalty programs under which the customer can redeem credits for awards
such as free or discounted goods or services. IFRIC 13, which becomes mandatory for the
Groups 2009 financial statements, is not expected to have a material impact on the
Consolidated Financial Statements.
    
    IAS 1 Presentation of Financial Statements, applicable for annual periods beginning on
or after January 1, 2009. This Standard permits early adoption except to the extent of
amendment made by IAS 27 (as amended in 2008) in paragraph 106. This Standard would be
adopted, by the Company as at April 1, 2009.
    
    IFRS 3 (Revised), Business Combinations, as amended, is applicable for annual periods
beginning on or after July 1, 2009. Early adoption is permitted. However, this Standard
can be applied only at the beginning of an annual reporting period that begins on or after
June 30, 2007. The Company would adopt this Standard with effect from April 1, 2009. IFRS
3 (Revised) primarily requires the acquisition-related costs to be recognized as period
expenses in accordance with the relevant IFRS. Costs incurred to issue debt or equity
securities are required to be recognized in accordance with IAS 39. Consideration, after
this amendment, would include fair values of all interests previously held by the acquirer.
Re-measurement of such interests to fair value would be required to be carried out through
the income statement. Contingent consideration is required to be recognized at fair value
even if not deemed probable of payment at the date of acquisition.IFRS 3 (Revised) provides an explicit option on a transaction-by-transaction basis, to
measure any Non-controlling interest (NCI) in the entity acquired at fair value of their
proportion of identifiable assets and liabilities or at full fair value. The first method
would result in a marginal difference in the measurement of goodwill from the existing IFRS
3; however the second approach would require recording goodwill on NCI as well as on the
acquired controlling interest.
    
    IAS 27, Consolidated and Separate Financial Statements, as amended, is applicable for
annual periods beginning on or after July 1, 2009. Earlier adoption is permitted provided
IFRS 3 (Revised) is also early adopted. This Standard would be adopted by the company as
at April 1, 2009. It requires a mandatory adoption of economic entity model which treats
all providers of equity capital as shareholders of the entity. Consequently, a partial
disposal of interest in a subsidiary in which the parent company retains control does not
result in a gain or loss but in an increase or decrease in equity. Additionally purchase
of some or all of the NCI is treated as treasury transaction and accounted for in equity
and a partial disposal of interest in a subsidiary in which the parent company loses
control triggers recognition of gain or loss on the entire interest. A gain or loss is
recognized on the portion that has been disposed of and a further holding gain is
recognized on the interest retained, being the difference between the fair value and
carrying value of the interest retained. This Standard requires an entity to attribute
their share of net income and reserves to the NCI even if this results in the NCI having a
deficit balance.
    
    IFRIC 14, IAS 19  The limit on a defined benefit asset, minimum funding requirements
and their interaction provides guidance on assessing the limit in IAS 19 on the amount of
the surplus that can be recognized as an asset. It also explains how the pension asset or
liability may be affected by a statutory or contractual minimum funding requirement. The
Company will apply IFRIC 14 from April 01, 2008. The Group has not yet determined the
potential effect of this interpretation.
    
    IFRS 2, Share-based Payment  vesting conditions and cancellations specifies the
definition of vesting conditions. Vesting conditions are only those conditions that
determine whether the entity receives the services that entitle the counterparty to the
share-based payment. Conditions other than these are non-vesting conditions. The
amendment is not expected to have a significant impact on Sify.
 42




---



##### 



Critical Accounting Policies
   Revenue Recognition
  
    
    Corporate network/data services, which provides Internet, connectivity, security and
consulting, hosting and managed service solutions;
    
    Internet access services, from homes and through cybercafes;
    
    Online portal services and content offerings; and
    
    Other services such as development of e-learning software
  cybercafés
   43




---



##### 



Revenue Arrangements with Multiple Deliverables
  
    
    The revenue recognition criteria applicable to the unit of accounting is met;
    
    The delivered element has value to the customer on a standalone basis. The delivered
unit will have value on a standalone basis if it is being sold separately by other
vendors or the customer could resell the deliverable on a standalone basis;
    
    There is objective and reliable evidence of the fair value of the undelivered
item(s); and
    
    If the arrangement includes a general right of return relative to the delivered
item, delivery or performance of the undelivered item(s) is considered probable and
substantially in our control.
   Accounting Estimates
    Allowance for accounts receivable
   Business Combinations, Goodwill and Intangible Assets
 Business Combinations
 44




---



##### 



Estimated Useful Lives of Property, Plant And Equipment
 Property, Plant and Equipment
 Impairment
 Impairment of Assets
    Income taxes
   45




---



##### 



Item 6. Directors, Senior Management and Employees
 Board of Directors and Senior Management Executives
  
 Name
    
    Age
    
    DesignationRaju Vegesna
    
    
    48
    
    
    Chairman and Managing DirectorAnanda Raju Vegesna
    
    
    49
    
    
    Executive DirectorC.B.Mouli (1)
    
    
    61
    
    
    Director, Chairman & Financial Expert of Audit
CommitteeS.K.Rao (1) (2) (3)
    
    
    64
    
    
    DirectorT.H. Chowdary (2) (3)
    
    
    76
    
    
    Director & Chairman of Compensation & Nominating
CommitteesP.S.Raju (2)
    
    
    55
    
    
    DirectorS R Sukumara (1) (2) (3)
    
    
    63
    
    
    DirectorM P Vijay Kumar
    
    
    38
    
    
    Chief Financial OfficerC V S Suri
    
    
    48
    
    
    Chief Operating OfficerPijush Kanti Das
    
    
    54
    
    
    President - Corporate AffairsP J Nath
    
    
    46
    
    
    Executive President - Enterprise SolutionsBaskar R Sayyaparaju
    
    
    41
    
    
    Chief Technology OfficerAravind Mathur
    
    
    44
    
    
    Chief Architect - Global ServicesV Sivaramakrishnan (4)
    
    
    43
    
    
    President - Interactive ServicesNaresh Ajwani
    
    
    46
    
    
    President - Consumer Infrastructure & OperationsDavid Appasamy
    
    
    51
    
    
    Chief Communications OfficerVenkata Rao Mallineni
    
    
    41
    
    
    Advisor - Business StrategyAjith K N
    
    
    39
    
    
    Head - HR
 (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Compensation Committee.(3)
    
    Member of the Nominating Committee.(4)
    
    Since resigned as of August 31, 2008.
   .
 46




---



##### 



47




---



##### 



Director Compensation
  Officer Compensation
  Summary Compensation Table(Rs. Million)StockName
    
    Salary
    
    
    Bonus
    
    
    CompensationC V S Suri
    
    
    5.77
    
    
    
    1.25
    
    
    
    8.23Bhaskar R Sayyaparaju
    
    
    5.11
    
    
    
    1.25
    
    
    
    4.18V Sivaramakrishnan
    
    
    5.15
    
    
    
    0.75
    
    
    
    3.09David Appasamy
    
    
    3.16
    
    
    
    0.17
    
    
    
    0.27Naresh Ajwani
    
    
    3.91
    
    
    
    0.23
    
    
    
    0.43Pijush Kanti Das
    
    
    3.22
    
    
    
    0.46
    
    
    
    1.68Venkat Rao Mallineni
    
    
    2.64
    
    
    
    0.30
    
    
    
    2.09K N Ajith
    
    
    2.46
    
    
    
    0.35
    
    
    
    0.19Part of the yearVijay Kumar
    
    
    2.91
    
    
    
    -
    
    
    
    3.12P J Nath
    
    
    5.31
    
    
    
    -
    
    
    
    2.22Aravind Mathur
    
    
    5.93
    
    
    
    -
    
    
    
    1.31S Gopalakrishnan
    
    
    2.97
    
    
    
    -
    
    
    
    -
  Name
    
    Equity Shares Underlying
    
    ExerciseOption Grant
    
    Price (Rs.)
    
    
    Expiration DateV Sivaramakrishnan
    
    40,000
    
    
    157.35
    
    
    January 21, 2012Pijush Kanti Das
    
    25,000
    
    
    157.35
    
    
    January 21, 2012C V S Suri
    
    100,000
    
    
    157.35
    
    
    January 21, 2012Bhaskar R Sayyaparaju
    
    60,000
    
    
    157.35
    
    
    January 21, 2012Venkata Rao Mallineni
    
    30,000
    
    
    157.35
    
    
    January 21, 2012P J Nath
    
    60,000
    
    
    157.35
    
    
    January 21, 2012Arvind Mathur
    
    35,000
    
    
    157.35
    
    
    January 21, 2012M P Vijay Kumar
    
    100,000
    
    
    157.35
    
    
    January 21, 2012P S Raju
    
    15,000
    
    
    157.35
    
    
    January 21, 2012S R Sukumara
    
    5,000
    
    
    157.35
    
    
    January 21, 2012
 48




---



##### 



Name
    
    No. of shares
    
    
    Exercise PriceV M Kumar
    
    
    6,250
    
    
    
    228.74
 Board Composition
  
    
    at least two-thirds of our directors shall be subject to re-election by our
shareholders; and
    
    at least one-third of our directors who are subject to re-election shall be up
for re-election at each annual meeting of our shareholders.
      Board Committees
    Employees
  49




---



##### 



Stock Ownership
  Equity SharesBeneficially OwnedBeneficial Owner
    
    Number
    
    
    PercentRaju Vegesna
    
    
    17,902,860
    
    
    
    42%T. H. Chowdary
    
    
    -
    
    
    
    -C B Mouli
    
    
    -
    
    
    
    -P S Raju
    
    
    -
    
    
    
    -S K Rao
    
    
    -
    
    
    
    -S R Sukumara
    
    
    -
    
    
    
    -Anand Raju Vegesna
    
    
    **
    
    
    
    **
 *  In addition to the above, Mr Raju Vegesna is beneficially owning 578,191 shares through Rajus
Family Trust, as a Co Trustee and has voting power.**  - excludes 12,817,000 equity shares forfeited subsequently at a meeting of the Board on 29
August 2008
  Employee Stock Option Plan
    
 Item 7. Major Shareholders and Related Party Transactions
 Principal Shareholders
  50




---



##### 



Equity SharesBeneficially ownedBeneficial Owner
    
    Number
    
    PercentInfinity Capital Ventures, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025
    
    
    17,902,860
    
    
    
    41.83Vegesna Family Trust, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA
90025
    
    
    578,191
    
    
    
    1
 Details of significant change in the percentage ownership held by the major shareholders:
 Name of the shareholder
    
    
    2005-06
    
    
    2006-07
    
    
    2007-08No. of shares
    
    
    
    %
    
    
    
    No. of shares
    
    
    
    %
    
    
    
    No. of shares
    
    
    
    %Infinity Capital Ventures, LP, USA
    
    
    
    17,902,860
    
    
    
    
    42.23
    
    
    
    
    17,902,860
    
    
    
    
    41.83
    
    
    
    
    17,902,860
    
    
    
    
    41.83Vegesna Family Trust, USA
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    578,191
    
    
    
    
    1
  United States Shareholders
  Host country Shareholders
  Control of Registrant
   
    
    altering our Articles of Association;
    
    issuing additional shares of capital stock, except for pro rataissuances to existing
shareholders;
    
    commencing any new line of business; and
    
    commencing a liquidation.
 51




---



##### 



Forfeiture of equity shares issued in a private placement
     Related Party Transactions
     52




---



##### 



Item 8. Financial Information
 Financial Statements
  Legal Proceedings
 In re Satyam Infoway Ltd.
      Dividends
   53




---



##### 



Item 9. The Offer and Listing
 Trading Markets
  Price History
  Prior Fiscal Years
 High
    
    LowFiscal year ended
    
    $
    
    $March 31, 2008
    
    10.47
    
    4.00March 31, 2007
    
    14.78
    
    7.43March 31, 2006
    
    14.58
    
    3.81March 31, 2005
    
    8.62
    
    3.82March 31, 2004
    
    9.25
    
    3.75
 Quarters of Prior Fiscal Years
 High
    
    LowFiscal year ended March 31, 2007
    
    $
    
    $First Quarter
    
    14.78
    
    8.21Second Quarter
    
    10.33
    
    7.43Third Quarter
    
    10.59
    
    8.68Fourth Quarter
    
    9.49
    
    7.61
 High
    
    LowFiscal year ended March 31, 2008
    
    $
    
    $First Quarter
    
    9.50
    
    8.06Second Quarter
    
    10.47
    
    6.75Third Quarter
    
    9.21
    
    5.15Fourth Quarter
    
    5.25
    
    4.00
 Prior Six months
 Price rangeHigh
    
    LowMonth
    
    $
    
    $January 2008
    
    5.20
    
    4.46February 2008
    
    5.25
    
    4.69March 2008
    
    4.61
    
    4.00April 2008
    
    5.10
    
    4.52May 2008
    
    5.20
    
    4.69June 2008
    
    4.85
    
    3.77July 2008
    
    3.66
    
    2.75August 2008
    
    3.18
    
    2.65
  54




---



##### 



Item 10. Additional Information
            55




---



##### 



Memorandum and Articles of Association
   
    
    developing, servicing and selling or leasing data through direct or electronic media,
developing a wide area of communications network and providing value-added services on the
network for the development, service, purchase or sale of computers, software and related
products in order to provide marketing services; and
    
    designing and developing systems and application software for sale in and outside of
India, and designing and developing systems and applications software for or on behalf of
manufacturers, owners and users of computer systems and digital or electronic equipment.
 Board of Directors
  (a)
    
    no director of the company can vote on a proposal, arrangement or contract in
which he is materially interested;(b)
    
    the directors of the company can not vote on a proposal in the absence of an
independent quorum for compensation to themselves or their body;(c)
    
    each of our directors is entitled to receive a sitting fee not exceeding
Rs.20,000 for every meeting of the Board of Directors and each meeting of a Committee of
the Board of Directors, as well as all traveling and out-of-pocket expenses incurred in
attending such meetings;(d)
    
    the directors are empowered to borrow moneys through board meetings up to the
prescribed limit and beyond that with the approval of the shareholders through a General
Meeting;(e)
    
    retirement of directors are determined by rotation and not based on age limit;
and(f)
    
    no director is required to hold any qualification shares.
 For
additional information, please see Item 6. Director, Senior Management and Employees 
Board Composition, -Board Committees and -Director Compensation, and -Officer Compensation
of this Annual Report on Form 20-F .
 Dividends
   
    
    the rate of dividend to be declared may not exceed 10% of its paid up capital or the
average of the rate at which dividends were declared by the company in the prior 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 may not exceed an amount equivalent to 10% of its 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% of its paid up
capital.
 56




---



##### 



For additional information, please see Item 8. Financial InformationDividends.
 Voting Rights
    Bonus Shares
  Preemptive Rights and Issue of Additional Shares
  Annual General Meetings of Shareholders
  57




---



##### 



2008 Annual General Meeting
  Limitations on the Rights to Own Securities
  Register of Shareholders; Record Dates; Transfer of Shares
     Audit and Annual Report
 www.sifycorp.com
 58




---



##### 



Company Acquisition of Equity Shares
  Liquidation Rights
  Redemption of Equity Shares
  Material Contracts
 Internet Service Provider License.
     59




---



##### 



th
 Sponsored ADR Program
   Subscription Agreement with Infinity Capital Ventures, LP
  Standstill Agreement
  Shareholders Agreement
  60




---



##### 



Subscription Agreement with Infinity Satcom Universal Private Limited
  Exchange Controls
 General
   ADS Guidelines
       61




---



##### 



Foreign Direct Investment
  
    
    foreign investment in industries that require an industrial license;
    
    foreign investment being more than 24% in the equity capital of manufacturing items
reserved for small scale industries;
    
    all proposals in which the foreign collaboration has a previous venture/tie-up in India
in the relevant sector;
    
    all proposals relating to acquisition of shares in an existing company by a foreign
investor;
    
    all proposals for investment in the industries specified by the Government of India;
and
    
    all proposals for investment in specified industries where the proposed investment is
in excess of the sectoral caps specified therein.
      Investment by Non-Resident Indians and Overseas Corporate Bodies
  62




---



##### 



Investment by Foreign Institutional Investors
   Ownership Restrictions
    63




---



##### 



Voting Rights of Deposited Equity Shares Represented by ADSs
      Taxation
 Indian Taxation
 General
  64




---



##### 



Residence
 
    
    a period or periods amounting in all to 182 days or more; or
    
    a period or periods amounting in all 60 days or more and within the four years
preceding that year has been in India for a period or periods amounting to 365 days or
more.
  )
 Taxation of Distributions
 Taxation of Capital Gains
    65




---



##### 



Buy-back of Securities
 Stamp Duty and Transfer Tax
 Wealth Tax
 Gift Tax and Estate Duty
 Service Tax
 Income Tax Matters
   United States Federal Taxation
  66




---



##### 



Ownership of ADSs
 Dividends
   Sale or Exchange of Equity shares or ADSs
 Estate Taxes
 Passive Foreign Investment Company
 
    
    75% or more of its gross income for the taxable year is passive income; or
    
    on a quarterly average for the taxable year by value (or, if it is not a publicly
traded corporation and so elects, by adjusted basis) 50% or more of its assets produce or
are held for the production of passive income.
 67




---



##### 




    
    pay an interest charge together with tax calculated at maximum ordinary income rates on
excess distributions (as that term is defined in relevant provisions of the U.S. tax
laws), and on any gain on a sale or other disposition of equity
shares or ADSs;
    
    if a qualified electing fund election is made (as that term is defined in relevant
provisions of the U.S. tax laws), include in their taxable income their pro rata share of
undistributed amounts of our income; or
    
    if the equity shares are marketable (as that term is defined in relevant provisions
of the U.S. tax laws), and a mark-to-market election is made, mark-to-market the equity
shares each taxable year and recognize ordinary gain and, to the extent of prior ordinary
gain, ordinary loss for the increase or decrease in market value for
such taxable year.
  Backup Withholding Tax and Information Reporting Requirements
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 General
  Risk Management Procedures
   68




---



##### 



Item 12. Description of Securities Other Than Equity Securities
  
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  69




---



##### 



Item 15. Controls and procedures
 Evaluation of disclosure controls and procedures
  Managements annual report on internal control over financial reporting
        70




---



##### 



Report of Independent Registered Public Accounting Firm
 
 Internal Control -
Integrated Framework
    Internal Control -
Integrated Framework
   
 71




---



##### 



Changes in internal control over financial reporting
  
 Item 16A. Audit Committee financial expert
  
 Item 16B. Code of Ethics
    
 Item 16C. Principal Accountant Fees and Services
  Type of Service
    
    Fiscal year endedmarch 31, 2007
    

march 31, 2008(a) Audit Fees
    
    Rs.6.2 million
    
    Rs.12.92 million(b) Audit Related Fees
    
    Nil
    
    Nil(c) Tax Fees
    
    Nil
    
    Nil(d) All Other Fees
    
    Nil
    
    Nil
   72




---



##### 



Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
 73




---



##### 



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
  
 74




---



##### 



Sify Technologies Limited
 Consolidated Balance Sheet
 (In thousands of except share data and as otherwise stated)
    
    
    
    As at March 31,
    
    
    As at March 31,Note
    
    2008
    
    
    2007
    
    
    2008Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$(Unaudited)Note 2(c)AssetsProperty, plant and equipment
    
    7
    
    
    2,181,785
    
    
    
    1,672,987
    
    
    
    54,517Intangible assets
    
    8
    
    
    182,307
    
    
    
    187,749
    
    
    
    4,555Investment in associates/equity accounted
investees
    
    9
    
    
    478,514
    
    
    
    307,056
    
    
    
    11,957Restricted cash
    
    10
    
    
    1,000
    
    
    
    1,000
    
    
    
    25Net investment in leases other than current
installments
    
    11
    
    
    5,297
    
    
    
    12,032
    
    
    
    132Lease prepayments
    
    12
    
    
    568,909
    
    
    
    4,540
    
    
    
    14,216Other assets
    
    13
    
    
    336,525
    
    
    
    175,465
    
    
    
    8,409Deferred tax assets
    
    14
    
    
    15,570
    
    
    
    66,104
    
    
    
    389Total non-current assets
    
    
    
    
    3,769,907
    
    
    
    2,426,933
    
    
    $
    94,200Inventories
    
    15
    
    
    37,751
    
    
    
    28,685
    
    
    
    943Trade and other receivables, net
    
    16
    
    
    2,220,726
    
    
    
    1,661,264
    
    
    
    55,490Net investment in leases, current installments
    
    11
    
    
    6,743
    
    
    
    16,560
    
    
    
    169Prepayments for current assets
    
    17
    
    
    150,627
    
    
    
    118,292
    
    
    
    3,764Cash and cash equivalents
    
    10
    
    
    1,506,327
    
    
    
    3,070,157
    
    
    
    37,639Other investments
    
    18
    
    
    18,679
    
    
    
    -
    
    
    
    467Total current assets
    
    
    
    
    3,940,853
    
    
    
    4,894,958
    
    
    $
    98,472Total assets
    
    
    
    
    7,710,760
    
    
    
    7,321,891
    
    
    $
    192,672EquityShare capital
    
    19
    
    
    441,018
    
    
    
    428,003
    
    
    
    11,020Share premium
    
    19
    
    
    16,368,647
    
    
    
    16,262,096
    
    
    
    409,012Reserves
    
    19
    
    
    149,250
    
    
    
    104,168
    
    
    
    3,729Accumulated deficit
    
    19
    
    
    (12,263,931
    )
    
    
    (12,255,361
    )
    
    
    (306,445
    )Total equity attributable to equity holders of
the Company
    
    
    
    
    4,694,984
    
    
    
    4,538,906
    
    
    
    117,316Minority interest
    
    
    
    
    199,907
    
    
    
    169,765
    
    
    
    4,995Total equity
    
    
    
    
    4,894,891
    
    
    
    4,708,671
    
    
    $
    122,311
 75




---



##### 



Sify Technologies Limited
 Consolidated Balance Sheet
 (In thousands of except share data and as otherwise stated)
    
    
    
    As at March 31,
    
    
    As at March 31,Note
    
    2008
    
    
    2007
    
    
    2008Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$(Unaudited)Note 2(c)LiabilitiesFinance lease obligations, other than current
installments
    
    20
    
    
    2,493
    
    
    
    3,671
    
    
    
    62Employee benefits
    
    21
    
    
    42,250
    
    
    
    36,998
    
    
    
    1,056Other liabilities
    
    22
    
    
    124,472
    
    
    
    112,883
    
    
    
    3,110Total non-current liabilities
    
    
    
    
    169,215
    
    
    
    153,552
    
    
    $
    4,228Finance lease obligations current installments
    
    20
    
    
    2,899
    
    
    
    2,476
    
    
    
    72Borrowings from banks
    
    23
    
    
    156,426
    
    
    
    800,000
    
    
    
    3,909Bank overdraft
    
    10
    
    
    617,637
    
    
    
    -
    
    
    
    15,433Trade and other payables
    
    24
    
    
    1,501,336
    
    
    
    1,207,162
    
    
    
    37,515Deferred income
    
    25
    
    
    368,356
    
    
    
    450,030
    
    
    
    9,204Total current liabilities
    
    
    
    
    2,646,654
    
    
    
    2,459,668
    
    
    $
    66,133Total liabilities
    
    
    
    
    2,815,869
    
    
    
    2,613,220
    
    
    $
    70,361Total equity and liabilities
    
    
    
    
    7,710,760
    
    
    
    7,321,891
    
    
    $
    192,672
  76




---



##### 



Sify Technologies Limited
 Consolidated Income Statement
 For the fiscal years ended March 31, 2008 and March 31, 2007
 (In thousands of except share data and as otherwise stated)
    
    
    
    Year ended March 31,
    
    
    Year endedMarch 31,Note
    
    2008
    
    
    2007
    
    
    2008Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$(Unaudited)Note 2(c)Revenue
    
    26
    
    
    6,006,215
    
    
    
    5,447,347
    
    
    
    150,080Cost of goods sold and services rendered
    
    27
    
    
    (3,419,122
    )
    
    
    (2,939,329
    )
    
    
    (85,438
    )Other income
    
    28
    
    
    46,152
    
    
    
    66,320
    
    
    
    1,153Selling, general and administrative expenses
    
    30
    
    
    (2,434,715
    )
    
    
    (2,094,971
    )
    
    
    (60,838
    )Depreciation and amortisation expenses
    
    
    
    
    (394,337
    )
    
    
    (463,780
    )
    
    
    (9,854
    )Income/(loss) from operating activities
    
    
    
    
    (195,807
    )
    
    
    15,587
    
    
    
    (4,897
    )Finance income
    
    
    
    
    161,783
    
    
    
    154,192
    
    
    
    4,043Finance expenses
    
    
    
    
    (57,682
    )
    
    
    (25,550
    )
    
    
    (1,440
    )Net finance income
    
    33
    
    
    104,101
    
    
    
    128,642
    
    
    
    2,603Share of profit of equity accounted investee
(net of income tax)
    
    9
    
    
    181,127
    
    
    
    61,030
    
    
    
    4,526Profit before tax
    
    
    
    
    89,421
    
    
    
    205,259
    
    
    
    2,232Income tax (expense) / benefit
    
    14
    
    
    (63,975
    )
    
    
    66,113
    
    
    
    (1,599
    )Profit for the year
    
    
    
    
    25,446
    
    
    
    271,372
    
    
    $
    633Attributable to:Owners of the parent
    
    
    
    
    (4,696
    )
    
    
    240,841
    
    
    
    (119
    )Minority interests
    
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    75225,446
    
    
    
    271,372
    
    
    $
    633Earnings per share
    
    34Basic earnings per share
    
    
    
    
    (0.11
    )
    
    
    5.64
    
    
    $
    (0.003
    )Diluted earnings per share
    
    
    
    
    (0.11
    )
    
    
    5.63
    
    
    $
    (0.003
    )
  77




---



##### 



Sify Technologies Limited
 Consolidated statement of recognised income and expenses
 For the fiscal years ended March 31, 2008 and March 31, 2007
 (In thousands of except share data and as otherwise stated)
    
    
    
    
    
    Year ended March 31,
    
    
    Year endedMarch 31,Note
    
    

    2008
    
    
    2007
    
    
    2008Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$Note 2(c)(Unaudited)Foreign currency translation differences for
foreign operations
    
    
    
    
    
    
    163
    
    
    
    (316
    )
    
    
    4Defined benefit plan actuarial gains (losses)
    
    
    
    
    
    
    (1,859
    )
    
    
    18
    
    
    
    (46
    )Change in fair value of available for sale security
    
    
    
    
    
    
    (1,080
    )
    
    
    -
    
    
    
    (27
    )Income and expense recognised directly in equity
    
    
    
    
    
    
    (2,776
    )
    
    
    (298
    )
    
    
    (69
    )Profit for the year
    
    
    
    
    
    
    25,446
    
    
    
    271,372
    
    
    
    633Total recognised income and expense for the year
    
    
    19
    
    
    
    22,670
    
    
    
    271,074
    
    
    $
    564Attributable to:Equity holders of the company
    
    
    
    
    
    
    (7,472
    )
    
    
    240,543
    
    
    
    (188
    )Minority interest
    
    
    
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    752Total recognised income and expense for the year
    
    
    
    
    
    
    22,670
    
    
    
    271,074
    
    
    $
    564
  78




---



##### 



Sify Technologies Limited
 Consolidated statement of cash flows
 For the fiscal years ended March 31,
    
    Year ended March 31,
    
    
    Year endedMarch 31,(In thousands of except share data and as
    
    2008
    
    
    2007
    
    
    2008otherwise stated)
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$(Unaudited)Note 2(c)Cash flows from / (used in) operating activitiesProfit before tax
    
    
    89,421
    
    
    
    205,259
    
    
    
    2,232Adjustments for:Depreciation and amortization
    
    
    394,337
    
    
    
    463,780
    
    
    
    9,854Share of profit of equity accounted investees
    
    
    (181,127
    )
    
    
    (61,030
    )
    
    
    (4,526
    )Gain on sale of property, plant and equipment
    
    
    107
    
    
    
    (487
    )
    
    
    3Provision for doubtful receivables and advances
    
    
    131,954
    
    
    
    153,638
    
    
    
    3,297Gain on disposal of subsidiary
    
    
    -
    
    
    
    (226
    )
    
    
    -Stock compensation expense
    
    
    56,410
    
    
    
    60,933
    
    
    
    1,410Net finance income
    
    
    (104,101
    )
    
    
    (128,642
    )
    
    
    (2,601
    )Unrealized loss on account of exchange
differences
    
    
    496
    
    
    
    16,012
    
    
    
    12387,497
    
    
    
    709,237
    
    
    
    9,681Change in trade and other receivables
    
    
    (678,051
    )
    
    
    (651,650
    )
    
    
    (16,943
    )Change in inventories
    
    
    (9,066
    )
    
    
    1,777
    
    
    
    (227
    )Change in other assets
    
    
    (757,472
    )
    
    
    (21,898
    )
    
    
    (18,927
    )Change in trade and other payables
    
    
    460,211
    
    
    
    142,879
    
    
    
    11,500Change in employee benefits
    
    
    7,111
    
    
    
    (13,083
    )
    
    
    178Change in deferred revenue
    
    
    (81,673
    )
    
    
    5,697
    
    
    
    (2,041
    )(671,443
    )
    
    
    172,959
    
    
    
    (16,779
    )Income taxes paid
    
    
    (168,426
    )
    
    
    (56,697
    )
    
    
    (4,209
    )Net cash (used in)/ from operating activities
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (20,988
    )Cash flows from / (used in) investing activitiesAcquisition of property, plant and equipment
    
    
    (849,091
    )
    
    
    (686,320
    )
    
    
    (21,217
    )Expenditure on intangible assets
    
    
    (30,238
    )
    
    
    (65,474
    )
    
    
    (756
    )Business acquisition (net of cash)
    
    
    -
    
    
    
    (93,775
    )
    
    
    -Proceeds from sale of property, plant and
equipment
    
    
    5,630
    
    
    
    5,465
    
    
    
    141Net investment in leases
    
    
    16,552
    
    
    
    (6,974
    )
    
    
    414Finance income received
    
    
    121,162
    
    
    
    138,762
    
    
    
    3,028Short term investments
    
    
    (20,315
    )
    
    
    -
    
    
    
    (508
    )Net cash used in investing activities
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (18,898
    )
 79




---



##### 



Sify Technologies Limited
 Consolidated statement of cash flows
 For the fiscal years ended March 31,
    
    Year ended March 31,
    
    
    Year endedMarch 31,(In thousands of except share data and as
    
    2008
    
    
    2007
    
    
    2008otherwise stated)
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$(Unaudited)Note 2(c)Cash flows from / (used in) financing activitiesProceeds from issue of share capital (including
share premium)
    
    
    116,812
    
    
    
    72,647
    
    
    
    2,919Proceeds from / (repayment) of borrowings
    
    
    (643,574
    )
    
    
    800,000
    
    
    
    (16,081
    )Finance expenses paid
    
    
    (57,682
    )
    
    
    (25,550
    )
    
    
    (1,441
    )Proceeds from / (repayment) of finance lease
liabilities
    
    
    (756
    )
    
    
    842
    
    
    
    (19
    )Net cash from / (used in) financing activities
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    (14,622
    )Net increase / (decrease) in cash and cash equivalents
    
    
    (2,181,369
    )
    
    
    255,885
    
    
    
    (54,508
    )Cash and cash equivalents at April 1
    
    
    3,070,157
    
    
    
    2,822,501
    
    
    
    76,716Effect of exchange fluctuations on cash held
    
    
    (98
    )
    
    
    (8,229
    )
    
    
    (3
    )Cash and cash equivalents at March 31
    
    
    888,690
    
    
    
    3,070,157
    
    
    
    22,205Cash and cash equivalents includes
Rs. 617,637 (Previous year -  Nil) lying as bank overdraftsSupplementary informationAdditions to property, plant and
equipment represented by capital lease obligations
    
    
    8,166
    
    
    
    4,448
    
    
    
    204
  80




---



##### 



1.
    
    Reporting entity
  2.
    
    Basis of preparationa.
    
    Statement of compliance
  i.
    
    IFRS 8
    
    : Operating Segments revised version, effective for annual periods
beginning on or after January 1, 2009.
  i.
    
    IAS 1
    
    : Presentation of Financial Statements, revised version effective for
annual periods beginning on or after January 1, 2009. This Standard would be adopted,
by the Company as at April 1, 2009.ii.
    
    IFRS 3
    
    : Business combinations, the revised version effective for annual
periods beginning on or after July 1, 2009. The revision is not expected to have a
significant impact on the financial statements of the Group.iii.
    
    IAS 23
    
    : Borrowing Costs, effective for annual periods beginning on or after
January 1, 2009. The revised IAS 23 will become mandatory for the Groups 2009
financial statements and will constitute a change in accounting policy for the Group.
The amendment is not expected to have a significant impact on Sify.iv.
    
    IAS 27
    
    : Consolidated and Separate Financial Statements, the revised
version is effective for annual periods beginning on or after July 1, 2009 and earlier
application of revised IAS 27 is permissible only if the revised version of IFRS 3 is
adopted.v.
    
    IFRS 2
    
    : Share-based Payment - vesting conditions and cancellations, the
amendments are effective for annual periods beginning on or after January 1, 2009.
The amendment is not expected to have a significant impact on Sify.vi.
    
    IAS 32
    
    : Financial Instruments Presentation and IAS 1 Presentation of
Financial Statements, the amendments are effective for annual periods beginning on or
after January 1, 2009. This standard would be adopted by the Company as at April 1,
2009.
 81




---



##### 



vii.
    
    IFRIC 13
    
    : Customer Loyalty Programmes, the Interpretation is applicable for
annual periods beginning on or after July 1, 2008. IFRIC 13, which becomes mandatory
for the Groups 2009 financial statements, is not expected to have a material impact
on the Consolidated Financial Statements.viii.
    
    IFRIC 14
    
    : IAS 19  The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their interaction, the Interpretation is applicable for annual
periods beginning on or after January 1, 2008. The Company will apply IFRIC 14 from
April 01, 2008. The Group has not yet determined the potential effect of this
interpretation.
 b.
    
    Basis of measurement
  
    
    Available for sale financial assets
    
    Derivative financial instruments
  c.
    
    Functional and presentation currency
    d.
    
    Use of estimates and judgements
  :
 
    
    Business combinations (Note 6)
    
    Measurement of the recoverable amounts of cash-generating units containing goodwill
(Note 8)
    
    Useful lives of Property, plant and equipment (Note 7)
    
    Lease classification (Note 11, 12 and 20)
    
    Utilization of tax losses (Note 14)
    
    Measurement of defined employee benefit obligations (Note 21)
    
    Measurement of share-based payments (Note 32)
 82




---



##### 



3.
    
    Transition to IFRS
 First-time Adoption of International Financial Reporting Standards.
   A. Retrospective application of IFRS  Mandatory exemption
  Derecognition of financial assets and liabilities
 Hedge accounting
 Estimates
 Assets classified as held for sale and discontinued operations Non-current Assets Held for Sale and Discontinued Operations
 B. Exemption from Retrospective application of IFRS  Optional exemption
  Business combinations First Time Adoption of International Financial Reporting
Standard Business Combinations Business combinations
 b) Fair value or revaluation as deemed cost  First Time Adoption of International
Financial Reporting Standards
 83




---



##### 



c) Employee benefits
 d) Cumulative translation differences
 Compound financial instruments Financial instruments presentation First Time Adoption of International Financial Reporting Standard
 Assets and liabilities of subsidiaries, associates and joint ventures
 Designation of previously recognised financial assets and financial liabilities
 Share-based payment
  Insurance contracts Insurance Contracts
 Decommissioning liabilities included in the cost of property, plant and equipment Changes in Existing Decommissioning, Restoration and Similar Liabilities
  84




---



##### 



Leases Determining
whether an Arrangement contains a Lease Leases whether an arrangement
contains a lease
 l) Service concession arrangements
 C. Reconciliation of equity and net income between from U.S. GAAP (previous GAAP) to IFRS
  (i)
    
    Reconciliation of equity
 As at April 1, 2006
    
    
    As at March 31, 2007Equity under US GAAP
    
    
    4,054,509
    
    
    
    4,381,090Add :Recognition of import duty credit entitlement under Served from
India Scheme. (Note a)
    
    
    94,628
    
    
    
    66,094Adjustments relating to employee benefits. (Note b)
    
    
    5,272
    
    
    
    1,990Transition date credit to share-based payment reserve (Note c)
    
    
    42,193
    
    
    
    -Adjustment to amortization of intangible assets acquired in a
business combination. (Note d)
    
    
    -
    
    
    
    1,652Change in equity pick up of an investment accounted for using
equity method.
    
    
    2,490
    
    
    
    1,602Impact of opening balance sheet transitional adjustments.
    
    
    -
    
    
    
    99,4844,199,092
    
    
    
    4,551,912Less :Additional depreciation charge in respect of recognition of import
duty credit entitlement, under Served from India scheme. (Note a)
    
    
    (2,907
    )
    
    
    (4,626
    )Recognition of additional stock compensation expense. (Note c)
    
    
    (42,193
    )
    
    
    -Reversal of actuarial gain in respect of employee benefits. (Note b)
    
    
    -
    
    
    
    (5,556
    )Impact of income taxes relating to reversal of actuarial gains.
(Note b)
    
    
    -
    
    
    
    (2,824
    )Equity under IFRS
    
    
    4,153,992
    
    
    
    4,538,906
 85




---



##### 



(ii)
    
    Reconciliation of Net Income for the year ended March 31, 2007.
 Year endedMarch 31, 2007Net Income under US GAAP
    
    
    218,291Add:Recognition of import duty credit entitlement under Served from India Scheme. (Note a)
    
    
    66,094Reversal of provision in respect of employee benefits. (Note b)
    
    
    1,967Tax impact of recognition of actuarial gain to equity (Note b)
    
    
    9Adjustment to amortization of intangible assets acquired in a business combination. (Note d)
    
    
    1,652Less:Additional depreciation charge in respect of recognition of import duty credit entitlement.
(Note a)
    
    
    (4,626
    )Impact on income taxes relating to reversal of actuarial gains. (Note d)
    
    
    (2,824
    )Change in equity pick up of an investment accounted for using equity method.
    
    
    (9,191
    )Net Income under IFRS
    
    
    271,372
 a)
    
    Recognition of import duty credit entitlement
   b)
    
    Employee benefits
   86




---



##### 



c)
    
    Stock compensation expenses
  d)
    
    Amortisation of intangibles
 Business Combinations
 (iii)
    
    Reconciliation of cash flows for the year ended March 31, 2007
  87




---



##### 



4.
    
    Significant accounting policies
  a.
    
    Basis of consolidation(i)
    
    Subsidiaries
  (ii)
    
    Associates (equity accounted investees)
  (iii)
    
    Transactions eliminated on consolidation
  b.
    
    Foreign currency(i)
    
    Foreign currency transactions
  (ii)
    
    Foreign operations
  88




---



##### 



c.
    
    Financial Instruments(i)
    
    Non-derivative financial instruments
   a)
    
    Cash and cash equivalents
  b)
    
    Available-for-sale financial assets
   c)
    
    Others
  (ii)
    
    Derivative financial instruments
   (iii)
 d.
    
    Share capital
  89




---



##### 



e.
    
    Property, plant and equipment
    (i)
    
    Subsequent costs
  (ii)
    
    Depreciation
  Estimate of useful life in yearsBuildings
    
    
    28Plant and machinery comprising computers, servers etc
    
    
    2  5
    *Plant and machinery comprising other items
    
    
    8
    *Furniture and fittings
    
    
    5Office equipment
    
    
    5Motor vehicles
    
    
    3  5* - Revised (also refer to Note 7)
   90




---



##### 



f.
    
    Intangible assets
 (i) Goodwill
  Acquisitions prior to April 1, 2006
  Acquisitions on or after April 1, 2006
  Subsequent measurement
  Equity accounted investees:
 (ii) Other intangible assets
  (iii) Subsequent expenditure
  (iv) Amortisation of intangible assets with finite useful lives
  Estimate of useful life in yearsSoftware
    
    Not exceeding 3 YearsTechnical Know-how
    
    5 yearsLicense fees
    
    20 yearsPortals and web development cost
    
    5 yearsCustomer contract related intangibles
    
    5 years
 91




---



##### 



g.
    
    Leases
 Assets taken on finance lease:
  Assets taken on operating lease:
  Assets given on finance lease:
  h.
    
    Inventories
  i.
    
    Impairment
 Financial assets
     92




---



##### 



Non-financial assets
     j.
    
    Employee benefits
  (a)
    
    Defined contribution plan (Provident Fund)
  (b)
    
    Defined Benefit Plans (Gratuity)
  (c)
    
    Short term benefits
  93




---



##### 



(d)
    
    Compensated leave of absence
  k.
    
    Share-based payment transactions
  l.
    
    Provisions
   m.
    
    Revenue
    (i)
    
    Corporate network/data services
  94




---



##### 



(ii)
    
    Web hosting service
   (iii)
    
    Internet access services
     95




---



##### 



o
    
    conducting a market survey and deciding on the best location for the cybercafé
or cable head end;o
    
    installing the broadband receiver equipment on the roof top of the cybercafé or
the cable head end and connecting it to one of Sifys broadcasting towers;o
    
    obtaining the regulatory approvals for clearance of the site for wireless
transmission at the allotted frequency range;o
    
    installing the wiring from the receiver unit to the individual PCs in the
cybercafé or the transmitting equipment in the cable head end;o
    
    assisting in obtaining facilities, including computers and interiors for the
cybercafés; ando
    
    providing the operations manual with instructions and guidelines for running
the cybercafé or distributing Internet access through cable network.
  (iv)
    
    Online portal services
     96




---



##### 



(v)
    
    Other services
 
    
    The Group provides e-learning software development services to facilitate web-based
learning in various organizations. These customized services vary in size from customer to
customer and relate to computer based and web based training in accordance with the customer
specification. These services include information presentation, structured content delivery,
content digitization and simulation based training. These services are generally provided on a
fixed price basis. Revenue under such contracts is recognised when the outcome of the
transaction can be estimated reliably by reference to the stage of completion of transaction
at the reporting date.
 
    
    Revenue from barter transactions involving advertising services is recognised where the
services exchanged are dissimilar, and is measured at the fair value of services received,
adjusted by the amount of any cash or cash equivalents transferred.
 n.
    
    Export benefits
  o.
    
    Finance income and expense
   p.
    
    Income taxes
    q.
    
    Earnings per share
  97




---



##### 



5.
    
    Determination of fair values
  (i)
    
    Property, plant and equipment
  (ii)
    
    Intangible assets
  (iii)
    
    Investments in equity and debt securities
  (iv)
    
    Trade and other receivables
  (v)
    
    Derivatives
  (vi)
    
    Non Derivative financial liabilities
  (vii)
    
    Share-based payment transactions
  98




---



##### 



6.
    
    Acquisition of Globe travels business
  Cash price
    
    Rs.112,220 (USD 2,500)Stock options (No. of options)
    
    140,000Earn out payments
    
    USD 500
    Property, plant and equipment
    
    Rs 1,246Software
    
    
    2,255Intangible assets
    
    
    85,797Goodwill
    
    
    26,920Total
    
    
    116,218
  Final allocationProperty, Plant and Equipment
    
    Rs.1,246Software
    
    
    6,089Customer, contract related intangibles
    
    
    72,683Goodwill
    
    
    36,200Total
    
    
    116,218
 99




---



##### 



7.
    
    Property, plant and equipment
 Cost
    
    
    
    Accumulated depreciation
    
    
    
    CarryingParticulars
    
    
    As at
    
    
    
    Additions
    
    
    
    Disposals
    
    
    
    As at
    
    
    
    As at
    
    
    
    Depreciation
    
    
    
    Deletions
    
    
    
    As at
    
    
    
    amount asApril 1,
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    
    April 1,
    
    
    
    for the year
    
    
    
    
    
    
    
    
    March 31,
    
    
    
    at March2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    
    31, 2008Building
    
    
    
    634,230
    
    
    
    
    135,433
    
    
    
    
    -
    
    
    
    
    769,663
    
    
    
    
    94,656
    
    
    
    
    26,268
    
    
    
    
    -
    
    
    
    
    120,924
    
    
    
    
    648,739Plant and machinery
    
    
    
    3,180,761
    
    
    
    
    508,820
    
    
    
    
    5,949
    
    
    
    
    3,683,632
    
    
    
    
    2,341,233
    
    
    
    
    187,414
    
    
    
    
    2,202
    
    
    
    
    2,526,445
    
    
    
    
    1,157,187Computer equipments
    
    
    
    353,874
    
    
    
    
    84,857
    
    
    
    
    134
    
    
    
    
    438,597
    
    
    
    
    204,953
    
    
    
    
    92,230
    
    
    
    
    134
    
    
    
    
    297,049
    
    
    
    
    141,548Office equipment
    
    
    
    103,935
    
    
    
    
    12,803
    
    
    
    
    47
    
    
    
    
    116,691
    
    
    
    
    71,989
    
    
    
    
    11,982
    
    
    
    
    43
    
    
    
    
    83,928
    
    
    
    
    32,763Furniture and fittings
    
    
    
    386,994
    
    
    
    
    37,209
    
    
    
    
    1,264
    
    
    
    
    422,939
    
    
    
    
    303,712
    
    
    
    
    36,975
    
    
    
    
    937
    
    
    
    
    339,750
    
    
    
    
    83,189Vehicles
    
    
    
    8,766
    
    
    
    
    4,448
    
    
    
    
    4,040
    
    
    
    
    9,174
    
    
    
    
    2,439
    
    
    
    
    3,788
    
    
    
    
    2,381
    
    
    
    
    3,846
    
    
    
    
    5,328Total
    
    
    
    4,668,560
    
    
    
    
    783,570
    
    
    
    
    11,434
    
    
    
    
    5,440,696
    
    
    
    
    3,018,982
    
    
    
    
    358,657
    
    
    
    
    5,697
    
    
    
    
    3,371,942
    
    
    
    
    2,068,754Add: Construction
in Progress
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    113,031Total
    
    
    
    4,668,560
    
    
    
    
    783,570
    
    
    
    
    11,434
    
    
    
    
    5,440,696
    
    
    
    
    3,018,982
    
    
    
    
    358,657
    
    
    
    
    5,697
    
    
    
    
    3,371,942
    
    
    
    
    2,181,785
 Cost
    
    
    
    Accumulated depreciation
    
    
    
    CarryingParticulars
    
    
    As at
    
    
    
    Additions
    
    
    
    Disposals
    
    
    
    As at
    
    
    
    As at
    
    
    
    Depreciation
    
    
    
    Deletions
    
    
    
    As at
    
    
    
    amount asApril 1,
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    
    April 1,
    
    
    
    for the year
    
    
    
    
    
    
    
    
    March
    
    
    
    at March2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    31, 2007
    
    
    
    31, 2007Building
    
    
    
    485,156
    
    
    
    
    149,074
    
    
    
    
    -
    
    
    
    
    634,230
    
    
    
    
    72,901
    
    
    
    
    21,755
    
    
    
    
    -
    
    
    
    
    94,656
    
    
    
    
    539,574Plant and machinery
    
    
    
    2,828,970
    
    
    
    
    372,645
    
    
    
    
    20,854
    
    
    
    
    3,180,761
    
    
    
    
    2,069,145
    
    
    
    
    292,653
    
    
    
    
    20,565
    
    
    
    
    2,341,233
    
    
    
    
    839,528Computer equipments
    
    
    
    286,502
    
    
    
    
    70,240
    
    
    
    
    2,868
    
    
    
    
    353,874
    
    
    
    
    164,036
    
    
    
    
    43,677
    
    
    
    
    2,760
    
    
    
    
    204,953
    
    
    
    
    148,921Office equipment
    
    
    
    95,104
    
    
    
    
    9,120
    
    
    
    
    289
    
    
    
    
    103,935
    
    
    
    
    60,452
    
    
    
    
    11,816
    
    
    
    
    279
    
    
    
    
    71,989
    
    
    
    
    31,946Furniture and
fittings
    
    
    
    349,243
    
    
    
    
    39,222
    
    
    
    
    1,471
    
    
    
    
    386,994
    
    
    
    
    263,141
    
    
    
    
    41,921
    
    
    
    
    1,350
    
    
    
    
    303,712
    
    
    
    
    83,282Vehicles
    
    
    
    13,764
    
    
    
    
    8,166
    
    
    
    
    13,164
    
    
    
    
    8,766
    
    
    
    
    8,029
    
    
    
    
    3,124
    
    
    
    
    8,714
    
    
    
    
    2,439
    
    
    
    
    6,327Total
    
    
    
    4,058,739
    
    
    
    
    648,467
    
    
    
    
    38,646
    
    
    
    
    4,668,560
    
    
    
    
    2,637,704
    
    
    
    
    414,946
    
    
    
    
    33,668
    
    
    
    
    3,018,982
    
    
    
    
    1,649,578Add: Construction
in Progress
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    23,409Total
    
    
    
    4,058,739
    
    
    
    
    648,467
    
    
    
    
    38,646
    
    
    
    
    4,668,560
    
    
    
    
    2,631,354
    
    
    
    
    414,946
    
    
    
    
    33,668
    
    
    
    
    3,018,982
    
    
    
    
    1,672,987
 Leased assets
 
 100




---



##### 



Construction in progress
 
 Change in estimate
 
 2008
    
    
    2009
    
    
    2010
    
    
    2011Decrease / (Increase) in
depreciation expense
    
    
    110,315
    
    
    
    98,650
    
    
    
    61,498
    
    
    
    (17,674
    )
 8.
    
    Intangible assets
 Intangible assets comprise the following:
 March 31, 2008
    
    
    March 31, 2007(i) Goodwill
    
    
    50,796
    
    
    
    50,796(ii) Other intangible assets
    
    
    131,511
    
    
    
    136,953Total
    
    
    182,307
    
    
    
    187,749
 (i) Goodwill
 March 31, 2008
    
    
    March 31, 2007Balance at the beginning of the year
    
    
    50,796
    
    
    
    14,596Acquisitions through business combinations
    
    
    -
    
    
    
    36,200Balance at the end of the year
    
    
    50,796
    
    
    
    50,796Net carrying amount of goodwill
    
    
    50,796
    
    
    
    50,796
  Segment
    
    March 31, 2008
    
    
    March 31, 2007Online Portal Services
    
    
    50,796
    
    
    
    50,796Total
    
    
    50,796
    
    
    
    50,796
 101




---



##### 



(ii) Other intangible assets
 (A) Cost
    
    Technical
    
    
    Portals
    
    
    Customer
    
    
    Software
    
    
    License fees
    
    
    Totalknow-how
    
    
    and web
    
    
    contractscontent
    
    
    relatedintangiblesBalance as at 01.04.06
    
    
    82,753
    
    
    
    52,730
    
    
    
    126,871
    
    
    
    219,315
    
    
    
    -
    
    
    
    481,669Acquisitions
through business combinations
    
    
    -
    
    
    
    -
    
    
    
    72,683
    
    
    
    6,089
    
    
    
    -
    
    
    
    78,772Other acquisitions
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    15,474
    
    
    
    50,000
    
    
    
    65,474Balance as at 31.03.07
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    240,878
    
    
    
    50,000
    
    
    
    625,915Acquisitions
through business combinations
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Other acquisitions
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    30,238
    
    
    
    -
    
    
    
    30,238Balance as at 31.03.08
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    271,116
    
    
    
    50,000
    
    
    
    656,153(B) AmortisationBalance as at 01.04.06
    
    
    79,240
    
    
    
    50,065
    
    
    
    117,433
    
    
    
    193,350
    
    
    
    -
    
    
    
    440,088Amortisation for the year
    
    
    3,513
    
    
    
    2,645
    
    
    
    18,796
    
    
    
    22,974
    
    
    
    906
    
    
    
    48,834Balance as at 31.03.07
    
    
    82,753
    
    
    
    52,710
    
    
    
    136,269
    
    
    
    216,324
    
    
    
    906
    
    
    
    488,962Amortisation for the year
    
    
    -
    
    
    
    20
    
    
    
    13,657
    
    
    
    19,503
    
    
    
    2,500
    
    
    
    35,680Balance as at 31.03.08
    
    
    82,753
    
    
    
    52,730
    
    
    
    149,926
    
    
    
    235,827
    
    
    
    3,406
    
    
    
    524,642(C) Carrying amounts
    
    
    -
    
    
    
    -
    
    
    
    49,628
    
    
    
    35,289
    
    
    
    46,594
    
    
    
    131,511
 102




---



##### 



9. Investment in associates/equity accounted investees
   Balance Sheet
    
    March 31, 2008
    
    
    March 31, 2007Total Assets
    
    
    7,893,663
    
    
    
    4,391,809Total liabilities
    
    
    6,290,602
    
    
    
    3,363,145Shareholders equity
    
    
    1,603,061
    
    
    
    1,028,664Total Liabilities and Shareholders equity
    
    
    7,893,663
    
    
    
    4,391,809
 Statement of Operations
    
    For the year endedMarch 31, 2008
    
    
    March 31, 2007Revenues
    
    
    2,503,520
    
    
    
    1,293,383Net Profit
    
    
    606,255
    
    
    
    204,426
 10. Cash and Cash equivalents
  Non current
    
    March 31, 2008
    
    
    March 31, 2007Against future performance obligation
    
    
    1,000
    
    
    
    1,000CurrentRestricted-Deposits held under lien against overdraft facilities
    
    
    877,582
    
    
    
    938,833Cash & Bank balances
    
    
    628,745
    
    
    
    2,131,324Cash & cash equivalents
    
    
    1,506,327
    
    
    
    3,070,157Bank Overdrafts
    
    
    (617,637
    )
    
    
    -Cash & cash equivalents in the statement of cash flows
    
    
    888,690
    
    
    
    3,070,157
 103




---



##### 



11. Net investment in leases
   March 31, 2008
    
    
    March 31, 2007Minimum

    
    
    Unearned

    
    
    Net
    
    
    Minimum lease
    
    
    Unearned

    
    
    Net investmentlease
    
    
    income

    
    
    investment in
    
    
    payments
    
    
    income

    
    
    in sales-typepayments
    
    
    
    
    
    sales-type
    
    
    receivable
    
    
    
    
    
    leasesleasesLess than one year
    
    
    7,275
    
    
    
    532
    
    
    
    6,743
    
    
    
    17,796
    
    
    
    1,236
    
    
    
    16,560Between one and five years
    
    
    5,431
    
    
    
    134
    
    
    
    5,297
    
    
    
    12,697
    
    
    
    665
    
    
    
    12,032Total
    
    
    12,706
    
    
    
    666
    
    
    
    12,040
    
    
    
    30,493
    
    
    
    1,901
    
    
    
    28,592
 12. Lease prepayments
 March 31, 2008
    
    
    March 31, 2007Leasehold land prepayments
    
    
    553,051
    
    
    
    4,540Buildings
    
    
    15,858
    
    
    
    -568,909
    
    
    
    4,540
  13. Other assets
 March 31, 2008
    
    
    March 31, 2007Withholding taxes
    
    
    194,328
    
    
    
    105,734Other deposits
    
    
    142,197
    
    
    
    69,731336,525
    
    
    
    175,465
  104




---



##### 



14. Deferred tax assets and liabilities
 Recognised deferred tax assets and liabilities
 Assets / (liabilities)2008
    
    
    2007Property, Plant and Equipment
    
    
    1,733
    
    
    
    1,671Intangible assets
    
    
    3,155
    
    
    
    2,975Allowance for doubtful trade and other receivables
    
    
    10,644
    
    
    
    6,040Carry forward losses
    
    
    38
    
    
    
    55,418Tax assets
    
    
    15,570
    
    
    
    66,104
 Movement in temporary differences during the year
 Balance
    
    
    Recognised
    
    
    Recognised
    
    
    Balance
    
    
    Recognised
    
    
    Recognised
    
    
    Balanceas at
    
    
    in
    
    
    in
    
    
    as at
    
    
    in
    
    
    in
    
    
    as atApril 1,
    
    
    income
    
    
    Equity
    
    
    March
    
    
    income
    
    
    Equity
    
    
    March2006
    
    
    statement
    
    
    
    
    
    31, 2007
    
    
    statement
    
    
    
    
    
    31, 2008Property,
Plant and Equipment
    
    
    -
    
    
    
    1,671
    
    
    
    -
    
    
    
    1,671
    
    
    
    62
    
    
    
    
    
    
    
    1,733Intangible assets
    
    
    -
    
    
    
    2,975
    
    
    
    -
    
    
    
    2,975
    
    
    
    180
    
    
    
    
    
    
    
    3,155Investment
in equity accounted investees
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    
    
    
    
    -Allowance for doubtful trade and other
receivables
    
    
    -
    
    
    
    6,040
    
    
    
    -
    
    
    
    6,040
    
    
    
    4,604
    
    
    
    
    
    
    
    10,644Tax loss carry forwards
    
    
    -
    
    
    
    55,418
    
    
    
    -
    
    
    
    55,418
    
    
    
    (55,380
    )
    
    
    
    
    
    
    38Actuarial gains/losses
    
    
    -
    
    
    
    9
    
    
    
    (9
    )
    
    
    -
    
    
    
    (957
    )
    
    
    957
    
    
    
    -Others
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (471
    )
    
    
    471-
    
    
    
    66,113
    
    
    
    (9
    )
    
    
    66,104
    
    
    
    (51,962
    )
    
    
    1,428
    
    
    
    15,570
 Income tax directly recognised in equity
 March 31, 2008
    
    
    March 31, 2007Actuarial (gains) or losses
    
    
    966
    
    
    
    (9
    )Fair value reserve
    
    
    556
    
    
    
    -Translation reserve
    
    
    (84
    )
    
    
    -Benefit / (expense)
    
    
    1,438
    
    
    
    (9
    )
 Unrecognised deferred tax assets
  March 31, 2008
    
    
    March 31, 2007Deductible temporary differences
    
    
    63,090
    
    
    
    459,526Tax losses
    
    
    1,395,042
    
    
    
    1,081,4591,458,132
    
    
    
    1,540,985Of the above, tax losses of foreign operations governed by differential tax rates
    
    
    233,695
    
    
    
    33,109
  105




---



##### 



Income Tax expense
 March 31, 2008
    
    
    March 31, 2007Current tax expenseCurrent period
    
    
    12,013
    
    
    
    -Total
    
    
    12,013
    
    
    
    -Deferred tax expenseOrigination and reversal of temporary differences
    
    
    (3,456
    )
    
    
    (10,695
    )Recognition of previously unrecognised tax losses
    
    
    -
    
    
    
    (55,418
    )Reversal of previously recognised tax losses
    
    
    55,418
    
    
    
    -Deferred tax expense
    
    
    51,962
    
    
    
    (66,113
    )Total income tax (expense) / benefit
    
    
    63,975
    
    
    
    (66,113
    )
 15. Inventories
  Particulars
    
    March 31, 2008
    
    
    March 31, 2007Communication hardware
    
    
    28,700
    
    
    
    21,565Application software
    
    
    2,079
    
    
    
    876Others
    
    
    6,972
    
    
    
    6,24437,751
    
    
    
    28,685
 16. Trade and other receivables
  March 31, 2008
    
    
    March 31, 2007(i) Trade receivables, net
    
    
    1,694,542
    
    
    
    1,188,406(ii) Other receivables including deposits
    
    
    526,184
    
    
    
    472,8582,220,726
    
    
    
    1,661,264
 (i)
    
    Trade receivable as of March 31, 2008 and March 31, 2007 are stated net of allowance for
doubtful receivables. The Group maintains an allowance for doubtful receivables based on its
age and collectability. Trade receivables are not collateralised except to the extent of
refundable deposits received from cybercafé franchisees and from cable television operators.
Trade receivables consist of:
 March 31, 2008
    
    
    March 31, 2007Due from customers
    
    
    1,777,858
    
    
    
    1,290,030Less: Allowance for doubtful receivables
    
    
    83,316
    
    
    
    101,624Balance at the end of the year
    
    
    1,694,542
    
    
    
    1,188,406
 106




---



##### 



March 31, 2008
    
    
    March 31, 2007Balance at the beginning of the year
    
    
    101,624
    
    
    
    200,047Add : Additional provision
    
    
    131,954
    
    
    
    153,638Less : Bad debts written off
    
    
    150,262
    
    
    
    252,061Balance at the end of the year
    
    
    83,316
    
    
    
    101,624
  March 31, 2008
    
    
    March 31, 2007Advances and other deposits
    
    
    420,288
    
    
    
    452,178Deposits with Department of Income tax
    
    
    77,724
    
    
    
    12,954Employee advances
    
    
    5,185
    
    
    
    7,726503,197
    
    
    
    472,858
  17. Prepayments for current assets
  March 31, 2008
    
    
    March 31, 2007Prepayments for purchase of bandwidth
    
    
    90,129
    
    
    
    48,218Prepayments related to insurance
    
    
    15,798
    
    
    
    16,555Prepayments-others
    
    
    34,485
    
    
    
    53,433Lease prepayments
    
    
    10,215
    
    
    
    86150,627
    
    
    
    118,292
 18. Other Investments
  March 31, 2008
    
    
    March 31, 2007Gross amount
    
    
    Gains/(Loss)
    
    
    Fair value
    
    
    Gross amount
    
    
    Gains/(Loss)
    
    
    Fair valuerecognized directly
    
    
    
    
    
    
    
    
    
    
    recognized directlyin equity
    
    
    
    
    
    
    
    
    
    
    in equityInvestment in
mutual funds
    
    
    20,315
    
    
    
    (1,636
    )
    
    
    18,679
    
    
    
    -
    
    
    
    -
    
    
    
    -
 107




---



##### 



19. Capital and reserves
 Reconciliation of movement in Capital and reserves
 Attributable to equity holders of the CompanyShare capital
    
    
    Share premium
    
    
    Share based
    
    
    Translation
    
    
    Recognised
    
    
    Fair value
    
    
    Accumulated
    
    
    Total
    
    
    Minority
    
    
    Total equitypayment
    
    
    Reserve
    
    
    actuarial
    
    
    reserve
    
    
    deficit
    
    
    
    
    
    
    interestreserve
    
    
    
    
    
    
    gain / (loss)Balance at April 1, 2006
    
    
    423,895
    
    
    
    16,177,821
    
    
    
    60,860
    
    
    
    -
    
    
    
    2,926
    
    
    
    -
    
    
    
    (12,511,510
    )
    
    
    4,153,992
    
    
    
    -
    
    
    
    4,153,992Minority interest
recognized due to
divestment
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    139,234
    
    
    
    139,234Investment accounted
for using equity method
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10,793
    
    
    
    10,793
    
    
    
    -
    
    
    
    10,793Total recognised income
and expense
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (316
    )
    
    
    18
    
    
    
    -
    
    
    
    240,841
    
    
    
    240,543
    
    
    
    30,531
    
    
    
    271,074Share-based
payments recognized
    
    
    -
    
    
    
    -
    
    
    
    60,933
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    60,933
    
    
    
    -
    
    
    
    60,933Stock options exercised
    
    
    4,108
    
    
    
    84,275
    
    
    
    (15,738
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    72,645
    
    
    
    -
    
    
    
    72,645Share options lapsed
    
    
    -
    
    
    
    -
    
    
    
    (4,515
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4,515
    
    
    
    -
    
    
    
    -
    
    
    
    -Balance at March 31,
2007
    
    
    428,003
    
    
    
    16,262,096
    
    
    
    101,540
    
    
    
    (316
    )
    
    
    2,944
    
    
    
    -
    
    
    
    (12,255,361
    )
    
    
    4,538,906
    
    
    
    169,765
    
    
    
    4,708,671Balance at April 1, 2007
    
    
    428,003
    
    
    
    16,262,096
    
    
    
    101,540
    
    
    
    (316
    )
    
    
    2,944
    
    
    
    -
    
    
    
    (12,255,361
    )
    
    
    4,538,906
    
    
    
    169,765
    
    
    
    4,708,671Total recognised income
and expense
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    163
    
    
    
    (1,859
    )
    
    
    (1,080
    )
    
    
    (4,696
    )
    
    
    (7,472
    )
    
    
    30,142
    
    
    
    22,670Investment accounted
for using equity method
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (9,669
    )
    
    
    (9,669
    )
    
    
    -
    
    
    
    (9,669
    )Share-based payments
recognized
    
    
    -
    
    
    
    -
    
    
    
    56,410
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    56,410
    
    
    
    -
    
    
    
    56,410Stock options exercised
    
    
    198
    
    
    
    7,219
    
    
    
    (2,757
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4,660
    
    
    
    -
    
    
    
    4,660Stock options lapsed
    
    
    -
    
    
    
    -
    
    
    
    (5,795
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    5,795
    
    
    
    -
    
    
    
    -
    
    
    
    -Issue of share capital
    
    
    12,817
    
    
    
    99,332
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    112,149
    
    
    
    -
    
    
    
    112,149Balance at March 31,
2008
    
    
    441,018
    
    
    
    16,368,647
    
    
    
    149,398
    
    
    
    (153
    )
    
    
    1,085
    
    
    
    (1,080
    )
    
    
    (12,263,931
    )
    
    
    4,694,984
    
    
    
    199,907
    
    
    
    4,894,891
 108




---



##### 



(i) Share Capital and Share Premium
    (ii) Translation reserve
  (iii) Share based payment reserve
  (iv) Fair value reserve
  (v) Recognised actuarial gain / loss
  20. Finance lease obligations
  March 31, 2008
    
    
    March 31, 2007Future
    
    
Interest
    
    
    Present value
    
    
    Future
    
    
Interest
    
    
    Present valueminimum lease
    
    
    
    
    
    
    minimum lease
    
    
    minimum lease
    
    
    
    
    
    
    minimum leasepayments
    
    
    
    
    
    payments
    
    
    payments
    
    
    
    
    
    paymentsLess than one year
    
    
    3,344
    
    
    
    445
    
    
    
    2,899
    
    
    
    2,954
    
    
    
    478
    
    
    
    2,476Between one and
five years
    
    
    2,656
    
    
    
    163
    
    
    
    2,493
    
    
    
    3,982
    
    
    
    311
    
    
    
    3,671Total
    
    
    6,000
    
    
    
    608
    
    
    
    5,392
    
    
    
    6,936
    
    
    
    789
    
    
    
    6,147
 109




---



##### 



21. Employee benefits
 March 31, 2008
    
    
    March 31, 2007Gratuity payable
    
    
    8,592
    
    
    
    12,363Compensated Absences
    
    
    33,658
    
    
    
    24,63542,250
    
    
    
    36,998
  Change in projected benefit obligation
    
    March 31, 2008
    
    
    March 31, 2007Projected benefit obligation at the beginning of the year
    
    
    20,785
    
    
    
    22,959Service cost
    
    
    8,533
    
    
    
    8,149Interest cost
    
    
    1,639
    
    
    
    1,662Actuarial (gain)/ loss
    
    
    2,393
    
    
    
    604Benefits paid
    
    
    (6,018
    )
    
    
    (12,589
    )Projected benefit obligation at the end of the year
    
    
    27,332
    
    
    
    20,785
 Change in plan assetsFair value of plan assets at the beginning of the year
    
    
    8,423
    
    
    
    1,717Expected return on plan assets
    
    
    957
    
    
    
    163Actuarial (gain) / loss
    
    
    (423
    )
    
    
    631Employer contributions
    
    
    15,801
    
    
    
    18,500Benefits paid
    
    
    (6,018
    )
    
    
    (12,589
    )Fair value of plan assets at the end of the year
    
    
    18,740
    
    
    
    8,422Present Value of Projected benefit obligation at the end of the year
    
    
    27,332
    
    
    
    20,785Funded status of the plans
    
    
    18,740
    
    
    
    8,422Funded Status amount of liability recognised in the balance sheet
    
    
    8,592
    
    
    
    12,363
 The components of net gratuity costs are reflected below:
 Service cost
    
    
    8,533
    
    
    
    8,149Interest cost
    
    
    1,639
    
    
    
    1,662Expected returns on plan assets
    
    
    (957
    )
    
    
    (163
    )Amortisation
    
    
    -
    
    
    
    -Net gratuity costs
    
    
    9,215
    
    
    
    9,648
 Financial Assumptions at Balance Sheet date
 March 31, 2008
    
    
    March 31, 2007Discount rate
    
    
    7.85% P.a
    
    
    
    8.15% P.aLong-term rate of compensation increase
    
    
    6.00% P.a
    
    
    
    6.00 %P.aRate of return on plan assets
    
    
    7.50% P.a
    
    
    
    7.50% P.a
  110




---



##### 



Historical information
    
    March 31, 2008
    
    
    March 31, 2007Present value of the defined benefit obligation
    
    
    27,333
    
    
    
    20,785Fair value of plan assets
    
    
    18,741
    
    
    
    8,422Deficit in the plan
    
    
    (8,592
    )
    
    
    (12,363
    )Experience adjustment on plan liabilities
    
    
    1,489
    
    
    
    2,188Experience adjustment on plan assets
    
    
    (423
    )
    
    
    631
  Actuarial gains and losses recognised in equity
 March 31, 2008
    
    
    March 31, 2007Actuarial gain / (loss)
    
    
    (1,859
    )
    
    
    18(1,859
    )
    
    
    18
 22. Other liabilities
 March 31, 2008
    
    
    March 31, 2007Franchisee and other deposits
    
    
    124,472
    
    
    
    112,883124,472
    
    
    
    112,883
  23. Borrowings from banks
 March 31, 2008
    
    
    March 31, 2007Loan against fixed deposits
    
    
    85,000
    
    
    
    800,000Other working capital facilities
    
    
    71,426
    
    
    
    -156,426
    
    
    
    800,000
  
    
    Loan secured against deposits of Rs. 85,000 as at March 31, 2008 (Rs. 800,000 as at
March 31, 2007) from its bankers for working capital requirements. These borrowings bear
interest ranging from 9%-11% p.a and are repayable within one year from the balance sheet
date.
 
    
    Other working capital facilities are secured by a charge on the current assets and
book debts of the Company. These are short term borrowings and bear interest ranging
from 8%-10% p.a. Such facility generally is for a period that ranges from 90 to 120
days.
 111




---



##### 



24. Trade and other payables
 March 31, 2008
    
    
    March 31, 2007Trade payables
    
    
    613,422
    
    
    
    316,935Advance from customers
    
    
    124,921
    
    
    
    89,908Accrued expenses
    
    
    656,402
    
    
    
    650,376Other payables
    
    
    106,591
    
    
    
    149,9431,501,336
    
    
    
    1,207,162
 25. Deferred Income
  March 31, 2008
    
    
    March 31, 2007Corporate network/data services
    
    
    208,327
    
    
    
    351,933Internet access services
    
    
    57,270
    
    
    
    61,459Other services
    
    
    102,759
    
    
    
    36,638368,356
    
    
    
    450,030
 26. Revenue
 Year endedMarch 31, 2008
    
    
    March 31, 2007Rendering of ServicesService revenue
    
    
    4,868,673
    
    
    
    4,587,873Initial franchise fee
    
    
    43,503
    
    
    
    67,269Installation service revenue
    
    
    318,466
    
    
    
    256,0405,230,642
    
    
    
    4,911,182Sale of products
    
    
    775,573
    
    
    
    536,1656,006,215
    
    
    
    5,447,347
 27. Cost of goods sold and services rendered
  28. Other income
 Year endedMarch 31, 2008
    
    
    March 31, 2007Duty credit entitlement
    
    
    46,152
    
    
    
    66,094Gain on sale of investment in subsidiary (refer to note 29)
    
    
    -
    
    
    
    22646,152
    
    
    
    66,320
 112




---



##### 



29. Gain on sale of investment in subsidiary
   30. Selling, general & administration expenses
 Year endedMarch 31, 2008
    
    
    March 31, 2007Personnel expenses
    
    
    524,061
    
    
    
    571,610Marketing and promotion expenses
    
    
    555,132
    
    
    
    239,214Administrative and other expenses
    
    
    1,355,522
    
    
    
    1,284,1472,434,715
    
    
    
    2,094,971
  31. Personnel expenses
 Year endedMarch 31, 2008
    
    
    March 31, 2007Salaries and wages
    
    
    936,732
    
    
    
    878,463Contribution to provident fund and other funds
    
    
    43,597
    
    
    
    38,192Staff welfare expenses
    
    
    36,061
    
    
    
    25,610Employee stock compensation expense
    
    
    56,410
    
    
    
    60,9331,072,800
    
    
    
    1,003,198Attributable to cost of goods sold and services rendered
    
    
    548,739
    
    
    
    431,588Attributable to selling, general and administration expenses
    
    
    524,061
    
    
    
    571,610
 32. Share-based payments
  113




---



##### 



(i) Associate Stock Option Plan 2000
   One sixth of the options:
    
    At the end of one year from the date of the grantTwo sixths of the options:
    
    At the end of two years from the date of the grantThree sixths of the options:
    
    At the end of three years from the date of the grant.
   No. of options granted, exercised and forfeited
    
    Number of
    
    
    Weighted average
    
    
    Number of options
    
    
    Weighted averageoptions
    
    
    exercise price in
    
    
    
    
    
    
    exercise price inRs.
    
    
    
    
    
    
    Rs.2008
    
    
    2008
    
    
    2007
    
    
    2007Outstanding at beginning of the year
    
    
    -
    
    
    
    -
    
    
    
    2,040
    
    
    
    182.47Granted
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Forfeited
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Expired
    
    
    -
    
    
    
    -
    
    
    
    2,040
    
    
    
    182.47Outstanding at the end of the year
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
 (ii) Associate Stock Option Plan 2002
   One sixth of the options:
    
    At the end of one year from the date of the grantFive sixths of the options:
    
    At the end of each quarter during the second and third year from the date of the grant in eight equal installments.
   114




---



##### 



No. of options granted, exercised and forfeited
    

    Number of
    
    
    Weighted
    
    
    Number of options
    
    
    Weighted averageoptions
    
    
    average exercise
    
    
    
    
    
    
    exercise price inprice in Rs.
    
    
    
    
    
    
    Rs.2008
    
    
    2008
    
    
    2007
    
    
    2007Outstanding at beginning of the year
    
    
    6,250
    
    
    
    228.74
    
    
    
    376,857
    
    
    
    172.83Granted
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Forfeited
    
    
    -
    
    
    
    -
    
    
    
    521
    
    
    
    265.35Expired
    
    
    -
    
    
    
    -
    
    
    
    31,323
    
    
    
    188.45Exercised
    
    
    6,250
    
    
    
    228.74
    
    
    
    338,763
    
    
    
    172.18Outstanding at the end of the year
    
    
    -
    
    
    
    -
    
    
    
    6,250
    
    
    
    228.74Exercisable at the end of the year
    
    
    -
    
    
    
    -
    
    
    
    3,906
    
    
    
    228.74
 (iii)
    
    Associate Stock Option Plan 2005
 nd
  One sixth of the options:
    
    At the end of one year from the date of the grantFive sixths of the options:
    
    At the end of each quarter during the second and third year from the date of the grant in eight
equal installments.
   No. of options granted, exercised
    
    Number of options
    
    
    Weighted average
    
    
    Number of options
    
    
    Weighted averageand forfeited
    
    
    
    
    
    exercise price in Rs.
    
    
    
    
    
    
    exercise price in Rs.2008
    
    
    2008
    
    
    2007
    
    
    2007Outstanding at the beginning of the year
    
    
    868,195
    
    
    
    238.32
    
    
    
    1,676,400
    
    
    
    286.20Granted during the year
    
    
    119,400
    
    
    
    340.82
    
    
    
    547,600
    
    
    
    451.15Forfeited during the year
    
    
    (122,442
    )
    
    
    376.64
    
    
    
    (1,268,293
    )
    
    
    290.32Expired during the year
    
    
    (28,293
    )
    
    
    461.51
    
    
    
    (15,524
    )
    
    
    254.01Exercised during the year
    
    
    (13,567
    )
    
    
    238.32
    
    
    
    (71,988
    )
    
    
    238.32Replaced during the year (Refer to notes below)
    
    
    (497,200
    )
    
    
    422.91
    
    
    
    -
    
    
    
    -Outstanding at the end of the year
    
    
    326,093
    
    
    
    328.84
    
    
    
    868,195
    
    
    
    391.59Vested and exercisable at the end of the year
    
    
    235,010
    
    
    
    328.84
    
    
    
    54,914
    
    
    
    338.66Weighted average grant date fair value of grants during the year
    
    
    -
    
    
    
    120.00
    
    
    
    -
    
    
    
    224.86
 115




---



##### 



(iv)
    
    Associate Stock Option Plan 2007
   One sixth of the option quantity:
    
    At the end of one year from the date of the grant.Five sixths of the option quantity:
    
    At the end of each quarter during the second, third and fourth year from the date of
the grant in twelve equal installments.
   No. of options granted, exercised and forfeited
    
    Shares arising out of
    
    
    Weighted averageoptions
    
    
    exercise price in Rs.Year ended
    
    
    Year endedMarch 31, 2008
    
    
    March 31, 2008Outstanding at the beginning of the year
    
    
    -
    
    
    
    -Granted during the year
    
    
    708,200
    
    
    
    184.84Replaced (Refer to notes below)
    
    
    (123,900
    )
    
    
    184.84Replacement options granted (Refer to notes below)
    
    
    621,100
    
    
    
    157.35Forfeited during the year
    
    
    (5,000
    )
    
    
    308.42Expired during the year
    
    
    -
    
    
    
    -Exercised during the year
    
    
    -
    
    
    
    -Outstanding at the end of the year
    
    
    1,200,400
    
    
    
    157.35Vested and Exercisable at the end of the year
    
    
    -
    
    
    
    -Weighted average grant date fair value of grants
during the year
    
    
    -
    
    
    
    80.78
  Range of
    
    
    Number
    
    
    Weighted
    
    
    Weighted
    
    
    Number
    
    
    Weightedexercise
    
    
    outstanding
    
    
    average
    
    
    average
    
    
    exercisable at
    
    
    averageprice in Rs.
    
    
    at March 31,
    
    
    exercise price
    
    
    remaining
    
    
    March 31, 2008
    
    
    exercise2008
    
    
    in Rs.
    
    
    contractual life
    
    
    
    
    
    
    price in Rs.ASOP 2005
    
    
    238.32 - 449.16
    
    
    
    326,093
    
    
    
    328.84
    
    
    
    0.57 to 1.07 years
    
    
    
    235,010
    
    
    
    311.59ASOP 2007
    
    
    157.35
    
    
    
    1,200,400
    
    
    
    157.35
    
    
    3.81 years
    
    
    -
    
    
    
    -
 116




---



##### 



Modification
     Assumptions
    
    Pre modification
    
    
    Post modificationCurrent market price
    
    
    174.83
    
    
    
    174.83Exercise price
    
    
    308.34-578.38
    
    
    
    157.35Expected term
    
    3 - 4.5 years
    
    3 - 4.5 yearsVolatility
    
    
    53.83% - 77.82%
    
    
    
    53.01% - 77.82%Dividend yield
    
    
    0%
    
    
    
    0%Discount rate
    
    
    2.5%
    
    
    
    2.5%
 117




---



##### 



33. Financial Income and expense
 Year endedMarch 31, 2008
    
    
    March 31, 2007Interest income on bank deposits
    
    
    160,262
    
    
    
    153,028Interest income from leases
    
    
    1,232
    
    
    
    1,164Others
    
    
    289
    
    
    
    -Finance income
    
    
    161,783
    
    
    
    154,192Interest
expense on financial liabilities  leases
    
    
    1,826
    
    
    
    389Bank charges
    
    
    46,484
    
    
    
    17,428Other interest
    
    
    9,372
    
    
    
    7,733Finance expense
    
    
    57,682
    
    
    
    25,550Net finance income / (expense) recognised in profit or loss
    
    
    104,101
    
    
    
    128,642
 34. Earnings per share
 Year endedMarch 31, 2008
    
    
    March 31, 2007Net profit / (loss )  as reported
    
    
    (4,696
    )
    
    
    240,841Weighted average number of shares  Basic
    
    
    42,877,726
    
    
    
    42,704,619Profit / (loss) per share
    
    
    (0.11
    )
    
    
    5.64Weighted average number of shares  Dilutive
    
    
    43,039,675
    
    
    
    42,792,514Profit / (loss) per share
    
    
    (0.11
    )
    
    
    5.63
 Year endedMarch 31, 2008
    
    
    March 31, 2007Weighted average number of ordinary shares (Basic)
    
    
    42,877,726
    
    
    
    42,704,619Effect of dilutive equivalent shares- stock options
    
    
    83,096
    
    
    
    87,895Effect of partly paid shares
    
    
    78,853
    
    
    
    -Weighted average number of equity shares and equivalent shares outstanding (Diluted)
    
    
    43,039,675
    
    
    
    42,792,514
 118




---



##### 



35. Segment Reporting
  
    
    Corporate network/data services, which provides Internet, connectivity, security and
consulting, hosting and managed service solutions;
    
    Internet access services, from homes and through cybercafés,
    
    Online portal services and content offerings; and
    
    Other services, such as development of e-learning software.
       119




---



##### 



Year ended March 31, 2008
 CorporateNetwork /
    
    
    Internet AccessServices
    
    
    Online PortalServices
    
    
    Other Services
    
    
    TotalData ServicesTotal Segment Revenue
    
    
    3,993,189
    
    
    
    1,545,226
    
    
    
    210,766
    
    
    
    257,034
    
    
    
    6,006,215Segment Expenses allocated
    
    
    (2,592,132
    )
    
    
    (1,432,982
    )
    
    
    (298,031
    )
    
    
    (209,035
    )
    
    
    (4,532,180
    )Segment Operating Income
    
    
    1,401,057
    
    
    
    112,244
    
    
    
    (87,265
    )
    
    
    47,999
    
    
    
    1,474,035Unallocated corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,299,070
    )Depreciation and amortisation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (394,337
    )Foreign exchange gain / (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,587
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,152Net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,101Share of profit in equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,127Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,142
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,975
    )Net Profit/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,696
    )
 Year ended March 31, 2007
 CorporateNetwork /
    
    
    Internet AccessServices
    
    
    Online PortalServices
    
    
    Other Services
    
    
    TotalData ServicesTotal Segment Revenue
    
    
    3,163,899
    
    
    
    1,846,416
    
    
    
    262,904
    
    
    
    174,128
    
    
    
    5,447,347Segment Expenses allocated
    
    
    (1,937,489
    )
    
    
    (1,760,624
    )
    
    
    (261,949
    )
    
    
    (154,692
    )
    
    
    (4,114,754
    )Segment Operating Income
    
    
    1,226,410
    
    
    
    85,792
    
    
    
    955
    
    
    
    19,436
    
    
    
    1,332,593Unallocated corporate expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (927,878
    )Depreciation and amortisation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (463,780
    )Foreign exchange gain / (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,332Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,320Net interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,642Share of profit in equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,030Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,531
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,113Net Profit/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    240,841
 36. Capital Commitments
  120




---



##### 



37. Contingencies
      38. Legal proceedings
      121




---



##### 



39. Related parties
  March 31, 2008
    
    
    March 31, 2007Transactions with related partiesPayments to Directors (Fees for consultancy services)
    
    
    240
    
    
    
    240Billings
    
    
    -
    
    
    
    2,494Purchase of goods
    
    
    3,796
    
    
    
    -Gain on divestment of 26% holding in Sify
Communications Limited (also refer to note 29)
    
    
    -
    
    
    
    226Balances due to / receivable from related parties
    
    
    -
    
    
    
    -
  40. Financial instrument risks management
 Credit risk
    Exposure to credit risk
  March 31, 2008
    
    
    March 31, 2007Trade and Other receivables
    
    
    1,949,595
    
    
    
    1,648,310Other assets
    
    
    142,197
    
    
    
    69,731Cash and cash equivalents
    
    
    1,506,327
    
    
    
    3,070,157Forward exchange contracts used
for hedging:190,095
    
    
    
    -
  122




---



##### 



Impairment losses
  Gross
    
    
    Impairment
    
    
    Gross
    
    
    ImpairmentMarch 31, 2008
    
    
    March 31, 2008
    
    
    March 31, 2007
    
    
    March 31, 2007Not past due ( 0- 180 days )
    
    
    1,517,500
    
    
    
    -
    
    
    
    964,033
    
    
    
    -Past due 181 - 270 days
    
    
    131,313
    
    
    
    9,974
    
    
    
    190,427
    
    
    
    15,535Past due 271 - 365 days
    
    
    87,253
    
    
    
    31,550
    
    
    
    80,494
    
    
    
    31,013More than one year
    
    
    41,792
    
    
    
    41,792
    
    
    
    55,076
    
    
    
    55,0761,777,858
    
    
    
    83,316
    
    
    
    1,290,030
    
    
    
    101,624
  March 31, 2008
    
    
    March 31, 2007Balance as at 1 April
    
    
    101,624
    
    
    
    200,047Impairment loss recognised (net of write off)
    
    
    (18,308
    )
    
    
    (98,423
    )Balance as at 31 March
    
    
    83,316
    
    
    
    101,624
 Details of collaterals and other credit enhancements held
 March 31, 2008
    
    
    March 31, 2007Security deposits received for internet access services
    
    
    36,413
    
    
    
    40,603
  Ageing of other assets
 March 31, 2008
    
    
    March 31, 2007Gross
    
    
    GrossNot past due
    
    
    142,196
    
    
    
    69,731
 Liquidity risk
 
 123




---



##### 



As at March 31, 2008
 Carrying
    
    
    Contractual
    
    
    0-12 months
    
    
    1-2 years
    
    
    2-5 yearsamount
    
    
    cash flowsNon-derivative financial liabilitiesOverdraft facilities
    
    
    617,637
    
    
    
    617,637
    
    
    
    617,637
    
    
    
    -
    
    
    
    -Other secured financing arrangements
    
    
    156,426
    
    
    
    156,426
    
    
    
    156,426
    
    
    
    -
    
    
    
    -Finance lease liabilities
    
    
    5,392
    
    
    
    5,392
    
    
    
    2,899
    
    
    
    2,493
    
    
    
    -Deposits received from sales partners
    
    
    124,472
    
    
    
    124,472
    
    
    
    53,843
    
    
    
    12,499
    
    
    
    58,130Trade and other payables
    
    
    1,501,336
    
    
    
    1,501,336
    
    
    
    1,501,336
    
    
    
    -
    
    
    
    -2,405,263
    
    
    
    2,405,263
    
    
    
    2,332,141
    
    
    
    14,992
    
    
    
    58,130
 Carrying
    
    
    Contractual
    
    
    0-12 months
    
    
    1-2 years
    
    
    2-5 yearsamount
    
    
    cash flowsDerivative financial liabilitiesForward exchange contracts
other than those used for
hedging:Inflow
    
    
    (190,095
    )
    
    
    188,915
    
    
    
    188,915
    
    
    
    -
    
    
    
    -(190,095
    )
    
    
    188,915
    
    
    
    188,915
    
    
    
    -
    
    
    
    -
 As at March 31, 2007
 Carrying
    
    
    Contractual
    
    
    0-12 months
    
    
    1-2 years
    
    
    2-5 yearsAmount
    
    
    cash flowsNon-derivative financial liabilitiesOther secured financing arrangements
    
    
    800,000
    
    
    
    800,000
    
    
    
    800,000
    
    
    
    -
    
    
    
    -Finance lease liabilities
    
    
    6,147
    
    
    
    6,147
    
    
    
    2,476
    
    
    
    3,671
    
    
    
    -Deposits received from sales partners
    
    
    112,883
    
    
    
    112,883
    
    
    
    45,608
    
    
    
    8,214
    
    
    
    59,061Trade and other payables
    
    
    1,207,162
    
    
    
    1,207,162
    
    
    
    1,207,162
    
    
    
    -
    
    
    
    -2,126,192
    
    
    
    2,126,192
    
    
    
    2,055,246
    
    
    
    11,885
    
    
    
    59,061
 Currency risk
 Exposure to currency risk
  
    
    Forecasting inflows and outflows denominated in US$ for a twelve-month period
    
    Estimating the net-exposure in foreign currency, in terms of timing and amount
    
    Determining the extent to which exposure should be protected through one or more
risk-mitigating instruments to maintain the permissible limits of uncovered exposures.
  124




---



##### 



March 31, 2008
    
    
    
    March 31, 2007USD
    
    
    
    USD
    
    
    GBP
    
    
    EURO
    
    
    DHSTrade receivables
    
    
    6,693
    
    
    
    
    4,214
    
    
    
    63
    
    
    
    -
    
    
    
    53Trade payables
    
    
    -
    
    
    
    
    433
    
    
    
    -
    
    
    
    13
    
    
    
    -Gross balance sheet exposure
    
    
    6,693
    
    
    
    
    4,647
    
    
    
    63
    
    
    
    13
    
    
    
    53Forward exchange contracts
    
    
    4,750
    
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net exposure
    
    
    1,943
    
    
    
    
    4,647
    
    
    
    63
    
    
    
    13
    
    
    
    53
  Average rate during the year ended
    
    
    Reporting date spot rateMarch 31, 2008
    
    
    March 31, 2007
    
    
    March 31, 2008
    
    
    March 31, 2007USD
    
    
    40.13
    
    
    
    45.12
    
    
    
    40.02
    
    
    
    43.10
 Sensitivity analysis
  Equity
    
    
    Profit or lossMarch 31, 2008
    
    
    -
    
    
    
    2,259March 31, 2007
    
    
    -
    
    
    
    833
 125




---



##### 



Interest rate risk
  Profile
  Carrying amountMarch 31, 2008
    
    
    March 31, 2007Fixed rate instrumentsFinancial assets- Deposits
    
    
    877,582
    
    
    
    938,833Financial liabilities- Loans and borrowings
    
    
    774,063
    
    
    
    800,000
 Fair value sensitivity analysis for fixed rate instruments
 Cash flow sensitivity analysis for variable rate instruments
 41. Company entities
 Country
    
    % of Ownership interestParticulars
    
    of incorporationSignificant subsidiaries
    
    
    
    March 31, 2008
    
    
    March 31, 2007Sify Communication Limited
    
    India
    
    
    74
    
    
    
    74India World Communications Limited*
    
    India
    
    
    100
    
    
    
    100Sify International Inc
    
    US
    
    
    100
    
    
    
    100Sify Networks Private Limited
    
    India
    
    
    100
    
    
    
    100Sify Americas Inc *
    
    US
    
    
    
    
    
    
    100Globe Travels Inc*
    
    US
    
    
    100
    
    
    
    100AssociatesMF Global-Sify securities India Private Limited
    
    India
    
    
    29.85
    
    
    
    29.85
 * Sify Americas Inc, Globe Travels Inc. and India World Communications Limited since wound up.
 126




---



##### 



MF Global Sify Securities India Private Limited
 IFRS Consolidated Financial Statements
 As at and for the years ended March 31, 2008 and 2007.
 127




---



##### 



Report of Independent Registered Public Accounting Firm
 
   
 128




---



##### 



MF Global Sify Securities India Private Limited  (formerly known as Man Financial Sify Securities India Private Limited)
 (All amounts in Rupees thousands, except as otherwise stated)
  Consolidated Balance Sheet
 As at March 31,Note
    
    2008
    
    2007ASSETSCash and bank balance
    
    
    11
    
    
    
    287,465
    
    
    
    324,375Cash-restricted
    
    
    12
    
    
    
    5,414,723
    
    
    
    2,562,032Interest bearing deposits with bank
    
    
    
    
    
    
    16,500
    
    
    
    130,424Receivable from broker-dealers and clearing organizations
    
    
    9
    
    
    
    354,441
    
    
    
    60,916Receivable from customers (net of provision of Rs.
77,075 Previous year Rs. 76,400)
    
    
    8
    
    
    
    930,671
    
    
    
    616,792Available-for-sale securities:Marketable, at market value
    
    
    
    
    
    
    161,280
    
    
    
    204,176Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    20,393
    
    
    
    52,000Deposits with clearing organizations
    
    
    
    
    
    
    151,515
    
    
    
    120,048Interest accrued but not due
    
    
    
    
    
    
    234,126
    
    
    
    61,725Other assets
    
    
    10
    
    
    
    170,896
    
    
    
    122,037Intangible assets:Computer software
    
    
    5.1
    
    
    
    15,680
    
    
    
    19,353Memberships in exchanges
    
    
    5.2
    
    
    
    8,409
    
    
    
    8,745Furniture and equipment
    
    
    6
    
    
    
    72,882
    
    
    
    61,461Deferred tax asset
    
    
    7
    
    
    
    54,682
    
    
    
    47,725Total assets
    
    
    
    
    
    
    7,893,663
    
    
    
    4,391,809EQUITYCapital and reserves attributable to the Equity holdersOrdinary shares
    
    
    13
    
    
    
    518,942
    
    
    
    518,942Additional paid in capital
    
    
    
    
    
    
    28,968
    
    
    
    28,968Retained earnings
    
    
    
    
    
    
    1,039,771
    
    
    
    433,516Other components of equity
    
    
    
    
    
    
    15,380
    
    
    
    47,238Total Equity
    
    
    
    
    
    
    1,603,061
    
    
    
    1,028,664LIABILITIESPayable to broker dealers and clearing organizations
    
    
    9
    
    
    
    2,984,232
    
    
    
    1,195,594Payable to customers
    
    
    
    
    
    
    2,494,634
    
    
    
    1,797,100Borrowings
    
    
    15
    
    
    
    105,059
    
    
    
    Accounts payable, accrued expenses, and other liabilities
    
    
    17
    
    
    
    682,289
    
    
    
    360,740Employee benefit obligation
    
    
    16
    
    
    
    24,388
    
    
    
    9,711Total Liabilities
    
    
    
    
    
    
    6,290,602
    
    
    
    3,363,145Total liabilities and Equity
    
    
    
    
    
    
    7,893,663
    
    
    
    4,391,809
   129




---



##### 



MF Global Sify Securities India Private Limited  formerly known as Man Financial Sify Securities India Private Limited)
 (All amounts in Rupees thousands, except as otherwise stated)
  Consolidated Income Statement
 Years ended March 31,Note
    
    2008
    
    2007RevenueCommissions
    
    
    
    
    
    
    1,761,848
    
    
    
    1,025,505Depository and clearing fees
    
    
    
    
    
    
    78,324
    
    
    
    44,352Interest on fixed deposits with banks
    
    
    
    
    
    
    497,683
    
    
    
    141,681Other Income
    
    
    20
    
    
    
    165,665
    
    
    
    81,845Total Revenue
    
    
    
    
    
    
    2,503,520
    
    
    
    1,293,383ExpensesEmployee compensation and benefits
    
    
    19
    
    
    
    745,773
    
    
    
    453,488Exchange expenses and clearance fees
    
    
    
    
    
    
    253,658
    
    
    
    104,065Brokerage to other broker-dealers
    
    
    
    
    
    
    177,795
    
    
    
    109,319Communications and data processing
    
    
    
    
    
    
    24,707
    
    
    
    14,611Bank Interest and guarantee commission
    
    
    
    
    
    
    42,522
    
    
    
    19,896Depreciation and amortization
    
    
    
    
    
    
    36,086
    
    
    
    33,698Occupancy
    
    
    
    
    
    
    37,990
    
    
    
    30,839Provision for receivable from customers
    
    
    
    
    
    
    675
    
    
    
    73,300Advertisement and business promotion
    
    
    
    
    
    
    72,426
    
    
    
    45,418Other expenses
    
    
    18
    
    
    
    151,964
    
    
    
    100,493Total Expenses
    
    
    
    
    
    
    1,543,596
    
    
    
    985,127Profit before income tax
    
    
    
    
    
    
    959,924
    
    
    
    308,256Income tax expense
    
    
    21
    
    
    
    353,669
    
    
    
    103,830Profit for the year attributable to the Equity holders
    
    
    
    
    
    
    606,255
    
    
    
    204,426
   130




---



##### 



MF Global Sify Securities India Private Limited  (formerly known as Man Financial Sify Securities India Private Limited)
 (All amounts in Rupees thousands, except as otherwise stated)
  Consolidated Statement of Changes in Equity
 Number of
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    Otherordinary
    
    Par
    
    Share
    
    paid-in
    
    Retained
    
    components of
    
    Totalshares
    
    value
    
    capital
    
    capital
    
    earnings
    
    equity
    
    EquityBalance at April 01, 2006
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    229,090
    
    
    
    
    
    
    
    777,000Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,061
    )
    
    
    (1,061
    )Fair value gains on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,299
    
    
    
    48,299Net income directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,238
    
    
    
    47,238Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,426
    
    
    
    
    
    
    
    204,426Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,426
    
    
    
    47,238
    
    
    
    251,664Balance at March 31, 2007
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    433,516
    
    
    
    47,238
    
    
    
    1,028,664Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,586
    )
    
    
    (1,586
    )Transfer to income statement on sale of available-for-sale securities,
net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,387
    )
    
    
    (22,387
    )Fair value gains on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,885
    )
    
    
    (7,885
    )Net income directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,858
    )
    
    
    (31,858
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606,255
    
    
    
    
    
    
    
    606,255Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606,255
    
    
    
    (31,858
    )
    
    
    574,397Balance at March 31, 2008
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    1,039,771
    
    
    
    15,380
    
    
    
    1,603,061
   131




---



##### 



MF Global Sify Securities India Private Limited  (formerly known as Man Financial Sify Securities India Private Limited)
 (All amounts in Rupees thousands, except as otherwise stated)
  Consolidated Cash Flow Statement
 Year ended March 31,2008
    
    2007Cash flows from operating activitiesProfit before income tax
    
    
    959,924
    
    
    
    308,256Adjustments for
Depreciation and amortization
    
    
    35,980
    
    
    
    33,635Profit on sale of Available-for-sale securities
    
    
    (51,816
    )
    
    
    Provision on receivable from customers
    
    
    675
    
    
    
    73,300Stock appreciation rights
    
    
    15,218
    
    
    
    7,455Others
    
    
    (33
    )
    
    
    996Movements in working capitalCash-restricted
    
    
    (2,852,691
    )
    
    
    (1,522,917
    )Interest bearing deposits with banks
    
    
    113,924
    
    
    
    (28,174
    )Deposits with clearing organizations
    
    
    (31,467
    )
    
    
    300,342Receivable from broker-dealers and clearing organizations
    
    
    (293,525
    )
    
    
    77,385Receivable from customers
    
    
    (314,554
    )
    
    
    (68,859
    )Interest accrued but not due
    
    
    (172,401
    )
    
    
    (34,690
    )Other assets
    
    
    (19,620
    )
    
    
    (22,562
    )Payable to broker dealers and clearing organizations
    
    
    1,788,638
    
    
    
    829,384Payable to customers
    
    
    697,534
    
    
    
    525,279Accounts payable, accrued expenses, and other liabilities
    
    
    321,549
    
    
    
    161,307Cash generated from operations
    
    
    197,335
    
    
    
    640,137Income taxes paid
    
    
    (389,865
    )
    
    
    (157,945
    )Net cash (used in) / provided by operating activities
    
    
    (192,530
    )
    
    
    482,192Cash flows from investing activitiesAvailable for Sale Securities: Marketable, At Market Value
    
    
    72,325
    
    
    
    (191,571
    )Available for Sale Securities: Not readily marketable (at estimated fair value)
    
    
    23,722
    
    
    
    Expenditure on furniture and equipment
    
    
    (44,105
    )
    
    
    (58,924
    )Proceeds from sale of furniture and equipment
    
    
    205
    
    
    
    Net cash used in investing activities
    
    
    52,147
    
    
    
    (250,495
    )Cash flows from financing activitiesProceeds from borrowings
    
    
    105,059
    
    
    
    Net cash provided by/(used in) financing activities
    
    
    105,059
    
    
    
    Effect of foreign exchange fluctuation on cash and cash equivalents
    
    
    (1,586
    )
    
    
    (1,061
    )Net increase (decrease) in cash and bank balance
    
    
    (36,910
    )
    
    
    230,636Cash and bank balance at beginning of the year
    
    
    324,375
    
    
    
    93,739Cash and bank balance at end of the year
    
    
    287,465
    
    
    
    324,375
   132




---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    General information
  nd
   2.
    
    Summary of significant accounting policies2.1.
    
    Basis of preparation
  , Firsttime Adoption of International Financial Reporting Standards
     133




---



##### 



2.1.1.
    
    Basis of transition to
IFRS
    Exemptions from retrospective application
  a)
    
    Business combinations exemption MF has not had any transaction in the nature
of business combinations since inception; this exemption is not applicable.b)
    
    Fair value as deemed cost exemption MF has not elected to measure any item
of furniture and equipment at its fair value at the date of transition; furniture and
equipment have been measured at cost in accordance with IFRS.c)
    
    Employee benefits exemption all actuarial gains/losses are recognised in the
income statement. At the date of transition, full net benefit obligation has been
accounted on the balance sheet.d)
    
    Cumulative translation differences exemption As at April 1, 2006 there were
no balances on account of cumulative translation differences as MF didnt have any
significant operation with functional currency other than INR on the date of
transition; this exemption is not applicable.e)
    
    Compound financial instruments exemption MF has not issued any compound
financial instruments, this, exemption is not applicable.f)
    
    Assets and liabilities of subsidiaries, associates and joint ventures exemption
All the entities in the group except MF Global Middle East DMCC are transitioning to
IFRS on the same date. MF Global Middle East DMCC was incorporated on February 7, 2006,
and has been preparing financial statements under IFRS since inception. Accordingly,
assets and liabilities of MF Global Middle East DMCC are measured at the same carrying
amount as reported in its financial statements, after adjusting for consolidated
adjustments as on the date of transition.g)
    
    Designation of financial assets and financial liabilities exemption MF has
designated Shares of Bombay Stock Exchange Ltd. issued during the year 2005, in The
Bombay Stock Exchange (Corporatisation and Demutualisation) Scheme 2005 and investments
in mutual funds as an available for sale financial asset as at April 1, 2006.h)
    
    Share-based payment transaction exemption As at April 1, 2006 MF did not
have any outstanding share-based payments transaction; this exemption is not
applicable.i)
    
    Insurance contracts exemption MF does not issue insurance contracts; this
exemption is not applicable.j)
    
    Decommissioning liabilities included in the cost of property, plant and
equipment exemption MF does not have any decommissioning liabilities included in the
cost of premises and equipment; this exemption is not applicable.k)
    
    Leases exemption There are no arrangements covered under IFRIC
Interpretation 4, which determine whether an arrangement contains a lease as at the
date of transition; this exemption is not applicable.l)
    
    Fair value measurement of financial assets or liabilities at initial
recognition MF has not applied the exemption offered by the revision of IAS 39,
Financial Instruments: Recognition and Measurement, on the initial recognition of the
financial instruments measured at fair value through profit and loss where there is no
active market.m)
    
    IFRIC interpretation 12, Service concession arrangements exemption IFRIC 12
is not yet effective as at March 31, 2008 and MF has not early adopted the
interpretation; this exemption is not applicable. The group does not have any
transaction within the scope of IFRIC 12.n)
    
    Borrowing Cost exemption
This exemption is not yet effective as at March 31,
2008 and MF has not early adopted the interpretation; this exemption is not applicable.
 
 134




---



##### 



Exceptions from full retrospective application followed by MF
  a)
    
    Derecognition of financial assets and liabilities exception Financial assets
and liabilities derecognized before January 1, 2004 are not re-recognised under IFRS.
MF has not chosen to apply the IAS 39 derecognition criteria to an earlier date. No
significant arrangements were identified that had to be assessed under this exception.b)
    
    Hedge accounting exception MF has not identified any hedging relationships.
Hence, this exception is not applicable.c)
    
    Estimates exception On an assessment of the estimates made under US GAAP, MF
has concluded that there was no necessity to revise the estimates under IFRS except
where estimates were required by IFRS and not required by US GAAP.d)
    
    Assets held for sale and discontinued operations exception This exception
requires a company with a date of adoption after December 31, 2005 to restate its
comparatives for IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.
However, MF did not have any assets that met the heldforsale criteria during the
years presented and hence no adjustment is required.
 2.1.2.
    
    Standards, amendment
and interpretations effective as at March 31, 2008
 Financial instruments: Disclosures Presentation of financial statements  Capital disclosures
 Scope of IFRS 2
 IFRS 2  Group and treasury share transactions
 Interim financial reporting and impairment 
 2.1.3.
    
    Standards, amendments
and interpretations effective as at March 31, 2008 but not relevant
  
    
    IFRS 4, Insurance contracts;
    
    IFRIC 7, Applying the restatement approach under IAS 29, Financial reporting in
hyper-inflationary economies; and
    
    IFRIC 9, Reassessment of embedded derivatives.
 
 135




---



##### 



2.1.4.
    
    Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the group
  
    
    IAS 23 (Revised), Borrowing costs. It requires an entity to capitalise borrowing
costs directly attributable to the acquisition, construction or production of a
qualifying asset (one that takes a substantial period of time to get ready for use or
sale) as part of the cost of that asset. The option of immediately expensing those
borrowing costs will be removed. The group will apply IAS 23 (revised) from April 1,
2009 and is currently not applicable to the group as there are no qualifying assets.
    
    IAS 27 (Revised), Consolidated and Separate Financial Statements. It requires a
mandatory adoption of economic entity model, which treats all providers of equity
capital as shareholders of the entity. Consequently, a partial disposal of interest in
a subsidiary in which the parent company retains control does not result in a gain or
loss but in an increase or decrease in equity. Purchase of some or all of the
non-controlling interests (also known as minority interests) (NCI) is treated as
treasury transaction and accounted for in equity. A partial disposal of interest in a
subsidiary in which the parent company loses control triggers recognition of gain or
loss on the entire interest. A gain or loss is recognised on the portion that has been
disposed of; a further holding gain is recognised on the interest retained, being the
difference between the fair value and book value of the interest retained.
   
    
    IFRS 3 (Revised), Business Combinations. It has expanded the scope to include
combinations by contract alone and combination of mutual entities and slightly amended
the definition of business as capable of being conducted rather than are conducted
and managed. All the acquisition-related costs are to be recognised as period expenses
in accordance with the appropriate IFRS. Costs incurred to issue debt or equity
securities will be recognised in accordance with IAS 39.
     
    
    IFRIC 14, IAS 19  The limit on a defined benefit asset, minimum funding
requirements and their interaction. IFRIC 14 provides guidance on assessing the limit
in IAS 19 on the amount of the surplus that can be recognized as an asset. It also
explains how the pension asset or liability may be affected by a statutory or
contractual minimum-funding requirement. The group will apply IFRIC 14 from April 1,
2008, but it is not expected to have any impact on the groups accounts.
    
    IAS 1, Presentation of Financial Statements, applicable for annual periods beginning
on or after January 1, 2009, or the revised standard can be early adopted. IAS 1
affects the presentation of owner changes in equity and of comprehensive income. It
does not change the recognition, measurement or disclosure of specific transactions and
other events required by other IFRSs. The group will apply this standard from April 1,
2009.
 136




---



##### 



2.1.5.
    
    Interpretations to existing standards that is not yet effective and not relevant for the
groups operations
  
    
    IFRIC 12, Service concession arrangements(effective from April 1, 2008). IFRIC 12
applies to contractual arrangements whereby a private sector operator participates in
the development, financing, operation and maintenance of infrastructure for public
sector services. IFRIC 12 is not relevant to the groups operations.
    
    IFRIC 13, Customer loyalty programmes(effective from April 1, 2008). IFRIC 13
clarifies that where goods or services are sold together with a customer loyalty
incentive (for example, loyalty points or free products), the arrangement is a
multiple-element arrangement and the consideration receivable from the customer is
allocated between the components of the arrangement using fair values. IFRIC 13 is not
relevant to the groups operations as the group does not provide customer loyalty
programmes.
    
    IFRS 8, Operating segments(effective from April 1, 2009). IFRS 8 replaces IAS 14
and aligns segment reporting with the requirements of the US standard SFAS 131,
Disclosures about segments of an enterprise and related information. The new standard
requires a management approach, under which segment information is presented on the
same basis as that used for internal reporting provided to the chief operating
decision-maker. This standard is not applicable to the group as the groups debt or
equity instruments are not traded in a public market or the group is not in the process
of filing, the consolidated financial statements with a securities commission or other
regulatory organisation for the purpose of issuing any class of instruments in a public
market.
    
    IFRIC Interpretation 15, Agreements for the Construction of Real Estate (effective
from April 1, 2009), IFRIC 15 is applicable to the accounting for revenue and
associated expenses by entities that undertake the construction of real estate directly
or through subcontractors. IFRIC 13 is not relevant to the groups operations.
    
    IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation (effective
from April 1, 2009), This Interpretation applies to an entity that hedges the foreign
currency risk arising from its net investments in foreign operations and wishes to
qualify for hedge accounting in accordance with IAS 39. IFRIC 16 is not relevant to the
group.
 2.2.
    
    Consolidation
  Country of
    
    Percentage of holdingincorporation
    
    as at March 31, 2008Direct subsidiaries1)
    
    MF Global Commodities India Private Limited
    
    India
    
    
    100.00%2)
    
    MF Global Capital India Private Limited
    
    India
    
    
    100.00%Indirect Subsidiary1)
    
    MF Global Middle East Limited DMCC
    
    Dubai
    
    
    100.00%
    Business Combinations
 
 137




---



##### 



2.3.
    
    Foreign currency
translation
 a)
    
    Functional and presentation currency
  
    
    assets and liabilities for each balance sheet presented are translated at the
closing rate at that balance sheet date;
    
    income and expenses for each income statement are translated at average exchange
rate; and
    
    all resulting exchange differences are recognised as a separate component of equity.b)
    
    Transactions and balances
  2.4.
    
    Furniture and
equipment
   Furniture
and fixtures
    
    
    18.10
    %Computer systems
    
    
    40.00
    %Office equipments
    
    
    13.91
    %Vehicles
    
    
    25.89
    %
   
 138




---



##### 



2.5.
    
    Intangible assets
  a)
    
    Software
  b)
    
    Trading rights in Stock Exchange
 BSE membership
   DGCX membership
   2.6.
    
    Impairment of
non-financial assets
  2.7.
    
    Financial instruments
   
 139




---



##### 



2.8.
    
    Financial assets
  a)
    
    Loans and Receivables
  b)
    
    Available for sale
    2.9.
    
    Receivables
  2.10.
    
    Interest bearing
deposits with banks
  2.11.
    
    Cash and bank balance
  
 140




---



##### 



2.12.
    
    Payables
  2.13.
    
    Borrowings - Bank
overdraft
  2.14.
    
    Provisions
  2.15.
    
    Current and deferred
income tax
      2.16.
    
    Employee benefits
  a)
    
    Provident Fund
  b)
    
    Gratuity
  141




---



##### 



c)
    
    Share-based payment
 Share Based Payment
    2.17.
    
    Revenue
Recognition
 a)
    
    Commission, clearing fees, depository fee income
  b)
    
    Dividend and Interest Income
  2.18.
    
    Leases
    
 142




---



##### 



3.
    
    Financial risk management3.1.
    
    Financial risk factors
  Business
Risk
  Interest
rate Risk
   Price Risk
  Foreign
Exchange Risk
  Credit Risk
   143




---



##### 



The groups policy is to place fixed deposits with credit worthy banks. The following table
depicts that majority of groups fixed deposits is placed in
highly rated banks
 % of fixed depositsInvestment grade
    
    2008
    
    
    2007Highest safety
    
    
    74
    
    
    
    66High safety
    
    
    8
    
    
    
    33Adequate
safety
    
    
    18
    
    
    
    1100
    
    
    
    100
  Risk Management Process & Mitigation
   
    
    establishing risk parameters based on analysis of current and historical prices and
price volatility;
    
    intra-day and end of day risk limit monitoring, including intra-day position and
trade monitoring to identify any accounts trading beyond pre-set limits and parameters;
    
    market risk analysis and evaluation of adequacy of margin requirements for traded
products;
    
    intra-day stress analysis for material market moves or accounts with material
position taking;
    
    approval of margin requirements, limits and risk control of new instruments
 Cash Liquidity
RiskIn normal conditions, the groups core business of providing execution and clearing
brokerage services is self-financing because the operations generate sufficient revenues to
pay expenses as they become due. As a result, the group generally do not face a substantial
cash liquidity risk  that is a risk that the group will be unable to raise quickly enough
to meet payment obligations as they arise. The group have sufficient readily available
liquid assets and credit facilities to ensure that the group can meet financial obligations
as they become due under both normal and distressed market conditions. The group also have
committed credit lines from banks to support the business in respect of settlement and intra
day requirements. The group evaluates liquidity needs by analysing the impact of liquidity
stress scenarios. The following table analyses the Groups financials assets, liabilities
and commitments. The amounts disclosed are the contractual undiscounted cash flows.Year ended March 31,
2008
 Within 6
    
    
    6 months to
    
    
    2 to 3 years
    
    
    After 3 yearsmonths
    
    
    1 YearFinancial LiabilitiesPayable to
broker dealers and clearing organizations
    
    
    2,984,232
    
    
    
    -
    
    
    
    -
    
    
    
    -Payable to customers
    
    
    2,494,634
    
    
    
    -
    
    
    
    -
    
    
    
    -Borrowings
    
    
    100,274
    
    
    
    768
    
    
    
    3,070
    
    
    
    2,430Accounts payable, accrued expenses, and other liabilities
    
    
    682,289
    
    
    
    -
    
    
    
    -
    
    
    
    -6,261,429
    
    
    
    768
    
    
    
    3,070
    
    
    
    2,430
 144




---



##### 



Within 6
    
    
    6 months to
    
    
    2 to 3 years
    
    
    After 3 yearsmonths
    
    
    1 YearThe group
has at its disposal following financial assets in addition to unused lines of credit.Cash and
Bank balance
    
    
    287,465
    
    
    
    -
    
    
    
    -
    
    
    
    -Cash-restricted
    
    
    2,640,245
    
    
    
    2,774,478
    
    
    
    -
    
    
    
    -Interest
bearing deposits with bank
    
    
    -
    
    
    
    16,500
    
    
    
    -
    
    
    
    -Deposits
with clearing organizations
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    151,515Receivable
from broker-dealers and clearing organizations
    
    
    354,441
    
    
    
    -
    
    
    
    -
    
    
    
    -Receivable
from customers
    
    
    930,671
    
    
    
    -
    
    
    
    -
    
    
    
    -Available-for-sale
securities Marketable, at market value
    
    
    161,280
    
    
    
    -
    
    
    
    -
    
    
    
    -Interest
accrued but not due
    
    
    234,126
    
    
    
    -
    
    
    
    -
    
    
    
    -4,608,228
    
    
    
    2,790,978
    
    
    
    -
    
    
    
    151,515
 Year ended March 31,
2007
 Within 6
    
    
    6 months to
    
    
    2 to 3 years
    
    
    After 3 yearsmonths
    
    
    1 YearFinancial
LiabilitiesPayable to
broker dealers and clearing organizations
    
    
    1,195,594
    
    
    
    -
    
    
    
    -
    
    
    
    -Payable to
customers
    
    
    1,797,100
    
    
    
    -
    
    
    
    -
    
    
    
    -Accounts
payable, accrued expenses, and other liabilities
    
    
    360,740
    
    
    
    -
    
    
    
    -
    
    
    
    -3,353,434
    
    
    
    -
    
    
    
    -
    
    
    
    -
 Within 6
    
    
    6 months to
    
    
    2 to 3 years
    
    
    After 3 yearsmonths
    
    
    1 YearThe group
has at its disposal following financial assets in addition to unused lines of credit.Cash and Bank balance
    
    
    324,375
    
    
    
    -
    
    
    
    -
    
    
    
    -Cash-restricted
    
    
    657,052
    
    
    
    1,904,980
    
    
    
    -
    
    
    
    -Interest
bearing deposits with bank
    
    
    130,424
    
    
    
    -
    
    
    
    -
    
    
    
    -Deposits with clearing organizations
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    120,048Receivable
from broker-dealers and clearing organizations
    
    
    60,916
    
    
    
    -
    
    
    
    -
    
    
    
    -Receivable from customers
    
    
    616,792
    
    
    
    -
    
    
    
    -
    
    
    
    -Available-for-sale
securities: Marketable, at market
    
    
    204,176
    
    
    
    -
    
    
    
    -
    
    
    
    -Interest
accrued but not due
    
    
    61,725
    
    
    
    -
    
    
    
    -
    
    
    
    -2,055,460
    
    
    
    1,904,980
    
    
    
    
    
    
    
    120,048
  As at March 31,2008
    
    
    2007Fund based facilities (working capital)
    
    
    2,260,000
    
    
    
    2,050,000Non--fund facilities
    
    
    1,000,075
    
    
    
    75Total
    
    
    3,260,075
    
    
    
    2,050,075
 3.2.
    
    Capital risk
management
  145




---



##### 



3.3.
    
    Fair value estimationThe fair value of financial instruments traded in active markets (such as available-for-sale
securities) is based on quoted market prices at the balance sheet date. The quoted market
price used for financial assets held by the group is the closing market price. The fair
value of financial instruments that are not traded in an active market (for example, the
BSE Shares) is determined by using valuation techniques.The group uses a variety of methods and makes assumptions that are based on market
conditions and comparable market transactions existing at each balance sheet date. Other
techniques, such as estimated discounted cash flows, are used to determine fair value for
the remaining financial instruments.The carrying values less impairment provision, of trade receivables are assumed to
approximate their fair values.4.
    
    Critical accounting estimates and judgementsIn the process of applying the groups accounting policies, management has made estimates
and judgements in preparing the financial statements.Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable
under the circumstances.MF makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.Valuation of financial assets where there is no quoted price  This determination requires
significant judgement particularly in determining changes in fair value since the last
formal valuation.Impairment of assets  The recoverable amount of an asset or a cash-generating unit is
determined based on value-in-use calculations prepared on the basis of managements
assumptions and estimates.Income taxes  There are transactions and calculations for which the ultimate tax
determination is uncertain and would get finalized on completion of assessment by tax
authorities. Where the final tax outcome is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.Defined benefit schemes  Gratuity Liability  The costs of and period-end obligations
under defined benefit schemes are determined using an actuarial valuation. The actuarial
valuation involves making assumptions about discount rates, expected rates of return on
assets, future salary increases, mortality rates and future pension increases. Due to the
long-term nature of these schemes, such estimates are subject to significant uncertainty.
The group reviews its assumptions annually in conjunction with its independent actuary and
considers this adjustment appropriate given the geographical and demographic profile of the
scheme.Share-based payment transactions  Share-based payments are measured at fair value by an
independent valuer using black and scholes model and expensed over the vesting period based
on the groups estimate of shares that will eventually vest.5.1.
    
    Software
 Computer
    
    
    Web DevelopmentSoftware
    
    
    Costs
    
    
    TotalCostAs at April 1, 2006
    
    
    24,978
    
    
    
    207,422
    
    
    
    232,400Additions
    
    
    19,218
    
    
    
    30
    
    
    
    19,248As at March 31, 2007
    
    
    44,196
    
    
    
    207,452
    
    
    
    251,648Additions
    
    
    7,265
    
    
    
    -
    
    
    
    7,265Exchange difference
    
    
    (15
    )
    
    
    -
    
    
    
    (15
    )As at March 31, 2008
    
    
    51,446
    
    
    
    207,452
    
    
    
    258,898Accumulated amortisation and impairmentAs at April 1, 2006
    
    
    16,273
    
    
    
    207,422
    
    
    
    223,695Charge for the year
    
    
    8,570
    
    
    
    30
    
    
    
    8,600As at March 31, 2007
    
    
    24,843
    
    
    
    207,452
    
    
    
    232,295Charge for the year
    
    
    10,931
    
    
    
    -
    
    
    
    10,931Exchange difference
    
    
    (8
    )
    
    
    -
    
    
    
    (8
    )As at March 31, 2008
    
    
    35,766
    
    
    
    207,452
    
    
    
    243,218Net book amount as atMarch 31, 2007
    
    
    19,353
    
    
    
    -
    
    
    
    19,353March 31, 2008
    
    
    15,680
    
    
    
    -
    
    
    
    15,680
 146




---



##### 



5.2.
    
    Membership in Exchange
 Membership in exchanges consists of:
 a)
    
    BSE membership of Rs 4,387 thousands as at March 31, 2008 and 2007, andb)
    
    DGCX membership of Rs 4,022 thousands and Rs.4,358 thousand as at March 31,
2008 and 2007, respectively. DGCX membership value underwent a change due to foreign
currency translation.
 BSE membershipMF Global Sify acquired The Stock Exchange, Mumbai (the BSE) membership card on December
6, 2000. During the year 2005-06, a scheme, The Bombay Stock Exchange (Corporatisation and
Demutualization) Scheme 2005 (the Scheme) was approved by Securities Exchange Board of
India with effect from August 19, 2005 (the due date) which converted the 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 erstwhile BSE, in exchange of their
erstwhile BSE membership cards (rights) received 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 erstwhile BSE membership card on the due date in the books of MF
Global Sify was Rs.13,570 thousand. Consequent to the corporatisation of the BSE, MF Global
Sify computed the fair value of the membership rights of BSEL and shares of BSEL as follows:
 Membership rights of BSEL
    
    On the basis of the benefits which
MF Global Sify 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
 The difference between the aggregate of the fair values of the membership right being BSEL
and the equity shares of BSEL and the carrying value of the initial BSE membership right of
Rs. 5,980 thousand was written off to consolidated income statement during the year ended
March 31, 2006.6.
    
    Furniture and equipment
 Furniture and
    
    
    Computers
    
    
    OfficeFixtures
    
    
    Systems
    
    
    equipments
    
    
    Vehicles
    
    
    TotalCostAs at April 1, 2006
    
    
    1,034
    
    
    
    99,126
    
    
    
    11,413
    
    
    
    6,108
    
    
    
    117,681Additions
    
    
    2,112
    
    
    
    31,453
    
    
    
    3,948
    
    
    
    2,195
    
    
    
    39,708Disposals
    
    
    (2
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (2
    )As at March 31, 2007
    
    
    3,144
    
    
    
    130,579
    
    
    
    15,361
    
    
    
    8,303
    
    
    
    157,387Additions
    
    
    3,317
    
    
    
    16,901
    
    
    
    5,464
    
    
    
    11,158
    
    
    
    36,840Disposals
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (351
    )
    
    
    (351
    )Exchange difference
    
    
    (78
    )
    
    
    (39
    )
    
    
    (44
    )
    
    
    -
    
    
    
    (161
    )As at March 31, 2008
    
    
    6,383
    
    
    
    147,441
    
    
    
    20,781
    
    
    
    19,110
    
    
    
    193,715Accumulated depreciationAs at April 1, 2006
    
    
    481
    
    
    
    63,871
    
    
    
    3,725
    
    
    
    2,822
    
    
    
    70,899Charge for the year
    
    
    483
    
    
    
    21,621
    
    
    
    1,605
    
    
    
    1,318
    
    
    
    25,027As at March 31, 2007
    
    
    964
    
    
    
    85,492
    
    
    
    5,330
    
    
    
    4,140
    
    
    
    95,926Charge for the year
    
    
    550
    
    
    
    20,678
    
    
    
    1,717
    
    
    
    2,104
    
    
    
    25,049Disposals
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (91
    )
    
    
    (91
    )Exchange difference
    
    
    (22
    )
    
    
    (20
    )
    
    
    (9
    )
    
    
    -
    
    
    
    (51
    )As at March 31, 2008
    
    
    1,492
    
    
    
    106,149
    
    
    
    7,039
    
    
    
    6,153
    
    
    
    120,833Net book amount as atMarch 31, 2007
    
    
    2,180
    
    
    
    45,087
    
    
    
    10,031
    
    
    
    4,163
    
    
    
    61,461March 31, 2008
    
    
    4,891
    
    
    
    41,292
    
    
    
    13,742
    
    
    
    12,957
    
    
    
    72,882
 147




---



##### 



7.
    
    Deferred income taxThe movement in deferred tax assets and liabilities during the respective years, is as
follows:
 2008
    
    
    2007At April
    
    
    47,725
    
    
    
    13,664Furniture and equipment
    
    
    (1,677
    )
    
    
    (5,390
    )Provision on receivable from customers
    
    
    229
    
    
    
    24,915Stock appreciation rights
    
    
    4,899
    
    
    
    2,438Bonus payable
    
    
    3,442
    
    
    
    12,606Others
    
    
    64
    
    
    
    (508
    )At March
    
    
    54,682
    
    
    
    47,725Comprised Of:Deferred tax assets
    
    
    55,229
    
    
    
    48,510Deferred tax liabilities
    
    
    (547
    )
    
    
    (785
    )54,682
    
    
    
    47,725
 An analysis of the gross deferred tax asset and liability balances is as follows:
 2008
    
    
    2007Deferred tax assets:Furniture and equipment
    
    
    5,159
    
    
    
    6,806Provision on receivable from customers
    
    
    26,153
    
    
    
    25,924Stock appreciation rights
    
    
    7,337
    
    
    
    2,438Bonus payable
    
    
    16,048
    
    
    
    12,606Others
    
    
    532
    
    
    
    73655,229
    
    
    
    48,510Deferred tax assets:Furniture and equipment
    
    
    5,159
    
    
    
    6,806Provision on receivable from customers
    
    
    26,153
    
    
    
    25,924Stock appreciation rights
    
    
    7,337
    
    
    
    2,438Bonus payable
    
    
    16,048
    
    
    
    12,606Others
    
    
    532
    
    
    
    73655,229
    
    
    
    48,510Deferred tax liabilities:Furniture and equipment
    
    
    (41
    )
    
    
    (11
    )Others
    
    
    (506
    )
    
    
    (774
    )(547
    )
    
    
    (785
    )
 8.
    
    Receivables from customersReceivables from customers that are due for less than six months are generally not
considered impaired. In respect of receivables that are neither past due nor impaired, as at
the reporting date, there are no indications that the customers will not meet their payment
obligations.As at March 31, 2008, receivables of Rs.39,831 (March 31, 2007: Rs.11,938) were past due but
not impaired. There are no indications that these customers will not meet their payment
obligations. The ageing analysis of receivables, which are not impaired, is as follows:
 As at March 31,2008
    
    
    2007Up to 6 months
    
    
    890,860
    
    
    
    605,116more than 6 months
    
    
    39,831
    
    
    
    11,938930,691
    
    
    
    617,054
 148




---



##### 



As at March 31, 2008, receivables of Rs.77,055 (March 31, 2007: Rs.76,138) were impaired and
provided for. The amount of the provision was Rs.77,075 as at March 31, 2008 (March 31,
2007: Rs.76,400). Receivables are tested individually for impairment.The ageing of these receivables is as follows:
 As at March 31,2008
    
    
    2007Up to 6 months
    
    
    13,061
    
    
    
    63,067more than 6 months
    
    
    63,994
    
    
    
    13,07177,055
    
    
    
    76,138
 The carrying amounts of the groups receivables are denominated in the following currencies:
 As at March 31,2008
    
    
    2007US dollar
    
    
    332,834
    
    
    
    57,797INR
    
    
    597,837
    
    
    
    558,995930,671
    
    
    
    616,792
 Movements on the groups provision for impairment of trade receivables are as follows:
 As at March 31,2008
    
    
    2007As at the beginning of the year
    
    
    76,400
    
    
    
    3,100Provision for impairment
    
    
    675
    
    
    
    73,300As at the closing of the year
    
    
    77,075
    
    
    
    76,400
 The maximum exposure to credit risk at the reporting date is the fair value of each class of
receivable mentioned above.9.
    
    Receivable from and payable to broker-dealer and clearing organisationsAmounts receivable from and payable to broker-dealers and clearing organizations within six
months from the balance sheet date consist of the following:
 As of March 312008
    
    
    2007Receivable
    
    
    Payable
    
    
    Receivable
    
    
    Payable(Rs. in thousands)Clearing organizations -- Unsettled trade
    
    
    223,496
    
    
    
    -
    
    
    
    60,724
    
    
    
    14,400Broker-Dealer
    
    
    130,945
    
    
    
    2,984,232
    
    
    
    192
    
    
    
    1,181,194354,441
    
    
    
    2,984,232
    
    
    
    60,916
    
    
    
    1,195,594
 The group is a member of various exchanges that trade and clear securities, commodities
and/or futures contracts. Associated with its membership, the group 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 groups obligation 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. The group 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.
 149




---



##### 





|   
|---
|10.

As at March 31,2008
    
    
    2007Prepaid expenses
    
    
    21,806
    
    
    
    25,838Advance tax (net of provisions)
    
    
    75,479
    
    
    
    49,091Deposits
    
    
    34,462
    
    
    
    17,221Loans and advances (to staff)
    
    
    16,693
    
    
    
    9,990Others*
    
    
    22,456
    
    
    
    19,897170,896
    
    
    
    122,037 * Includes Advances to vendors towards expenses, delayed payment charges from clients,
withholding tax recoverable, etc
 11.
    
    Cash and bank balanceCash and bank balance consist of:
 As at March 31,2008
    
    
    2007Cash in hand
    
    
    21
    
    
    
    1Cash at bank
    
    
    287,444
    
    
    
    324,374287,465
    
    
    
    324,375
 12.
    
    Cash  RestrictedRestricted cash as of
March 31, 2008 includes fixed deposits of Rs.1,082,523 thousand (Rs.1,061,603 thousand as of March 31, 2007) placed with banks as margins for bank guarantees
issued to clearing organizations and fixed deposits of Rs. 4,332,200 thousand (Rs.1,500,429
thousand as of March 31, 2007) specifically earmarked as liens to clearing organizations
towards margins.
   150      13.
    
    Share capital and Dividend distribution
 As at March 31,2008
    
    
    2007Authorised capital65,000,000 ordinary shares of Rs.10/- per share
    
    
    650,000
    
    
    
    650,000
  Dividend
distribution
   14.
    
    Sharebased payments
 Employees Stock Appreciation Scheme
        151
      Changes in number of SARs representing stock options outstanding were as follows:
 As at March 31,2008
    
    
    2007As at the beginning of the year
    
    
    711,247
    
    
    
    -Granted
during the year
    
    
    809,500
    
    
    
    711,247Exercised
    
    
    -
    
    
    
    -Forfeited
    
    
    (62,000
    )
    
    
    -Lapsed
    
    
    54,000
    
    
    
    -As at the end of the year
    
    
    1,512,747
    
    
    
    711,247Exercisable at the end of the year
    
    
    -
    
    
    
    -Approximate remaining vesting period in years
    
    
    3.92
    
    
    
    3.00
 Co-investment plan
    15.
    
    Borrowings
 As at March 31,2008
    
    
    2007Bank overdraft
    
    
    99,507
    
    
    
    -Car Loan
    
    
    5,552
    
    
    
    -105,059
    
    
    
    -
 Aggregate maturities of the borrowings are as follows:
 As at March 31,2008
    
    
    2007On demand or within one year
    
    
    100,441
    
    
    
    -In one to three years
    
    
    2,376
    
    
    
    -In three to five years
    
    
    2,242
    
    
    
    -105,059
    
    
    
    -
 152
      16.
    
    Employee benefit obligation
 Year ended March 31,2008
    
    
    2007Gratuity
    
    
    1,772
    
    
    
    2,260Stock appreciation rights
    
    
    22,616
    
    
    
    7,45124,388
    
    
    
    9,711
 The movement in the defined benefit obligation of gratuity over the period is as follows:
 Year ended March 31,2008
    
    
    2007Opening defined benefit obligation
    
    
    6,286
    
    
    
    4,131Current service cost
    
    
    3,110
    
    
    
    2,214Interest cost
    
    
    505
    
    
    
    296Actuarial losses/ (gains)
    
    
    (444
    )
    
    
    (354
    )Benefits paid
    
    
    -
    
    
    
    -Closing defined benefit obligation
    
    
    9,458
    
    
    
    6,287
 The movement in the fair value of plan assets of the year is as follows: Year ended March 31,2008
    
    
    2007Beginning of year
    
    
    4,027
    
    
    
    2,264Expected return on plan assets
    
    
    321
    
    
    
    210Actuarial (losses)/gains
    
    
    32
    
    
    
    -Employer contributions
    
    
    3,306
    
    
    
    1553Closing fair value of plan assets
    
    
    7,686
    
    
    
    4,027
 The amounts recognised in the income statement in respect of gratuity are as follows:
 Year ended March 31,2008
    
    
    2007Current service cost
    
    
    3,153
    
    
    
    2,214Interest cost
    
    
    505
    
    
    
    296Actuarial loss
    
    
    (537
    )
    
    
    -Expected return on plan asset
    
    
    (321
    )
    
    
    (170
    )2,800
    
    
    
    2,340
 The principal actuarial assumptions used were as follows:
 Year ended March 31,2008
    
    
    2007Discount rate
    
    
    8
    %
    
    
    8
    %Expected return on plan assets
    
    
    8
    %
    
    
    8
    %Long term rate of compensation increase
    
    
    6
    %
    
    
    6
    %
 Mortality rates at various age groups are taken as per 1994-96 Life
Insurance Corporation (LIC) Ultimate table.
 153      17.
    
    Accounts payables, accrued expenses and other liabilities
 As at March 31,2008
    
    
    2007Accruals
    
    
    42,205
    
    
    
    62,425Withholding Tax payable
    
    
    147,729
    
    
    
    63,925Bonus Payable
    
    
    307,076
    
    
    
    152,164Other payables
    
    
    185,279
    
    
    
    82,226Total
    
    
    682,289
    
    
    
    360,740
 18.
    
    Other Expenses
 Year ended March 31,2008
    
    
    2007Professional Fees
    
    
    17,562
    
    
    
    14,465Travelling and conveyance
    
    
    18,844
    
    
    
    15,388Books & Periodicals, Postage, printing and stationary
    
    
    46,284
    
    
    
    33,958Loss on account of error trades (net)
    
    
    30,818
    
    
    
    21,988Repairs & maintenance
    
    
    708
    
    
    
    1,687Service fee expenses
    
    
    22,222
    
    
    
    1,713Others
    
    
    15,526
    
    
    
    11,294Total
    
    
    151,964
    
    
    
    100,493
 19.
    
    Employee benefit expense
 Year ended March 312008
    
    
    2007Salaries and bonus
    
    
    720,070
    
    
    
    437,135Defined contribution plans
    
    
    3,828
    
    
    
    3,617Defined benefit plans
    
    
    2,800
    
    
    
    2,340Staff welfare expenses
    
    
    3,688
    
    
    
    2,787Sharebased compensation expense
    
    
    15,218
    
    
    
    7,455Fringe benefit tax
    
    
    169
    
    
    
    154745,773
    
    
    
    453,488
 20.
    
    Other income
 Year ended March 31,2008
    
    
    2007Profit on sale of available-for-sale securities
    
    
    51,816
    
    
    
    -Delayed payment charges
    
    
    52,622
    
    
    
    28,719Research fees
    
    
    7,861
    
    
    
    1,587Referral fees
    
    
    20,527
    
    
    
    9,741Interest and dividend
    
    
    11,708
    
    
    
    19,917Miscellaneous income
    
    
    21,131
    
    
    
    21,881165,665
    
    
    
    81,845
 154
      21.
    
    Income tax expense
 Year ended March 31,2008
    
    
    2007Current tax
    
    
    360,626
    
    
    
    138,650Deferred tax (Note 7)
    
    
    (6,957
    )
    
    
    (34,820
    )353,669
    
    
    
    103,830
 The tax on MFs profit before tax differs from the theoretical amount that would arise using
the weighted average tax rate applicable to profits of the consolidated entities as follows:
 Year ended March 31,2008
    
    
    2007Net income before taxes
    
    
    959,924
    
    
    
    308,256Enacted tax rates in India
    
    
    33.99
    %
    
    
    33.66
    %Computed tax expense
    
    
    326,278
    
    
    
    103,759Income exempt from tax:Dividend
    
    
    (198
    )
    
    
    (3174
    )Non-deductible expenses:Contribution to co-investment plan
    
    
    751
    
    
    
    2,973Security transaction tax not allowable
    
    
    3,022
    
    
    
    -Others including donations, FBT, etc.
    
    
    1,335
    
    
    
    935Stock appreciation rights
    
    
    26,675
    
    
    
    -Income charged at lower rate
    
    
    (2,536
    )
    
    
    -Loss in Subsidiaries
    
    
    491
    
    
    
    352Others
    
    
    (2,149
    )
    
    
    (1,015
    )Income taxes recognized in the statement of income
    
    
    353,669
    
    
    
    103,830
 22.
    
    Financial instruments by categoryThe accounting policies for financial instruments have been applied to the line items below:
 Loans and
    
    
    Available
    
    
    TotalMarch 31, 2008
    
    receivables
    
    
    for saleAssets as per balance sheetCash and Bank balance
    
    
    287,465
    
    
    
    
    
    
    
    287,465Cash-restricted
    
    
    5,414,723
    
    
    
    -
    
    
    
    5,414,723Interest bearing deposits with bank
    
    
    16,500
    
    
    
    -
    
    
    
    16,500Deposits with clearing organizations and others
    
    
    151,515
    
    
    
    -
    
    
    
    151,515Receivable from broker-dealers and clearing organizations
    
    
    354,441
    
    
    
    -
    
    
    
    354,441Receivable from customers
    
    
    930,671
    
    
    
    -
    
    
    
    930,671Available-for-sale securities:Marketable, at market value
    
    
    -
    
    
    
    161,280
    
    
    
    161,280Not readily marketable (at estimated fair value)
    
    
    -
    
    
    
    20,393
    
    
    
    20,393Interest accrued but not due
    
    
    234,126
    
    
    
    -
    
    
    
    234,126Other assets
    
    
    149,090
    
    
    
    -
    
    
    
    149,0907,538,531
    
    
    
    181,673
    
    
    
    7,720,204
 155       Other financialMarch 31, 2008
    
    liabilities
    
    
    TotalLiabilities as per balance sheetPayable to broker dealers and clearing organizations
    
    
    2,984,232
    
    
    
    2,984,232Payable to customers
    
    
    2,494,634
    
    
    
    2,494,634Borrowings
    
    
    105,059
    
    
    
    105,059Accounts payable, accrued expenses, and other liabilities
    
    
    682,289
    
    
    
    682,2896,266,214
    
    
    
    6,266,214
 Loans and
    
    
    AvailableMarch 31, 2007
    
    receivables
    
    
    for sale
    
    
    TotalAssets as per balance sheetCash and Bank balance
    
    
    324,375
    
    
    
    
    
    
    
    324,375Cash-restricted
    
    
    2,562,032
    
    
    
    -
    
    
    
    2,562,032Interest bearing deposits with bank
    
    
    130,424
    
    
    
    -
    
    
    
    130,424Deposits with clearing organizations and others
    
    
    120,048
    
    
    
    -
    
    
    
    120,048Receivable from broker-dealers and clearing organizations
    
    
    60,916
    
    
    
    -
    
    
    
    60,916Receivable from customers
    
    
    616,792
    
    
    
    -
    
    
    
    616,792Available-for-sale securities:Marketable, at market value
    
    
    -
    
    
    
    204,176
    
    
    
    204,176Not readily marketable (at estimated fair value)
    
    
    -
    
    
    
    52,000
    
    
    
    52,000Interest Accrued But Not Due
    
    
    61,725
    
    
    
    -
    
    
    
    61,725Other assets
    
    
    96,199
    
    
    
    -
    
    
    
    96,1993,972,511
    
    
    
    256,176
    
    
    
    4,228,687
 Other financialMarch 31, 2007
    
    liabilities
    
    
    TotalLiabilities as per balance sheetPayable to broker dealers and clearing organizations
    
    
    1,195,594
    
    
    
    1,195,594Payable to customers
    
    
    1,797,100
    
    
    
    1,797,100Accounts payable, accrued expenses, and other liabilities
    
    
    360,740
    
    
    
    360,7403,353,434
    
    
    
    3,353,434
  156
      23.
    
    Commitments and contingencies
 a)
    
    Operating lease commitments  MF as lessee
  As at March 31, 2008Not later than 1 year
    
    
    14,621Later than 1 year and not later than 5 years
    
    
    8,882Later than 5 years
    
    
    -Total minimum lease commitments
    
    
    23,503
  24.
    
    Related party transactions
  a)
    
    Transactions involving services
 Year ended March 31,2008
    
    
    2007Services provided by MF toHolding companies & Parties having
substantial interest
    
    
    -
    
    
    
    -Fellow Subsidiary CompaniesReferral Fees
    
    
    20,527
    
    
    
    9,74120,527
    
    
    
    9,741Services received by MF fromHolding companies & Parties having
substantial interestReimbursement of Expenses
    
    
    -
    
    
    
    2,303Service Fees
    
    
    8,263
    
    
    
    -Bank Guarantee Commission
    
    
    14,616
    
    
    
    -Fellow Subsidiary CompaniesReimbursement of Expenses
    
    
    2,780
    
    
    
    870Service Fees
    
    
    13,998
    
    
    
    -Membership & Subscription
    
    
    3,447
    
    
    
    -Insurance Premium
    
    
    1,809
    
    
    
    -Lease Line Charges
    
    
    1,346
    
    
    
    -46,259
    
    
    
    3,173
 157
      b)
    
    Key management compensation
 Year ended March 31,2008
    
    
    2007Salaries and other short-term employee benefits
    
    
    170,488
    
    
    
    70,734Post-employment benefits
    
    
    -
    
    
    
    -Other long-term benefits (Co-Investment Plan)
    
    
    2,208
    
    
    
    2,208Share-based payments
    
    
    6,824
    
    
    
    1,901179,520
    
    
    
    74,843
 c)
    
    Year-end balances arising from transactions involving services
 As at March 31,2008
    
    
    2007Due To Related PartiesMF Global Ltd. (Bermuda)
    
    
    23,038
    
    
    
    -Refco (India) Pvt. Ltd.
    
    
    -
    
    
    
    212MF Global (India) Pvt. Ltd.
    
    
    -
    
    
    
    309MF Global UK Ltd.
    
    
    13,755
    
    
    
    2344MF Global Inc. DE
    
    
    454
    
    
    
    -MF Global Holdings USA Inc.
    
    
    1,809
    
    
    
    -MF Global Singapore Pte Ltd.
    
    
    3.313
    
    
    
    1,996MF Global Holdings HK Ltd.
    
    
    1,346
    
    
    
    -MF Global Capital Services India Pvt. Ltd.
    
    
    2,592
    
    
    
    -46,307
    
    
    
    4,861Due from Related PartiesMF Global Inc. DE
    
    
    7,343
    
    
    
    2,336MF Global Mauritius Pvt. Ltd.
    
    
    43
    
    
    
    -MF Global Singapore Pte Ltd.
    
    
    107
    
    
    
    -MF Global Holdings HK Ltd.
    
    
    7
    
    
    
    -MF Global UK Ltd.
    
    
    465
    
    
    
    -7,966
    
    
    
    2,336
 d)
    
    Loans and advances to key management personnel
 Year ended March 31,2008
    
    
    2007At the beginning of the year
    
    
    1,150
    
    
    
    -Advances during the year
    
    
    1,999
    
    
    
    1,196Repayments during the year
    
    
    (2,890
    )
    
    
    (46
    )At the end of the year
    
    
    259
    
    
    
    1,150
 Advances to the key management personnel are interest free advances. No provision has been
required for such loans.
 158
      25.
    
    Transition to IFRS from US GAAP25.1.
    
    Reconciliation of equity as at March 31, 2007 and 2006:
 Note
    
    
    Year ended March 31,2007
    
    
    2006Total equity under US GAAP
    
    
    
    
    
    
    1,014,926
    
    
    
    768,662Deferred tax liability on Undistributed Earnings of Subsidiaries
    
    
    b
    
    
    
    13,848
    
    
    
    8441Interest free deposits on operating lease
    
    
    d
    
    
    
    (110
    )
    
    
    (103
    )Total equity under IFRS
    
    
    
    
    
    
    1,028,664
    
    
    
    777,000
 25.2.
    
    Reconciliation of net income for the year ended March 31, 2007
 Note
    
    
    AmountNet income under US GAAP
    
    
    
    
    
    
    247,356   Classification of Investments in Bombay Stock Exchange Limited
    
    
    a
    
    
    
    (48,299
    )   Deferred Tax Liability on Undistributed Earnings of
Subsidiaries
    
    
    b
    
    
    
    5,407   Actuarial gain / (loss) on defined benefit schemes
    
    
    c
    
    
    
    (31
    )   Interest free deposits on operating lease
    
    
    d
    
    
    
    (7
    )Net income under IFRS
    
    
    
    
    
    
    204,426
 a)
    
    Classification of Investments in Bombay Stock Exchange Limited (BSEL):
   b)
    
    Deferred Tax Liability on Undistributed Earnings of Subsidiaries:
 Accounting for Income Taxes
 Income Taxes
 c)
    
    Actuarial gain or loss on defined benefit schemes
   d)
    
    Interest free deposits on operating lease
    159
      25.3.
    
    Reconciliation of cash flows for the year ended March 31, 2008 and 2007
  160
      Item 19. Exhibits
 Number
    
    Description1.1
    
    Amended Articles of Association of Sify Technologies Limited. (1)1.2
    
    Memorandum of Association of Sify Technologies Limited. (2)1.3
    
    Amendment of Memorandum of Association. (3)2.1
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American
Depositary Shares evidenced by 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 Technologies Limited, Citibank, N.A. and holders from time to time of American Depositary Shares
evidenced by 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 Technologies Limited, Citibank, N.A. and holders from time to time of American Depositary Shares
evidenced by 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 Technologies Limited and Infinity Capital Ventures, LP. (9)2.5
    
    Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9)2.6
    
    Shareholders Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify Communications
Limited. (10)2.7
    
    Shareholders Agreement dated November 25, 2005 between Sify Technologies 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
    
    Associate Stock Option Plan 2007 *4.5
    
    Form of Indemnification Agreement. (7)4.6
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies Limited
and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom Commission. (3)4.7
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.8
    
    Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and Venture
Tech Solutions Pvt. Ltd. (8)4.9
    
    Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13)8.1
    
    List of Subsidiaries.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 in respect of the Sify Technologies Limited15.2
    
    Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited
 161
      *
    
    Filed herewith.
 
 (1)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October
17, 2007 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 Report on Form 6-K filed with the Commission on October
17, 2007 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.(13)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April
14, 2008 and incorporated herein by reference. 162
      SIGNATURES
  SIFY TECHNOLOGIES LIMITEDBy:
    

/s/ Raju VegesnaName:
    Raju VegesnaTitle:
    Chief Executive Officer & Managing DirectorBy:
    
    /s/ M P Vijay KumarName:
    M P Vijay KumarDate:  October 11, 2008

    Title:
    Chief Financial Officer 163
      Exhibit Index
 Number
    
    Description1.1
    
    Amended Articles of Association of Sify Technologies Limited. (1)1.2
    
    Memorandum of Association of Sify Technologies Limited. (2)1.3
    
    Amendment of Memorandum of Association. (3)2.1
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time
to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder (including, as an
exhibit, the form of American Depositary Shares). (4)2.2
    
    Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of
American Depositary Shares evidenced by 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 Technologies Limited, Citibank, N.A. and holders from time to time of
American Depositary Shares evidenced by 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 Technologies Limited and Infinity Capital Ventures, LP. (9)2.5
    
    Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and
Mr Raju Vegesna. (9)2.6
    
    Shareholders Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P)
Limited, and Sify Communications Limited. (10)2.7
    
    Shareholders Agreement dated November 25, 2005 between Sify Technologies 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
    
    Associate Stock Option Plan 2007 *4.5
    
    Form of Indemnification Agreement. (7)4.6
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and
between Sify Technologies Limited and the Government of India, Ministry of Communications and Information Technology,
Department of Telecommunications, Telecom Commission. (3)4.7
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.8
    
    Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF
Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8)4.9
    
    Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private
Limited. (13)8.1
    
    List of Subsidiaries.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 Officer
 *
    
    Filed herewith
 164
      (1)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on
October 17, 2007 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 Report on Form 6-K filed with the Commission on October
17, 2007 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.(13)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April
14, 2008 and incorporated herein by reference. 165