UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
 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, 2009.
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
 For the transition period from  to
 o
    
    SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
 Date of event requiring this shell company report
 Commission file number 000-27663
 Sify Technologies Limited
 (Exact name of Registrant as specified in its charter)
 (Translation at Registrants name into English)
 (Jurisdiction of incorporation or organization)
 (Address of principal executive offices)
 (Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act
 Title of Each class
    
    Name of Each Exchange on Which RegisteredAmerican Depository Shares, each represented by
    
    Nasdaq Global Select Marketone Equity Share, par value Rs.10 per share
 Securities registered or to be registered pursuant to Section 12(g) of the Act
 Title of Each class
    
    Name of Each Exchange on Which RegisteredNone
    
    Not Applicable
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
 (Title of class)
    o No þ
  o No þ
   Yes þ o
  o No þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  US GAAP o
    
    IFRS as issued by the IASB þ
    
    Other o
  Yes o þ




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Table of Contents
 Item
    
    PageCurrency of Presentation and Certain Defined Terms
    
    
    3Forward-Looking Statements May Prove Inaccurate
    
    
    4PART IItem 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
    
    
    27Item 4A. Unresolved Staff Comments
    
    
    42Item 5. Operating and Financial Review and Prospects
    
    
    43Item 6. Directors, Senior Management and Employees
    
    
    62Item 7. Major Shareholders and Related Party Transactions
    
    
    68Item 8. Financial Information
    
    
    71Item 9. The Offer and Listing
    
    
    72Item 10. Additional Information
    
    
    73Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    89Item 12. Description of Securities Other Than Equity Securities
    
    
    89PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    89Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
    
    
    89Item 15. Controls and Procedures
    
    
    90Item 16A. Audit Committee Financial Expert
    
    
    92Item 16B. Code of Ethics
    
    
    92Item 16C. Principal Accountant Fees and Services
    
    
    92Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    93Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    93Item 16F. Change in Registrants Certifying Accountant
    
    
    93Item 16G. Corporate Governance
    
    
    93PART IIIItem 17. Financial Statements
    
    
    93Item 18. Financial Statements
    
    
    93Item 19. Exhibits
    
    
    189
 2




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Currency of Presentation and Certain Defined Terms
 Sify SifyMax.in Sify e-ports Sify online
   www.sifycorp.com
 3




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Forward-Looking Statements May Prove Inaccurate
  4




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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
 Summary of Consolidated Financial Data
  5




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Year endedMarch 31,2009Conveniencetranslation intoUS$ inthousands,Year ended March 31,
    
    
    except share andParticulars
    
    2009
    
    
    2008
    
    
    2007
    
    
    per share data(Rupees in thousands, except share and
    
    
    
    
    
    
    
    
    
    
    (see note 1per share data)
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    below)Consolidated income statementRevenues
    
    
    6,162,161
    
    
    
    6,006,215
    
    
    
    5,447,347
    
    
    
    120,945Cost of goods sold and services rendered
    
    
    (3,613,349
    )
    
    
    (3,419,122
    )
    
    
    (2,939,329
    )
    
    
    (70,920
    )Selling, general and administrative
expenses
    
    
    (2,813,425
    )
    
    
    (2,434,715
    )
    
    
    (2,094,971
    )
    
    
    (55,219
    )Depreciation and amortization
    
    
    (498,872
    )
    
    
    (394,337
    )
    
    
    (463,780
    )
    
    
    (9,791
    )Impairment loss on goodwill
    
    
    (15,200
    )
    
    
    
    
    
    
    
    
    
    
    (298
    )Other income, net (4)
    
    
    89,105
    
    
    
    46,152
    
    
    
    66,320
    
    
    
    1,749Total operating expenses
    
    
    6,851,741
    
    
    
    6,202,022
    
    
    
    5,431,760
    
    
    
    134,479Operating (loss) / profit
    
    
    (689,580
    )
    
    
    (195,807
    )
    
    
    15,587
    
    
    
    (13,534
    )Net finance income/(expense)
    
    
    (129,095
    )
    
    
    104,101
    
    
    
    128,642
    
    
    
    (2,533
    )Share of profit of equity accounted
investee (net of income tax)
    
    
    64,091
    
    
    
    181,127
    
    
    
    61,030
    
    
    
    1,258Profit / (Loss) before income taxes and
minority interest
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    205,259
    
    
    
    (14,809
    )Income tax benefit / (expense)
    
    
    (97,049
    )
    
    
    (63,975
    )
    
    
    66,113
    
    
    
    (1,905
    )Profit / (Loss) before minority interest
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )Minority interest
    
    
    48,941
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    961Net (loss) / Profit for equity holders
of the Company
    
    
    (900,574
    )
    
    
    (4,696
    )
    
    
    240,841
    
    
    
    (17,675
    )Net (loss)/Profit per share (2) Basic
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.64
    
    
    
    (0.41
    ) Diluted
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.63
    
    
    
    (0.41
    )Weighted-average number of equity
shares used in computing earnings per
equity share Basic
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,704,619 Diluted
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,792,514
 6




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Conveniencetranslation intoUS$ inthousands,except share andper share data(see note 2Particulars
    
    March 31,
    
    
    below)(Rupees in thousands, except share
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009and per share data)
    
    Rs
    
    
    Rs
    
    
    RsBalance Sheet data:Cash and cash equivalents including
restricted cash
    
    
    1,710,798
    
    
    
    1,507,327
    
    
    
    3,071,157
    
    
    
    33,578Net current assets
    
    
    (175,993
    )
    
    
    1,294,200
    
    
    
    2,435,290
    
    
    
    (3,454
    )Total assets
    
    
    9,145,555
    
    
    
    7,710,760
    
    
    
    7,321,891
    
    
    
    179,502Total equity attributable to equity
shareholders of the Company
    
    
    3,851,693
    
    
    
    4,694,984
    
    
    
    4,538,906
    
    
    
    75,598Cash Flow DataNet cash provided by (used in):Operating activities
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (7,292
    )Investing activities
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (23,045
    )Financing activities
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    19,015Other Financial Data 
Reconciliation of Adjusted EBITDA
to net profit / (loss)Adjusted EBITDA from operations (3)
    
    
    (111,420
    )
    
    
    379,657
    
    
    
    540,397
    
    
    
    (2,187
    )Add: Interest income
    
    
    122,565
    
    
    
    161,783
    
    
    
    154,192
    
    
    
    2,406Less: Depreciation and amortization
    
    
    498,872
    
    
    
    394,337
    
    
    
    463,780
    
    
    
    9,791Less: Impairment loss on goodwill
    
    
    15,200
    
    
    
    
    
    
    
    
    
    
    
    298Less: Interest expense
    
    
    251,660
    
    
    
    57,682
    
    
    
    25,550
    
    
    
    4,939Less: Income tax expense / (benefit)
    
    
    97,049
    
    
    
    63,975
    
    
    
    (66,113
    )
    
    
    1,905Net Profit / (loss)
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )
 
 Notes1.
    
    The convenience translation to U.S. Dollars was performed at the reference rate in the City
of Mumbai for cable transfers as published by Reserve Bank of India on March 31, 2009 of
Rs.50.95 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 depository underlying our ADSs. [Effective September
24, 2002, one ADS represented one equity share].3.
    
    Adjusted EBITDA from operations represents earnings (loss) from operations before interest,
taxes, depreciation, amortization and impairment including the share of profit of equity
accounted investee (net of income tax).4.
    
    Refer to note 25 of the financial statements for the components of other income. 7




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Exchange Rates
   High
    
    LowMonth
    
    Rs.
    
    Rs.August 2009
    
    
    48.98
    
    
    
    47.54July 2009
    
    
    49.09
    
    
    
    47.89June 2009
    
    
    48.60
    
    
    
    46.96May 2009
    
    
    49.83
    
    
    
    48.17April 2009
    
    
    50.53
    
    
    
    49.49March 2009
    
    
    52.06
    
    
    
    50.14
  PeriodFiscal Year Ended
    
    end
    
    Average
    
    High
    
    LowMarch 31
    
    Rs.
    
    Rs.
    
    Rs.
    
    Rs.2009
    
    
    50.95
    
    
    
    45.91
    
    
    
    52.06
    
    
    
    39.892008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.482007
    
    
    43.10
    
    
    
    45.12
    
    
    
    46.83
    
    
    
    42.78
  Capitalization and indebtedness
  Reasons for the offer and use of proceeds
  8




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Risk Factors
  Risks Related to our Company and Industry
 We may incur losses in the future and we may not achieve or maintain profitability.
  We may lose the incentive for exports availed under Serve from India Scheme on account of changes
in Government policy.
     The economic environment, pricing pressure and decreased utilization rates could negatively impact
our revenues and operating results.
    9




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Currency fluctuations may affect the results or our operations or the value of our ADSs
     We may encounter legal confrontations as the Information Technology Act 2000 lacks specificity as
to issues on online processes and/or Internet
  Intense competition in our businesses could prevent us from improving our profitability and 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
   10




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Margin squeeze may affect the results or our operations
  Procuring power at lower costs for data centers by the competitors may put us at a disadvantage in
terms of pricing for our data center operations
  We have added a number of new lines of business in the past 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
  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
 11




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
    
    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
   12




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Security breaches could damage our reputation or result in liability to us
   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
  Compliance with new and changing corporate governance and public disclosure requirements adds
uncertainty to our compliance policies and increases our costs of compliance
  13




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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 resulting in cash payout in excess of the insurance coverage in the
class action litigation that has been filed against us, it will impact our financial condition
   Our financial results are impacted by the financial results of entities that we do not control
  14




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Our inter-city network is leased from other service providers and is dependent on their quality and
availability
  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
    Our current infrastructure and its scalability may not accommodate increased use while maintaining
acceptable overall performance.
  We do not plan to pay dividends in the foreseeable future.
  15




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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.
  An investor in our ADSs may not be able to exercise preemptive rights for additional shares and may
thereby suffer dilution of such investors equity interest in us
   ADS holders may be restricted in their ability to exercise voting rights.
   16




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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;
    
    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 Select Market listing.
  17




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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
  The current capital and credit market conditions may adversely affect our access to capital, the
cost of capital, and ability to execute our business plan
  Risks Related to Investments in Indian Companies
  Changes in the policies of the Government of India could delay the further liberalization of the
Indian economy and adversely affect economic conditions in India generally, which could impact our
business and prospects
  Regional conflicts in South Asia could adversely affect the Indian economy, disrupt our operations
and cause our business to suffer
  18




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Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition
  The markets in which we operate are subject to the risk of earthquakes, floods and other natural
disasters
  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
   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.
  19




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In the event that the Government of India or the government of another country changes its tax
policies in a manner that is adverse to us, our tax expense may materially increase, reducing our
profitability.
  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.
  We may fail to exploit the market for WiMax services because of lack of access to spectrum
   We may be compelled to surrender the Spectrum that we now utilise for our operations
  20




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Our connectivity business may stagnate with a declining contribution
  We may not be able to retain and acquire customers for our data centers
   We may lose relevance and revenues if we do not position our business models in line with current
and future technology trends
  We may fail to augment our skills and capability to best manage our services over Internet Protocol
and data networks
  It may not be possible for us to retain our brand equity if we do not resort to huge investments
for brand development
  We may not meet the selection criteria set for high value contracts by the Governments
  21




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The success of our business depends on the development of our capability
  We may fail to offer end-to-end managed services to sustain our position
  We may not get repeat corporate orders to optimize the capacity utilisation
  Absence of policy support will hamper Internet and Data Services
   Constant improvement of technology standards/ skills and evolving tools & applications are
essential to sustain our position in Remote management of IT infrastructure
   The continued recession in the United States affects sales of our eLearning services
  22




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Emergence of Enterprise Software Suites may hamper our growth in eLearning stream
  The success of our strategy depends on our ability to keep pace with technological changes
  We may not be able to grow our business if online advertising in our markets does not expand
  
    
    our ability to attract and retain advertisers at profitable rates in light of
intense competition;
    
    our ability to generate and continue to grow a large community of users with
demographics attractive to advertisers;
    
    advertisers acceptance of the Internet as an effective and sustainable medium;
    
    the effectiveness of our advertising delivery, tracking and reporting systems; and
    
    our ability to adapt, including technologically, to new forms of Internet
advertising
   Adequate user database is necessary to make our advertising business profitable
  The viability of Cyber café services depends on the success of the franchisees to generate or
sustain adequate profitability
  23




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Our cybercafés may not fetch premium prices due to competition from unorganized sector
  Heightened security concerns for cybercafés issued by the governments will discourage franchisees
to operate such cybercafés
  The expected growth for broadband services to retail segment may come down
  Our pricing for broadband services to retail segment may not be competitive
  We may lose our broadband services to retail segment to competitors
   We do not have any control over service delivery of Broadband Services to Home
  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
  24




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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
    
    very few Indian companies accepting credit card numbers over the Internet.
  Risks Related to the Internet
 We are now subject to quality of service (QOS) guidelines issued by TRAI. Failure to comply with
one or more guidelines may expose us into fines/penalties
  
    
    All Internet service providers shall provide adequate information to subscribers
regarding Internet/broadband services being offered and marketed by them.
    
    All Internet service providers shall provide information regarding contention ratios
or the number of users competing for the same bandwidth, adopted by them to provide
Internet/broadband service in their tariff plans submitted to TRAI, manual of practice,
call centers and on their websites
    
    All Internet service providers shall quarterly publish contention ratio for
different Internet/broadband services on their website to facilitate subscribers to
take informed decision.
    
    All Internet service providers must use the contention ratios better than specified
ratios for different services to ensure sufficient bandwidth for providing good
quality of service to their subscribers
   25




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We may be liable to third parties for information retrieved from the Internet
  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
  26




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Item 4 . Information on the Company
 History and Development
   sifycorp.com
  www.sify.com
 Online Online Online Online
 iways iways
   27




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Initial Public Offering and Subsequent Financing Transactions
         Acquisition of Minority Interest in Subsidiary
  28




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Principal Capital Expenditures
  Investment Strategy
  Sify Networks Private Limited (formerly E Alcatraz Consulting Private Limited)
  Globe Travels, USA.
  India World Communication Limited
  29




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Sify International Inc
  Business Overview
  
    
    Corporate Network/Data Services. We offer end-to-end network, application and security
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 provide NLD (National Long
Distance) and ILD (International Long Distance) services through our network. We carry voice
traffic, both national and international, using the IP back-bone and deliver voice traffic to
Direct Inter-connect Operators. We also provide managed infrastructure services and managed
security services in all aspects of infrastructure services, network security and hosting,
with digital certificates based authentication service and VPN solutions. We are the first and
only service provider in India to be ISO 9001:2000 certified in network operations ,data
center operations and customer relationship management.
    
    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 e-ports
(formerly iway)cybercafés (e-ports). We also have agreements with certain cable television
operators through which we offer Internet access through cable. As of March 31, 2009, we had
approximately 0.7 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. We also provide remote infrastructure management services such
as Data center management, Network management, Security management and Desktop management to
support the clients from offshore command centers, on a 24 X 7 X 365 basis.
 www.sify.com www.sifymax.in www.samachar.com Sify.com SifyMax.in
    30




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Industry Overview
 Development of the Internet
 Special Communications Needs of Businesses
 The Opportunity in India
      31




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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, 2009, we owned and operated 547 points of presence serving more than 500
towns and cities across India. Our network provides the platform to deliver Internet
access and the backbone to provide a full range of corporate network/data services to
consumers. A significant portion of our last mile delivery for corporates, and almost
the entire iway cybercafé 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 are able to
place contents in our websites which will attract more users 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 in accordance with 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.
 Strategy
  32




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##### 




    
    Invest in the continued enhancement and expansion of our network infrastructure
to support customer growth, enter into 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, 2009, we have acquired adequate capacity of bandwidth lines, all from
major telecommunications companies, which ensures that there is an assured supply of
bandwidth service being provided to Sifys customers without any disruptions . We have
also leased intercity links from multiple suppliers including BSNL, Bharti, Reliance
and Power Grid corporation, such that each one of our nodes is 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 structure and national
coverage will create economies of scale. Being vendor neutral, we are able to procure
bandwidth in a cost effective manner. Over the past 5 years we have designed and built
4 Data Centers at Mumbai, Chennai, Bangalore and Airoli. We intend to invest in
additional data centers, including the one at Gurgaon in Delhi which is under
construction currently.
    
    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, 2009, we had
approximately 0.7 million retail Internet subscribers and 1,651 operative cybercafés,
of which 6 were owned by us and 1,645 were franchised. Approximately 99% of these iways
are 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, 2009, we have more than 2,014 cable television operators across 201
cities in India. We believe that increased focus by GOI on delivery of broadband
services , availability of broadband content, reduced cost of personal computers
coupled with 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
technologies 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 worldwideIn 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.
 33




---



##### 




    
    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 SifyOnlineInternet access service with the sale
of their personal computers in India.
    
    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.
    
    GlobalSite Connect, an international site-to-site managed MPLS-enabled IPVPN solution, is
used for securely connecting international branch offices to the corporate offices. 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 SiteConnect range of
 34




---



##### 



MPLS enabled IPVPN solutions, provide high-speed bandwidth in those situations where basic
connectivity and cost are the top concerns.
    
    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
 Security and Assurance Services.
 Data Centers
 Digital Certification
 35




---



##### 



Remote Management Services
  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
 Sify e-port. iways sify e-port e-port Xpress
 36




---



##### 



Voice Over Internet Protocol s
 VoIP for home: Sifytalk sifytalk
 Broadband/High Speed Internet to Home:
    Online Portal Services
 , www.sifymax.in www.sify.com www.samachar.com www.sifmax.in sify.com Online
 www.walletwatch.com www.khel.com www.bawarchi.com
 www.mumbailive.in www.bangalorelive.in www.hyderabadlive.in www.delhilive.in www.chennailive.in
 37




---



##### 



www.samachar.com,
    Corporate Customers
  Customer Service and Technical Support
  Sales and Marketing
 Corporate Offerings
 Consumer Offerings
  Technology and Network Infrastructure
  38




---



##### 



Geographic Coverage
 Network Architecture
   Network Operations Center
 Data Centre Infrastructure.
 Competition
 General
 Corporate Network/Data Services
 Internet Access Services
 39




---



##### 



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
     40




---



##### 



Government Regulation
    
    
    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.
   41




---



##### 



Organizational Structure
  Property, Plant and Equipment
  
 Item 4A. Unresolved Staff Comments
  42




---



##### 



Item 5. Operating and Financial Review and Prospects
  Operating Results
  Liquidity and Capital Resources
  Research and Development
  Trend Information
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   43




---



##### 



Corporate network/data services
  Internet access services
   Online portal services and content offerings
  Other services-Infrastructure Management Services
  Other services-eLearning Services
    Revenues
 Corporate network/data services
  44




---



##### 



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
  45




---



##### 



Internet access services
  Online portal services and content offerings
  Selling, general and administrative expenses
  Depreciation and amortization
  Impairment
   pro rata basis.
   46




---



##### 



Stock compensation expense
  Results of Operations
  Fiscal2009
    
    
    2008
    
    
    2007%
    
    
    %
    
    
    %Revenues
    
    
    100
    
    
    
    100
    
    
    
    100Cost of goods sold and services rendered
    
    
    58.64
    
    
    
    56.92
    
    
    
    53.95Other income/(expense)
    
    
    1.44
    
    
    
    0.76
    
    
    
    1.22Selling, general and administrative expenses
    
    
    45.65
    
    
    
    40.53
    
    
    
    38.46Depreciation and amortization expenses
    
    
    8.34
    
    
    
    6.57
    
    
    
    8.51Operating profit/(Loss)
    
    
    (11.19
    )
    
    
    (3.25
    )
    
    
    0.28Finance Income / (expense)Finance income
    
    
    1.99
    
    
    
    2.69
    
    
    
    2.83Finance expenses
    
    
    (4.08
    )
    
    
    (0.96
    )
    
    
    0.47Net finance income/(Loss)
    
    
    (2.09
    )
    
    
    1.73
    
    
    
    2.36Share of profit of equity accounted investee
    
    
    1.04
    
    
    
    3.01
    
    
    
    1.12Profit before tax
    
    
    (12.24
    )
    
    
    1.49
    
    
    
    3.76Income tax (expense)/ benefit
    
    
    (1.57
    )
    
    
    1.06
    
    
    
    1.21Net profit/(loss)
    
    
    (13.81
    )
    
    
    0.42
    
    
    
    4.98
 Results of year ended March 31, 2009 compared to year ended March 31, 2008
 Revenues
   47




---



##### 

`

Other income
 Cost of goods sold and services rendered
  48




---



##### 



Selling, general and administrative expenses
 Depreciation and Amortization expenses
 49




---



##### 



Impairment loss:
 Net finance income
 Share of profit of investment in associate
 Income tax expense
 Profit
 Results of year ended March 31, 2008 compared to year ended March 31, 2007
 Revenues
   50




---



##### 



Other income
 Cost of goods sold and services rendered
    51




---



##### 



Selling, general and administrative expenses
 Depreciation and Amortization expenses
 Net finance income
 Share of profit of investment in associate
 Income tax expense
 Foreign Exchange Fluctuations and Forwards
  52




---



##### 



Liquidity and Capital Resources
  2009
    
    
    2008
    
    
    2007
    
    
    2009Rs. in 000
    
    
    Rs. in 000
    
    
    Rs. in 000
    
    
    US $ in 000Profit / (loss) before tax
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    205,259
    
    
    
    (14,810
    )Other adjustments for non-cash items
    
    
    749,761
    
    
    
    298,076
    
    
    
    503,978
    
    
    
    14,716Income taxes paid
    
    
    (108,560
    )
    
    
    (168,426
    )
    
    
    (56,697
    )
    
    
    (2131
    )Net decrease (increase) in working capital
    
    
    (258,173
    )
    
    
    (1,058,940
    )
    
    
    (536,278
    )
    
    
    (5,067
    )Net cash from / (used in) operating activities
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (7,293
    )Net cash from / (used in) investing activities
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (23,045
    )Net cash from / (used in) financing activities
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    19,015Effect of exchange rate changes on cash and cash equivalents
    
    
    945
    
    
    
    (98
    )
    
    
    (8,229
    )
    
    
    19Net increase / (decrease) in cash and cash equivalents
    
    
    (576,920
    )
    
    
    (2,181,369
    )
    
    
    255,885
    
    
    
    (11,323
    )
        53




---



##### 



rd th
 Research and development
  Trends
  Off-balance sheet arrangements
  54




---



##### 



Contractual obligations
  Payments due by period (Rs 000s)LessContractual Obligations
    
    Total
    
    than 1 year
    
    1-3 years
    
    3-5 years
    
    More than 5 yearsLong Term Debt Obligations
    
    
    201,389
    
    
    
    13,333
    
    
    
    188,056
    
    
    
    
    
    
    
    Short Term Borrowings
    
    
    2,579,853
    
    
    
    2,579,853
    
    
    
    
    
    
    
    
    
    
    
    Finance Lease Obligations
    
    
    155,325
    
    
    
    32,944
    
    
    
    72,112
    
    
    
    50,269
    
    
    
    Non-cancellable Operating Lease obligations
    
    
    1,801,298
    
    
    
    135,165
    
    
    
    375,079
    
    
    
    210,306
    
    
    
    1,080,748Proposed Lease Obligations
    
    
    2,423,554
    
    
    
    
    
    
    
    279,950
    
    
    
    269,588
    
    
    
    1,874,016Europe India Gateway Obligations
    
    
    390,208
    
    
    
    289,484
    
    
    
    100,724
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    322,607
    
    
    
    322,607
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    7,874,234
    
    
    
    3,373,386
    
    
    
    1,015,921
    
    
    
    530,163
    
    
    
    2,954,764
 Recent Accounting Pronouncements
 i.
    
    Standards early adopted by the Company1.
    
    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. The standard is
applicable for periods beginning on or after January 1, 2009. Sify early adopted IFRS 8 for
the year ending March 31, 2009 and has made 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.2.
    
    In April 2009, the IASB issued Improvements to IFRS as part of its program of annual
improvements to its standards. As part of the Improvements to IFRS, IFRS 8 Operating
Segments was amended. The amendment requires disclosure of segment assets for each
reportable segment only if such measure is regularly reviewed by the Chief Operating
Decision Maker (CODM). The said amendment is effective for annual periods beginning on or
after 01 January, 2010, with earlier adoption being permitted. Sify has early adopted the
said amendment to IFRS 8 and has not provided disclosures relating to segment assets of
reportable segments as these are not regularly reviewed by the CODM.ii.
    
    New standards and interpretations not yet adoptedA number of new standards, amendments to standards and interpretations are not yet effective
for the year ended 31 March 2009, and have not been applied in preparing these consolidated
financial statements:1.
    
    Revised IAS 1, Presentation of Financial Statements (2007)introduces the term total
comprehensive income, which represents changes in equity during a period other than those
changes resulting from transactions with owners in their capacity as owners. Total
comprehensive income may be presented in either a single statement of comprehensive income
(effectively combining both the income statement and all non-owner changes in equity in a
single statement), or in an income statement and a separate statement of comprehensive
income. Revised IAS 1, which becomes mandatory for our March 31, 2010 consolidated financial
statements, is expected to have a significant impact on the presentation of the consolidated
financial statements. The Group plans to provide an income statement and a separate
statement comprehensive income for reporting periods commencing on and after April 1, 2009.2.
    
    Revised IAS 23, Borrowing Costsremoves the option to expense borrowing costs and
requires that an entity capitalize 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 23will become mandatory for reporting periods commencing on and after April 1,
2009. As the Group currently follows a policy of capitalizing borrowing costs, this new
standard will not have any material impact on the Groups consolidated financial statements.
 55




---



##### 



3.
    
    Amendments to IAS 32, Financial Instruments: Presentation and IAS 1, Presentation of
Financial Statements  Puttable Financial Instruments and Obligations Arising on
Liquidationrequire puttable instruments, and instruments that impose on the entity an
obligation to deliver to another party a pro rata share of the net assets of the entity only
on liquidation, to be classified as equity if certain conditions are met. The amendments,
which become mandatory for the Groups consolidated financial statements prepared for
reporting periods commencing on or after April 1, 2009, with retrospective application
required, are not expected to have any material impact on the consolidated financial
statements.4.
    
    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 Group 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.
Business combinations consummated after April 1, 2009 would be impacted by the revised
standard.5.
    
    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
effective 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 an increase or decrease in equity. Additionally,
purchase of some or all of the NCI is treated as equity transaction and accounted for in
equity and a partial disposal of interest in 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 or loss 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
proportionate share of net income and reserves to the NCI even if this results in the NCI
having a deficit balance.6.
    
    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
financial statements for reporting periods commencing on or after April 1, 2009, is not
expected to have a significant impact on the Consolidated Financial Statements.7.
    
    IFRIC 18- Transfer of assets from customersdefines the treatment for property, plant and
equipment transferred by customers to companies or for cash received to be invested in
property, plant and equipment that must be used to either connect the customer to a network
or to provide the customer with ongoing access to a supply of goods or services or to both.
The item of property, plant and equipment is to be initially recognized by the Company at
fair value with a corresponding credit to revenue. If an ongoing service is identified as a
part of the agreement, the period over which revenue will be recognized for that service
would be determined by the terms of the agreement with the customer. If the period is not
clearly defined, then revenue should be recognized over a period no longer than the usual
life of the transferred asset used to provide the ongoing service. This interpretation is to
be applied prospectively to transfers of assets from customers received on or after July 1,
2009. Earlier application is permitted provided the valuation and other information needed
to apply the information to past transfers were obtained at the time the transfers occurred.
The Company would prospectively adopt this interpretation for all assets transferred after
July 1, 2009. The amendment does not have any significant impact on Sifys statement of
operations.8.
    
    Amendments to IFRS 2, Share-based Payment  Vesting Conditions and Cancellations
clarify the definition of vesting conditions, introduce the concept of non-vesting
conditions, require non-vesting conditions to be reflected in grant-date fair value and
provide the accounting treatment for non-vesting conditions and cancellations. These
amendments to IFRS
 56




---



##### 



2 will become mandatory for the Groups financial statements for reporting periods commencing
on or after April 1, 2009, with retrospective application. The amendment does not have any
material impact on the consolidated financial statements of the Group.9.
    
    Amendments to IAS 39, Financial Instruments: Recognition and Measurement: Eligible
Hedged Itemsdeal with two situations where diversity in practice exists on the designation
of inflation as a hedged risk and the treatment of one-sided risks on hedged items. These
amendments are effective for accounting periods beginning on or after July 1, 2009. The
amendment is not expected to have any impact on the consolidated financial statements of the
Group.10.
    
    Improvements to IFRS- In April 2009, the IASB issued Improvements to IFRSs  a
collection of amendments to twelve International Financial Reporting Standards  as part of
its program of annual improvements to its standards, which is intended to make necessary,
but non-urgent, amendments to standards that will not be included as part of another major
project. The latest amendments were included in exposure drafts of proposed amendments to
IFRS published in October 2007, August 2008, and January 2009. The amendments resulting from
this standard mainly have effective dates for annual periods beginning on or after January
1, 2010, although entities are permitted to adopt them earlier. The Company is evaluating
the impact, these amendments (except as discussed in note 3 s (i) above) will have on the
Companys consolidated financial statements.
 Critical Accounting Policies
   Revenue Recognition
  
    
    Corporate network/data services, which provides Internet, connectivity, security and
consulting, hosting, voice 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
    (i)
  57




---



##### 



(ii)
    58




---



##### 



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.
  (iii)
    (iv)
  59




---



##### 



Accounting Estimates
   Allowance for accounts receivable
   Business Combinations, Goodwill and Intangible Assets
 Business Combinations
    Estimated Useful Lives of Property, Plant And Equipment
 Property, Plant and Equipment
 60




---



##### 



Impairment
   Financial assets measured at amortized cost
  Available-for-sale financial assets
  Loans and receivables
  Reversal of impairment loss
     pro rata basis.
 Reversal of impairment loss
  61




---



##### 



Income taxes
     
 Item 6. Directors, Senior Management and Employees
 Directors and Executive Officers
  Name
    
    Age
    
    DesignationRaju Vegesna
    
    49
    
    Chairman and Managing DirectorAnanda Raju Vegesna
    
    49
    
    Executive DirectorC.B.Mouli (1)
    
    62
    
    Director, Chairman & Financial Expert of Audit CommitteeS.K.Rao (1) (2) (3)
    
    65
    
    DirectorT.H. Chowdary (2) (3)
    
    77
    
    Director & Chairman of Compensation & Nominating CommitteesP.S.Raju (2)
    
    55
    
    DirectorS R Sukumara (1) (2) (3)
    
    64
    
    DirectorM P Vijay Kumar
    
    39
    
    Chief Financial OfficerC V S Suri
    
    49
    
    Chief Operating OfficerPijush Kanti Das
    
    55
    
    President  Corporate AffairsP J Nath
    
    47
    
    Executive President  Enterprise SolutionsBaskar R Sayyaparaju
    
    42
    
    Chief Technology OfficerAravind Mathur
    
    45
    
    Chief Architect  Global Infrastructure ServicesNaresh Ajwani (4)
    
    46
    
    President  Government Relations and Potential BusinessDavid Appasamy
    
    51
    
    Chief Communications OfficerVenkata Rao Mallineni
    
    41
    
    Head  Portals and Consumer MarketingAjith K N
    
    40
    
    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 June 30, 2009. 62




---



##### 



.
       63




---



##### 



Director Compensation
  Officer Compensation
  64




---



##### 



Summary Compensation Table(Rs. Million)Name
    
    Salary
    
    
    BonusC V S Suri
    
    
    4.66
    
    
    
    0.88Bhaskar R Sayyaparaju
    
    
    5.97
    
    
    
    0.79M P Vijay Kumar
    
    
    6.21
    
    
    
    P J Nath
    
    
    6.42
    
    
    
    1.50Aravind Mathur
    
    
    5.57
    
    
    
    1.00David Appasamy
    
    
    2.95
    
    
    
    0.15Naresh Ajwani
    
    
    3.92
    
    
    
    0.56Pijush Kanti Das
    
    
    3.23
    
    
    
    0.38Venkat Rao Mallineni
    
    
    3.35
    
    
    
    0.13K N Ajith
    
    
    2.76
    
    
    
    0.18
       Rs. inName
    
    millionC V S Suri
    
    
    0.25Bhaskar R Sayyaparaju
    
    
    0.30M P Vijay Kumar
    
    
    0.33P J Nath
    
    
    0.33Aravind Mathur
    
    
    0.30David Appasamy
    
    
    0.14Naresh Ajwani
    
    
    0.17Pijush Kanti Das
    
    
    0.17Venkat Rao Mallineni
    
    
    0.17K N Ajith
    
    
    0.12
   65




---



##### 



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
  Audit Committee
  66




---



##### 



Compensation Committee
         Nominating Committee
        Employees
  67




---



##### 



Stock Ownership
  Equity SharesBeneficially OwnedBeneficial Owner
    
    Number
    
    PercentRaju Vegesna *
    
    
    13,902,860
    
    
    
    26.06
    %T. H. Chowdary
    
    
    
    
    
    
    C B Mouli
    
    
    
    
    
    
    P S Raju
    
    
    
    
    
    
    S K Rao
    
    
    
    
    
    
    S R Sukumara
    
    
    
    
    
    
    Ananda Raju Vegesna
    
    
    14,530,000
    
    
    
    27.24
    %
 *
    
    In addition to the above, Mr Raju Vegesna beneficially owns 578,191 shares through his Family
Trust, as a Co Trustee and has voting power. Including this, Raju Vegesna beneficially holds 27.14%
of the issued capital of the Company. M/s T H Chowdary, C B Mouli, P S Raju, S K Rao and S R
Sukumara do not hold any shares in the Company.  Employee Stock Option Plan
    
 Item 7. Major Shareholders and Related Party Transactions
 Principal Shareholders
  68




---



##### 



Equity SharesBeneficially ownedBeneficial Owner
    
    Number
    
    PercentInfinity Capital Ventures, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025
    
    
    13,902,860
    
    
    
    26.06Vegesna Family Trust, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025
    
    
    578,191
    
    
    
    1.08Infinity Satcom Universal Private Limited, Vishakapatinam
    
    
    14,530,652
    
    
    
    27.24
 Details of significant change in the percentage ownership held by the major shareholders:
 Name of the shareholder
    
    2006-07
    
    2007-08
    
    2008-09No. of shares
    
    %
    
    No. of shares
    
    %
    
    No. of shares
    
    %Infinity Capital Ventures, LP, USA
    
    
    17,902,860
    
    
    
    41.81
    
    
    
    17,902,860
    
    
    
    41.81
    
    
    
    17,902,860
    
    
    
    41.81Vegesna Family Trust, USA
    
    
    
    
    
    
    
    
    
    
    578,191
    
    
    
    1.35
    
    
    
    578,191
    
    
    
    1.35Infinity Satcom Universal Private Limited *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 *
    
    Subsequent to the merger with Sify Communication Limited, Infinity Capital now owns
approximately 26.06% and Infinity Satcom Universal Private Limited owns 27.24% of outstanding
shares.  United States Shareholders
  Host country Shareholders
  Control of Registrant
  69




---



##### 




    
    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.
  Forfeiture of equity shares issued in a private placement
    Sale of shares in a private transaction
  Merger of Sify Communications Limited with Sify Technologies Limited
  70




---



##### 



th
  Related Party Transactions
    Loans to employees
   
 Item 8 . Financial Information
 Financial Statements
  Legal Proceedings
   71




---



##### 



Dividends
   
 Item 9 . The Offer and Listing
 Trading Markets
  72




---



##### 



Price History
  Prior Fiscal Years
 High
    
    LowFiscal year ended
    
    $
    
    $March 31, 2009
    
    
    5.30
    
    
    
    0.42March 31, 2008
    
    
    10.47
    
    
    
    4.00March 31, 2007
    
    
    14.78
    
    
    
    7.43March 31, 2006
    
    
    14.58
    
    
    
    3.81March 31, 2005
    
    
    8.62
    
    
    
    3.82
 Quarters of Prior Fiscal Years
 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
 High
    
    LowFiscal year ended March 31, 2009
    
    $
    
    $First Quarter
    
    
    5.41
    
    
    
    3.73Second Quarter
    
    
    3.89
    
    
    
    1.60Third Quarter
    
    
    2.05
    
    
    
    0.42Fourth Quarter
    
    
    1.82
    
    
    
    0.48
 Most recent six months
 High
    
    LowMonth
    
    Rs.
    
    Rs.August 2009
    
    
    48.98
    
    
    
    47.54July 2009
    
    
    49.09
    
    
    
    47.89June 2009
    
    
    48.60
    
    
    
    46.96May 2009
    
    
    49.83
    
    
    
    48.17April 2009
    
    
    50.53
    
    
    
    49.49March 2009
    
    
    52.06
    
    
    
    50.14
  
 Item 10. Additional Information
   73




---



##### 



Memorandum and Articles of Association
   74




---



##### 



1.
    
    To develop and provide Internet service, Internet Telephony, Infrastructure based
services, Virtual Private Network and other related data, voice and video services, wide area
communication network, value added services on the network, lease or other transfers of
network, software, peripherals and related products, and to provide marketing services.
 2.
    
    To provide security products for corporate, carry on the business of consulting,
software and hardware, integrated platform(s) for the e-commerce solutions, applications,
information technology, security and all other kinds of technology solutions or services,
and to acquire, maintain, operate, manage and undertake technology and infrastructure for this
purpose.
 3
    
    To develop, service & sell/lease data based through direct or electronic media, to
develop a wide area communication network of sell / lease the network or provide value added
services on the network to develop, service, buy / sell computers, software, peripherals and
related products to provide marketing services rising direct as well as electronic media;
 4
    
    To undertake the designing and development of systems and applications software either for
its own use or for sale in India or for export outside India and to design and develop such
systems and application software for or on behalf of manufacturers, owners and users of
computer systems and digital / electronic equipments in India or elsewhere in the world;
 5
    
    To set up and run electronic data processing centres and to carry on the business of data
processing, word processing, software consultancy, system studies, management consultancy,
techno-economic feasibility studies of projects, design and development of management
information systems, share / debenture issues management and / or registration and
share/debenture transfer agency;
 6.
    
    To undertake and execute feasibility studies for Computerisation, setting up of all
kind of computer systems and digital/electronic equipments and the selection, acquisition and
installation thereof whether for the company or its customers or other users;
 7
    
    To conduct, sponsor or otherwise participate in training programmes, courses, seminar
conferences in respect of any of the objects of the company and for
spreading or imparting
the knowledge and use of computers and computer programming languages including the
publication of books, journals, bulletins, study / course materials, circulars and
news-letters; and to undertake the business as agents, stockist, distributors, franchise
holders or otherwise for trading or dealing in computer systems, peripherals, accessories,
parts and computer consumables, continuous and non-continuous stationery, ribbons and other
allied products and things and standard software packages.
 8
    
    To conduct e-commerce for sale of all kinds of products and services through direct or
electronic media as well as on and off line e-commerce including travel related services,
buying and selling of products and services / merchandise, software, data information etc., in
India and abroad.
 75




---



##### 



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
      76




---



##### 




    
    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.
 Voting Rights
    
    
    amendments of the memorandum of association to alter the objects of the company and
to change the registered office of the company under section 146 of the Indian Companies
Act;
    
    the issuance of shares with differential rights with respect to voting, dividend or
other provisions of the Indian Companies Act;
    
    the sale of the whole or substantially the whole of an undertaking or facilities of
the company;
    
    providing loans, extending guarantees or providing a security in excess of the limits
allowed under Section 372A of the Indian Companies Act;
    
    varying the rights of the holders of any class of shares or debentures;
    
    the election of a director by minority shareholders; and
    
    the buy back of shares.
 Bonus Shares
  Consolidation and Subdivision of Shares
  77




---



##### 



Preemptive Rights and Issue of Additional Shares
  Annual General Meetings of Shareholders
   2009 Annual General Meeting
  Limitations on the Rights to Own Securities
  Register of Shareholders; Record Dates; Transfer of Shares
    78




---



##### 



Disclosure of Ownership Interest
  Audit and Annual Report
 www.sifycorp.com
 Company Acquisition of Equity Shares
    Liquidation Rights
 79




---



##### 



Redemption of Equity Shares
  Discriminatory Provisions in Articles
  Alteration of Shareholder Rights
   Provisions on Changes in Capital
  Material Contracts
  Exchange Controls
 General
  Foreign Direct Investment
  80




---



##### 



Subsequent Transfers
   Portfolio Investment by Non-Resident Indians
  Investment by Foreign Institutional Investors under PIS
  Issue of shares by Indian companies under ADR / GDR
  81




---



##### 



Takeover Code
  Fungibility of ADSs
    Transfer of ADSs and Surrender of ADSs
  82




---



##### 



Government of India Approvals
  
    
    the ADSs must be offered at a price determined by the lead manager of such offering;
    
    all equity holders may participate;
    
    the issuer must obtain special shareholder approval; and
    
    the proceeds must be repatriated to India within one month of the closure of the
issue.
 Ownership Restrictions
      83




---



##### 



Voting Rights of Deposited Equity Shares Represented by ADSs
      Taxation
 Indian Taxation
 General
  Residence
   Taxation of Distributions
 84




---



##### 



Minimum Alternate Tax
 Fringe Benefits Tax
 Taxation of Capital Gains
   85




---



##### 



Withholding Tax on Capital Gains
 Buy-back of Securities
 Stamp Duty and Transfer Tax
 Wealth Tax
 Gift Tax and Estate Duty
 Service Tax
 Income Tax Matters
  86




---



##### 



Material United States Federal Tax Consequences
    Ownership of ADSs
 Dividends
   87




---



##### 



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.
   
    
    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
 88




---



##### 



Documents on Display
 www.sec.gov,
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 General
  Risk Management Procedures
   
 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
  89




---



##### 



Item 15. Controls and procedures
 Disclosure Controls and Procedures
   Managements annual report on internal control over financial reporting
 1)
    
    Our management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our
internal control over financial reporting is a process to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with International Financial Reporting Standards, as
issued by the International Accounting Standards Board. Our internal control over financial
reporting includes those policies and procedures that:
 
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with applicable accounting principles,
and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
  2)
    
    Management assessed the effectiveness of our internal control over financial reporting as of
March 31, 2009. In conducting its assessment of internal control over financial reporting,
management based its evaluation on the framework in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on our assessment, management has concluded that our internal control over financial reporting
was effective as of March 31, 2009.
 3)
    
    Our independent registered public accounting firm, KPMG, has audited the consolidated
financial statements included in this Annual Report on Form 20-F, and as part of their audit,
has issued their report, included herein, on the effectiveness of our internal control over
financial reporting as of March 31, 2009.
 90




---



##### 



Report of Independent Registered Public Accounting Firm
 
 Internal Control 
Integrated Framework
    Internal Control  Integrated Framework
   
 91




---



##### 



Changes in internal control over financial reporting
  
 Item 16A. Audit Committee financial expert
  
 Item 16B. Code of Ethics
  www.sifycorp.com
   
 Item 16C. Principal Accountant Fees and Services
  Fiscal year endedType of Service
    
    march 31, 2008
    
    march 31, 2009(a) Audit Fees
    
    Rs.12.92 million
    
    Rs.12.72 million(b) Audit Related Fees
    
    Nil
    
    Nil(c) Tax Fees
    
    Nil
    
    Nil(d) All Other Fees
    
    Nil
    
    Nil
   92




---



##### 



Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  
 Item 16F : Change in Registrants Certifying Accountant
  
 Item 16 G. Corporate Governance
   
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
 Consolidated Statements and other Financial Information
 93




---



##### 



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
  
 94




---



##### 



Sify Technologies Limited
Consolidated Balance Sheets
 As at March 31,2009ConveniencetranslationAs at March 31,
    
    
    into US$(In thousands of Rupees, except share data and as
    
    
    
    
    
    2009
    
    
    2008
    
    
    (Unaudited)otherwise stated)
    
    
    Note
    
    
    Rs
    
    
    Rs
    
    
    Note 2(c)AssetsProperty, plant and equipment
    
    
    5
    
    
    
    3,260,914
    
    
    
    2,181,785
    
    
    
    64,002Intangible assets
    
    
    6
    
    
    
    177,872
    
    
    
    182,307
    
    
    
    3,491Investment in equity accounted investee
    
    
    7
    
    
    
    542,901
    
    
    
    478,514
    
    
    
    10,656Restricted cash
    
    
    8
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    20Lease prepayments
    
    
    9
    
    
    
    311,185
    
    
    
    568,909
    
    
    
    6,108Other assets
    
    
    10
    
    
    
    496,325
    
    
    
    341,822
    
    
    
    9,741Deferred tax assets
    
    
    11
    
    
    
    8,524
    
    
    
    15,570
    
    
    
    167Total non-current assets
    
    
    
    
    
    
    4,798,721
    
    
    
    3,769,907
    
    
    
    94,185Inventories
    
    
    12
    
    
    
    39,088
    
    
    
    37,751
    
    
    
    767Trade and other receivables, net
    
    
    13
    
    
    
    2,455,526
    
    
    
    2,220,726
    
    
    
    48,197Other assets
    
    
    10
    
    
    
    
    
    
    
    6,743
    
    
    
    Prepayments for current assets
    
    
    14
    
    
    
    128,548
    
    
    
    150,627
    
    
    
    2,523Restricted cash
    
    
    8
    
    
    
    1,329,756
    
    
    
    877,582
    
    
    
    26,099Cash and cash equivalents
    
    
    8
    
    
    
    380,042
    
    
    
    628,745
    
    
    
    7,459Other investments
    
    
    15
    
    
    
    13,874
    
    
    
    18,679
    
    
    
    272Total current assets
    
    
    
    
    
    
    4,346,834
    
    
    
    3,940,853
    
    
    
    85,317Total assets
    
    
    
    
    
    
    9,145,555
    
    
    
    7,710,760
    
    
    
    179,502EquityShare capital
    
    
    16
    
    
    
    441,018
    
    
    
    441,018
    
    
    
    8,656Share premium
    
    
    16
    
    
    
    16,375,217
    
    
    
    16,368,647
    
    
    
    321,398Share based payment reserve
    
    
    16
    
    
    
    149,535
    
    
    
    149,398
    
    
    
    2,935Other components of equity
    
    
    16
    
    
    
    (9,691
    )
    
    
    976
    
    
    
    (190
    )Accumulated deficit
    
    
    16
    
    
    
    (13,104,386
    )
    
    
    (12,265,055
    )
    
    
    (257,201
    )Total equity attributable to equity
holders of the Company
    
    
    
    
    
    
    3,851,693
    
    
    
    4,694,984
    
    
    
    75,598Minority interest
    
    
    16
    
    
    
    248,848
    
    
    
    199,907
    
    
    
    4,884Total equity
    
    
    
    
    
    
    4,100,541
    
    
    
    4,894,891
    
    
    
    80,482
 95




---



##### 



Sify Technologies Limited
Consolidated Balance Sheets
 As at March 31,2009ConveniencetranslationAs at March 31,
    
    
    into US$(In thousands of Rupees, except share data and as
    
    
    
    
    
    2009
    
    
    2008
    
    
    (Unaudited)otherwise stated)
    
    
    Note
    
    
    Rs
    
    
    Rs
    
    
    Note 2(c)LiabilitiesFinance lease obligations,
other than current
installments
    
    
    17
    
    
    
    122,382
    
    
    
    2,493
    
    
    
    2,402Borrowings from banks
    
    
    20
    
    
    
    201,389
    
    
    
    
    
    
    
    3,953Employee benefits
    
    
    18
    
    
    
    64,300
    
    
    
    42,250
    
    
    
    1,262Other liabilities
    
    
    19
    
    
    
    134,116
    
    
    
    124,472
    
    
    
    2,632Total non-current liabilities
    
    
    
    
    
    
    522,187
    
    
    
    169,215
    
    
    
    10,249Finance lease obligations,
current installments
    
    
    17
    
    
    
    32,943
    
    
    
    2,899
    
    
    
    647Borrowings from banks
    
    
    20
    
    
    
    1,182,770
    
    
    
    156,426
    
    
    
    23,214Bank overdraft
    
    
    8
    
    
    
    1,397,083
    
    
    
    617,637
    
    
    
    27,421Trade and other payables
    
    
    21
    
    
    
    1,555,230
    
    
    
    1,501,336
    
    
    
    30,525Deferred income
    
    
    22
    
    
    
    354,801
    
    
    
    368,356
    
    
    
    6,964Total current liabilities
    
    
    
    
    
    
    4,522,827
    
    
    
    2,646,654
    
    
    
    88,771Total liabilities
    
    
    
    
    
    
    5,045,014
    
    
    
    2,815,869
    
    
    
    99,020Total equity and liabilities
    
    
    
    
    
    
    9,145,555
    
    
    
    7,710,760
    
    
    
    179,502
  96




---



##### 



Sify Technologies Limited
Consolidated Income Statements
 YearendedMarch 31,2009ConveniencetranslationYear ended March 31,
    
    
    into US$(In thousands of Rupees, except share data and as
    
    
    
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    (Unaudited)otherwise stated)
    
    
    Note
    
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    Note2(c)Revenue
    
    
    23
    
    
    
    6,162,161
    
    
    
    6,006,215
    
    
    
    5,447,347
    
    
    
    120,945Cost of goods sold and services rendered
    
    
    24
    
    
    
    (3,613,349
    )
    
    
    (3,419,122
    )
    
    
    (2,939,329
    )
    
    
    (70,920
    )Other income
    
    
    25
    
    
    
    89,105
    
    
    
    46,152
    
    
    
    66,320
    
    
    
    1,749Selling, general and administrative expenses
    
    
    26
    
    
    
    (2,813,425
    )
    
    
    (2,434,715
    )
    
    
    (2,094,971
    )
    
    
    (55,219
    )Depreciation and amortization
    
    
    5 & 6
    
    
    
    (498,872
    )
    
    
    (394,337
    )
    
    
    (463,780
    )
    
    
    (9,791
    )Impairment loss on goodwill
    
    
    6
    
    
    
    (15,200
    )
    
    
    
    
    
    
    
    
    
    
    (298
    )Income / (loss) from operating activities
    
    
    
    
    
    
    (689,580
    )
    
    
    (195,807
    )
    
    
    15,587
    
    
    
    (13,534
    )Finance income
    
    
    29
    
    
    
    122,565
    
    
    
    161,783
    
    
    
    154,192
    
    
    
    2,406Finance expenses
    
    
    29
    
    
    
    (251,660
    )
    
    
    (57,682
    )
    
    
    (25,550
    )
    
    
    (4,939
    )Net finance income / (expense)
    
    
    29
    
    
    
    (129,095
    )
    
    
    104,101
    
    
    
    128,642
    
    
    
    (2,533
    )Share of profit of equity accounted
investee (net of income tax)
    
    
    7
    
    
    
    64,091
    
    
    
    181,127
    
    
    
    61,030
    
    
    
    1,258Profit / (loss) before tax
    
    
    
    
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    205,259
    
    
    
    (14,809
    )Income tax (expense) / benefit
    
    
    11
    
    
    
    (97,049
    )
    
    
    (63,975
    )
    
    
    66,113
    
    
    
    (1,905
    )Profit / (loss) for the year
Attributable to:
    
    
    
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )Equity holders of the Company
    
    
    
    
    
    
    (900,574
    )
    
    
    (4,696
    )
    
    
    240,841
    
    
    
    (17,675
    )Minority interests
    
    
    
    
    
    
    48,941
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    961(851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )Earnings / (loss) per share
    
    
    30Basic earnings /(loss) per share
    
    
    
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.64
    
    
    
    (0.41
    )Diluted earnings/(loss) per share
    
    
    
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.63
    
    
    
    (0.41
    )
  97




---



##### 



Sify Technologies Limited
 Consolidated Statements of Recognised Income and
Expense
 2009ConveniencetranslationYear ended March 31,
    
    
    into US$(In thousands of Rupees, except share data and as
    
    
    
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    Note 2(c)otherwise stated)
    
    
    Note
    
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    (Unaudited)Foreign currency translation
differences for foreign
operations
    
    
    
    
    
    
    (1,256
    )
    
    
    163
    
    
    
    (316
    )
    
    
    (25
    )Defined benefit plan
actuarial gains / (losses)
    
    
    
    
    
    
    (4,346
    )
    
    
    (1,859
    )
    
    
    18
    
    
    
    (85
    )Change in fair value of
available for sale
investments
    
    
    
    
    
    
    (5,361
    )
    
    
    (1,080
    )
    
    
    
    
    
    
    (105
    )Share of gains and (losses)
from equity accounted
investees
    
    
    
    
    
    
    296
    
    
    
    (9,669
    )
    
    
    10,793
    
    
    
    6Income and (expense)
recognised directly in
equity
    
    
    
    
    
    
    (10,667
    )
    
    
    (12,445
    )
    
    
    10,495
    
    
    
    (209
    )Profit / (loss) for the year
    
    
    
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )Total recognised income and
(expense) for the year
    
    
    16
    
    
    
    (862,300
    )
    
    
    13,001
    
    
    
    281,867
    
    
    
    (16,923
    )Attributable to:Equity holders of the Company
    
    
    
    
    
    
    (911,241
    )
    
    
    (17,141
    )
    
    
    251,336
    
    
    
    (17,884
    )Minority interest
    
    
    
    
    
    
    48,941
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    961Total recognised income and
(expense) for the year
    
    
    
    
    
    
    (862,300
    )
    
    
    13,001
    
    
    
    281,867
    
    
    
    (16,923
    )
  98




---



##### 



Sify Technologies Limited
 Consolidated Statements of Cash Flows
 2009ConveniencetranslationFor the fiscal years ended March 31,
    
    Year ended March 31,
    
    
    into US$(In thousands of Rupees, except share data and as
    
    2009
    
    
    2008
    
    
    2007
    
    
    (Unaudited)otherwise stated)
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    Note 2(c)Profit/(loss) for the year
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    (16,714
    )Adjustments for:Depreciation and amortization
    
    
    498,872
    
    
    
    394,337
    
    
    
    463,780
    
    
    
    9,791Impairment loss on goodwill
    
    
    15,200
    
    
    
    
    
    
    
    
    
    
    
    298Share of profit of equity accounted investee
    
    
    (64,091
    )
    
    
    (181,127
    )
    
    
    (61,030
    )
    
    
    (1,258
    )(Gain) / loss on sale of property, plant and equipment
    
    
    (828
    )
    
    
    107
    
    
    
    (487
    )
    
    
    (16
    )Provision for doubtful receivables
    
    
    84,346
    
    
    
    131,954
    
    
    
    153,638
    
    
    
    1,655Provision for finance lease receivables
    
    
    6,929
    
    
    
    
    
    
    
    
    
    
    
    136Stock compensation expense
    
    
    61,380
    
    
    
    56,410
    
    
    
    60,933
    
    
    
    1,205Gain on disposal of subsidiary
    
    
    
    
    
    
    
    
    
    
    (226
    )
    
    
    Net finance (income) / expenditure
    
    
    129,095
    
    
    
    (104,101
    )
    
    
    (128,642
    )
    
    
    2,534Income tax expense/(benefit)
    
    
    97,049
    
    
    
    63,975
    
    
    
    (66,113
    )
    
    
    1,905Unrealized (gain)/ loss on account of exchange differences
    
    
    455
    
    
    
    496
    
    
    
    16,012
    
    
    
    9Amortisation of Leasehold Prepayments
    
    
    8,403
    
    
    
    
    
    
    
    
    
    
    
    165Provison for infrastructure costs
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    196(4,823
    )
    
    
    387,497
    
    
    
    709,237
    
    
    
    (94
    )Change in trade and other receivables
    
    
    (314,349
    )
    
    
    (678,051
    )
    
    
    (651,650
    )
    
    
    (6,170
    )Change in inventories
    
    
    (1,337
    )
    
    
    (9,066
    )
    
    
    1,777
    
    
    
    (26
    )Change in other assets
    
    
    224,625
    
    
    
    (757,472
    )
    
    
    (21,898
    )
    
    
    4,409Change in trade and other payables
    
    
    (171,261
    )
    
    
    460,211
    
    
    
    142,879
    
    
    
    (3,361
    )Change in employee benefits
    
    
    17,704
    
    
    
    7,111
    
    
    
    (13,083
    )
    
    
    347Change in deferred income
    
    
    (13,555
    )
    
    
    (81,673
    )
    
    
    5,697
    
    
    
    (266
    )(262,996
    )
    
    
    (671,443
    )
    
    
    172,959
    
    
    
    (5,161
    )Income taxes paid
    
    
    (108,560
    )
    
    
    (168,426
    )
    
    
    (56,697
    )
    
    
    (2,131
    )Net cash from / (used in) operating activities
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    (7,292
    )
 99




---



##### 



Sify Technologies Limited
 Consolidated Statements of Cash Flows
 2009Conveniencetranslation intoFor the fiscal years ended March 31,
    
    Year ended March 31,
    
    
    US$(In thousands of Rupees, except share data and as
    
    2009
    
    
    2008
    
    
    2007
    
    
    (Unaudited)otherwise stated)
    
    

Rs
    
    
    Rs
    
    
    Rs
    
    
    Note 2(c)Cash flows from / (used in) investing activitiesAcquisition of property, plant and equipment
    
    
    (1,170,905
    )
    
    
    (849,091
    )
    
    
    (686,320
    )
    
    
    (22,981
    )Expenditure on intangible assets
    
    
    (165,247
    )
    
    
    (30,238
    )
    
    
    (65,474
    )
    
    
    (3,243
    )Proceeds from sale of property, plant and equipment
    
    
    2,393
    
    
    
    5,630
    
    
    
    5,465
    
    
    
    47Net investment in leases
    
    
    5,111
    
    
    
    16,552
    
    
    
    (6,974
    )
    
    
    100Finance income received
    
    
    154,492
    
    
    
    121,162
    
    
    
    138,762
    
    
    
    3,032Short term investments (net)
    
    
    
    
    
    
    (20,315
    )
    
    
    
    
    
    
    Business acquisition (net of cash)
    
    
    
    
    
    
    
    
    
    
    (93,775
    )
    
    
    Net cash from / (used in) investing activities
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (23,045
    )Cash flows from / (used in) financing activitiesProceeds from issue of share capital (including
share premium)
    
    
    
    
    
    
    116,809
    
    
    
    72,645
    
    
    
    Proceeds from / (repayment) of borrowings (net)
    
    
    1,227,733
    
    
    
    (643,574
    )
    
    
    800,000
    
    
    
    24,097Finance expenses paid
    
    
    (249,908
    )
    
    
    (57,679
    )
    
    
    (25,548
    )
    
    
    (4,905
    )Proceeds from / (repayment) of finance lease liabilities
    
    
    (9,028
    )
    
    
    (756
    )
    
    
    842
    
    
    
    (177
    )Net cash from / (used in) financing activities
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    19,015Net increase / (decrease) in cash and cash
equivalents
    
    
    (576,920
    )
    
    
    (2,181,369
    )
    
    
    255,885
    
    
    
    (11,322
    )Cash and cash equivalents at April 1
    
    
    888,690
    
    
    
    3,070,157
    
    
    
    2,822,501
    
    
    
    17,442Effect of exchange fluctuations on cash held
    
    
    945
    
    
    
    (98
    )
    
    
    (8,229
    )
    
    
    19Cash and cash equivalents at March 31
    
    
    312,715
    
    
    
    888,690
    
    
    
    3,070,157
    
    
    
    6,139Refer note 3 (c) and note 8 for the composition of cash and cash equivalents.Supplementary InformationAdditions to property, plant and equipment
    
    
    158,962
    
    
    
    8,166
    
    
    
    4,448
    
    
    
    3,120represented by finance lease obligations
  100




---



##### 



SIFY TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of Rupees, except share data and as stated otherwise)
 1. Reporting entity
  2. Basis of preparation
 a. Statement of compliance
   b. Basis of measurement
  
    
    Available for sale financial assets are measured at fair value
 
    
    Derivative financial instruments are measured at fair value
 
    
    the defined benefit asset is recognised as the net total of the plan assets, plus
unrecognised past service cost and unrecognised actuarial losses, less unrecognised actuarial
gains and the present value of the defined benefit obligation.
 
    
    In relation to lease prepayments, the initial fair value of the security deposit, is
estimated as the present value of the refundable amount, discounted using the market interest
rates for similar instruments. The difference between the initial fair value and the
refundable amount of the deposit is recognized as a lease prepayment.
  c. Functional and presentation currency
   Convenience translation (unaudited):
 101




---



##### 



d. Use of estimates and judgements
  :
 
    
    Measurement of the recoverable amounts of cash-generating units containing goodwill
(Note 6)
    
    Useful lives of Property, plant and equipment (Note 3 e and Note 5)
    
    Useful lives of intangible assets (Note 3 f and Note 6)
    
    Lease classification (Note 3 g, 10, 17 and 31)
    
    Utilization of tax losses (Note 11)
    
    Measurement of defined employee benefit obligations (Note 18)
    
    Measurement of share-based payments (Note 3 k and Note 28)
    
    Valuation of financial instruments (Note 3 c, 4, 36 and 37)
    
    Provisions and contingencies (Note 33 and 34)
 3. Significant accounting policies
  a. Basis of consolidation
 (i) Subsidiaries
  (ii) Associates (equity accounted investees)
  (iii) Transactions eliminated on consolidation
  102




---



##### 



b. Foreign currency
 (i) Foreign currency transactions
  (ii) Foreign operations
  c. Financial Instruments
 (i) Non-derivative financial instruments
   a) Cash and cash equivalents
  b) Available-for-sale financial assets
   103




---



##### 



c) Loans and receivables
  d) Others
  (ii) Derivative financial instruments
   d. Share capital
  e. Property, plant and equipment
    (i) Subsequent costs
  104




---



##### 



(ii) Depreciation
  Estimate of useful life in years2009/2008
    
    
    2007Buildings
    
    
    28
    
    
    
    28Plant and machinery comprising computers, servers etc.
    
    
    2  5
    *
    
    
    5Plant and machinery comprising other items
    
    
    8
    *
    
    
    5Furniture and fittings
    
    
    5
    
    
    
    5Office equipment
    
    
    5
    
    
    
    5Motor vehicles
    
    
    3  5
    
    
    
    3
 
 *
    
    Revised during the year ended March 31, 2008. Also refer note 5.  f. Intangible assets
 (i) Goodwill
  Acquisitions prior to April 1, 2006
  Acquisitions on or after April 1, 2006
  Acquisition of minority interests
  Subsequent measurement
  (ii) Other intangible assets
  105




---



##### 



(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 related intangibles
    
    5 years
 g. Leases
  Assets taken on finance lease:
  Assets taken on operating lease:
  Assets given on finance lease:
  Deposits provided to lessors
  106




---



##### 



h. Inventories
  i. Impairment
 Financial assets
  Financial assets measured at amortized cost
  Available-for-sale financial assets
  Loans and receivables
  Reversal of impairment loss
  Non-financial assets
   107




---



##### 



pro rata basis.
 Reversal of impairment loss
  j. Employee benefits
  (a) Defined contribution plan (Provident Fund)
  (b) Defined Benefit Plans (Gratuity)
   (c) Short term benefits
  108




---



##### 



(d) Compensated leave of absence
  k. Share-based payment transactions
    l. Provisions
   m. Revenue
  109




---



##### 



(i) Corporate network/data services
      (ii) Internet access services
  110




---



##### 



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.
  (iii) Online portal services
    111




---



##### 



(iv) Other services
  (v) Deferred income
  n. Export entitlements
  o. Finance income and expense
   p. Borrowing costs
  q. Income taxes
   112




---



##### 



r. Earnings / (loss) per share
  s. Recent accounting pronouncements
 (i)
    
    Standards early adopted by the Company1.
    
    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. The standard is
applicable for periods beginning on or after January 1, 2009. Sify early adopted IFRS 8 for
the year ending March 31, 2009 and has made 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.2.
    
    In April 2009, the IASB issued Improvements to IFRS as part of its program of annual
improvements to its standards. As part of the Improvements to IFRS, IFRS 8 Operating
Segments was amended. The amendment requires disclosure of segment assets for each
reportable segment only if such measure is regularly reviewed by the Chief Operating
Decision Maker (CODM). The said amendment is effective for annual periods beginning on or
after 01 January, 2010, with earlier adoption being permitted. Sify has early adopted the
said amendment to IFRS 8 and has not provided disclosures relating to segment assets of
reportable segments as these are not regularly reviewed by the CODM.(ii)
    
    New standards and interpretations not yet adoptedA number of new standards, amendments to standards and interpretations are not yet effective
for the year ended 31 March 2009, and have not been applied in preparing these consolidated
financial statements:1.
    
    Revised IAS 1, Presentation of Financial Statements (2007) introduces the term total
comprehensive income, which represents changes in equity during a period other than those
changes resulting from transactions with owners in their capacity as owners. Total
comprehensive income may be presented in either a single statement of comprehensive income
(effectively combining both the income statement and all non-owner changes in equity in a
single statement), or in an income statement and a separate statement of comprehensive
income. Revised IAS 1, which becomes mandatory for our March 31, 2010 consolidated financial
statements, is expected to have a significant impact on the presentation of the consolidated
financial statements. The Group plans to provide an income statement and a separate
statement comprehensive income for reporting periods commencing on and after April 1, 2009.2.
    
    Revised IAS 23, Borrowing Costsremoves the option to expense borrowing costs and
requires that an entity capitalize 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 23will become mandatory for reporting periods commencing on and after April 1,
2009. As the Group currently follows a policy of capitalizing borrowing costs, this new
standard will not have any material impact on the Groups consolidated financial statements.3.
    
    Amendments to IAS 32, Financial Instruments: Presentation and IAS 1, Presentation of
Financial Statements  Puttable Financial Instruments and Obligations Arising on
Liquidationrequire puttable instruments, and instruments that impose on the entity an
obligation to deliver to another party a pro rata share of the net assets of the entity only
on
 113




---



##### 



liquidation, to be classified as equity if certain conditions are met. The amendments,
which become mandatory for the Groups consolidated financial statements prepared for
reporting periods commencing on or after April 1, 2009, with retrospective application
required, are not expected to have any material impact on the consolidated financial
statements.4.
    
    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 Group 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. Business combinations consummated after April 1, 2009 would be impacted by the revised
standard.5.
    
    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
effective 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 an increase or decrease in equity. Additionally,
purchase of some or all of the NCI is treated as equity transaction and accounted for in
equity and a partial disposal of interest in 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 or loss 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
proportionate share of net income and reserves to the NCI even if this results in the NCI
having a deficit balance. The amendment is expected to have a significant impact on the
Groups consolidated financial statements.6.
    
    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
financial statements for reporting periods commencing on or after April 1, 2009, is not
expected to have a significant impact on the consolidated financial statements.7.
    
    IFRIC 18- Transfer of assets from customersdefines the treatment for property, plant and
equipment transferred by customers to companies or for cash received to be invested in
property, plant and equipment that must be used to either connect the customer to a network
or to provide the customer with ongoing access to a supply of goods or services or to both.
The item of property, plant and equipment is to be initially recognized by the Company at
fair value with a corresponding credit to revenue. If an ongoing service is identified as a
part of the agreement, the period over which revenue will be recognized for that service
would be determined by the terms of the agreement with the customer. If the period is not
clearly defined, then revenue should be recognized over a period no longer than the usual
life of the transferred asset used to provide the ongoing service. This interpretation is to
be applied prospectively to transfers of assets from customers received on or after July 1,
2009. Earlier application is permitted provided the valuation and other information needed
to apply the information to past transfers were obtained at the time the transfers occurred.
The Company would prospectively adopt this interpretation for all assets transferred after
July 1, 2009. The amendment does not have any significant impact on Sifys statement of
operations.8.
    
    Amendments to IFRS 2, Share-based Payment  Vesting Conditions and Cancellations
clarify the definition of vesting conditions, introduce the concept of non-vesting
conditions, require non-vesting conditions to be reflected in grant-date fair value and
provide the accounting treatment for non-vesting conditions and cancellations. These
amendments to IFRS 2 will become mandatory for the Groups financial statements for
reporting periods commencing on or after April 1, 2009, with retrospective application. The
amendment does not have any material impact on the consolidated financial statements of the
Group.
 114




---



##### 



9.
    
    Amendments to IAS 39, Financial Instruments: Recognition and Measurement: Eligible
Hedged Itemsdeal with two situations where diversity in practice exists on the designation
of inflation as a hedged risk and the treatment of one-sided risks on hedged items. These
amendments are effective for accounting periods beginning on or after July 1, 2009. The
amendment is not expected to have any impact on the consolidated financial statements of the
Group.10.
    
    Improvements to IFRS- In April 2009, the IASB issued Improvements to IFRSs  a
collection of amendments to twelve International Financial Reporting Standards  as part of
its program of annual improvements to its standards, which is intended to make necessary,
but non-urgent, amendments to standards that will not be included as part of another major
project. The latest amendments were included in exposure drafts of proposed amendments to
IFRS published in October 2007, August 2008, and January 2009. The amendments resulting from
this standard mainly have effective dates for annual periods beginning on or after January
1, 2010, although entities are permitted to adopt them earlier. The Group is evaluating the impact, these amendments (except as discussed in note 3 s (i) above) will
have on the Groups consolidated financial statements.
 4. Determination of fair values
  (i) Property, plant and equipment
  (ii) Inventories
  (iii) Intangible assets
  (iv) Investments in equity and debt securities
  (v) Trade and other receivables
  115




---



##### 



(vi) Derivatives
  (vii) Non Derivative financial liabilities
  (viii) Share-based payment transactions
  116




---



##### 



5. Property, plant and equipment
  Cost
    
    
    Accumulated depreciation
    
    
    CarryingAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    amount asApril 01,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March
    
    
    at MarchParticulars
    
    2008
    
    
    Additions
    
    
    Disposals
    
    
    2009
    
    
    2008
    
    
    for the year
    
    
    Deletions
    
    
    31, 2009
    
    
    31, 2009Building
    
    
    769,663
    
    
    
    
    
    
    
    
    
    
    
    769,663
    
    
    
    120,924
    
    
    
    27,477
    
    
    
    
    
    
    
    148,401
    
    
    
    621,262Plant and machinery
    
    
    3,683,632
    
    
    
    1,097,317
    
    
    
    47,827
    
    
    
    4,733,122
    
    
    
    2,526,445
    
    
    
    286,805
    
    
    
    47,330
    
    
    
    2,765,920
    
    
    
    1,967,202Computer equipments
    
    
    438,597
    
    
    
    58,824
    
    
    
    198
    
    
    
    497,223
    
    
    
    297,049
    
    
    
    71,001
    
    
    
    78
    
    
    
    367,972
    
    
    
    129,251Office equipment
    
    
    116,691
    
    
    
    47,090
    
    
    
    1,649
    
    
    
    162,132
    
    
    
    83,928
    
    
    
    14,673
    
    
    
    1,646
    
    
    
    96,955
    
    
    
    65,177Furniture
and fittings
    
    
    422,939
    
    
    
    208,486
    
    
    
    3,146
    
    
    
    628,279
    
    
    
    339,750
    
    
    
    52,720
    
    
    
    2,699
    
    
    
    389,771
    
    
    
    238,508Vehicles
    
    
    9,174
    
    
    
    
    
    
    
    905
    
    
    
    8,269
    
    
    
    3,846
    
    
    
    2,981
    
    
    
    407
    
    
    
    6,420
    
    
    
    1,849Total
    
    
    5,440,696
    
    
    
    1,411,717
    
    
    
    53,725
    
    
    
    6,798,688
    
    
    
    3,371,942
    
    
    
    455,657
    
    
    
    52,160
    
    
    
    3,775,439
    
    
    
    3,023,249Add: Construction
in Progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237,665Total
    
    
    5,440,696
    
    
    
    1,411,717
    
    
    
    53,725
    
    
    
    6,798,688
    
    
    
    3,371,942
    
    
    
    455,657
    
    
    
    52,160
    
    
    
    3,775,439
    
    
    
    3,260,914
  CarryingCost
    
    
    Accumulated depreciation
    
    
    amountAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    as atApril 01,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March 31,
    
    
    MarchParticulars
    
    2007
    
    
    Additions
    
    
    Disposals
    
    
    2008
    
    
    2007
    
    
    for the year
    
    
    Deletions
    
    
    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
 117




---



##### 



Change in estimated useful life
  2008
    
    
    2009
    
    
    2010
    
    
    2011Decrease / (increase) in depreciation expense
    
    
    110,315
    
    
    
    98,650
    
    
    
    61,498
    
    
    
    (17,674
    )
  Cost
    
    
    Accumulated depreciation
    
    
    CarryingAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    amount asApril 1,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March 31,
    
    
    at MarchParticulars
    
    2006
    
    
    Additions
    
    
    Disposals
    
    
    2007
    
    
    2006
    
    
    for the year
    
    
    Deletions
    
    
    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
    
    
    
    2,637,704
    
    
    
    414,946
    
    
    
    33,668
    
    
    
    3,018,982
    
    
    
    1,672,987
 Leased assets
  Capital Commitments
  Construction in progress
  Security
  6. Intangible assets
  March 31, 2009
    
    
    March 31, 2008Goodwill
    
    
    40,461
    
    
    
    50,796Other intangible assets
    
    
    137,411
    
    
    
    131,511177,872
    
    
    
    182,307
 118




---



##### 



(i) Goodwill
  March 31, 2009
    
    
    March 31, 2008Balance at the beginning of the year
    
    
    50,796
    
    
    
    50,796Effect of movement in exchange rates
    
    
    4,865
    
    
    
    Impairment loss recognised during the year
    
    
    (15,200
    )
    
    
    Net carrying amount of goodwill
    
    
    40,461
    
    
    
    50,796
  Impairment testing for cash-generating units containing goodwill
   
    
    Cash flows were projected based on actual operating results and the 5 year business plan.
Cash flows were arrived at as an excess of revenue over the related costs for the same period.
 
    
    Management believes that this forecast period is justified due to the long term nature of
the travel business.
 
    
    The projected quarterly average revenue growth included in the cash flow projections was 8%
during the period 2010  2014. Management believes that this growth percentage was reasonable
and is in line with the average trend of the industry.
 
    
    The projected quarterly increase in average cost was 6% during the same period.
 
    
    A pre-tax discount rate of 26% was applied in determining the recoverable amount of the
cash generating unit. The discount rate was estimated based on an industry average weighted
average cost of capital, which was based on a possible range of debt leveraging of 0% at a
market interest rate of 7%.
  119




---



##### 



(ii) Other Intangibles
  Technical
    
    Portals
    
    Customerknow-
    
    and web
    
    related
    
    
    
    
    
    Licensehow
    
    content
    
    intangibles
    
    Software
    
    fees
    
    Total(A) CostBalance as at April 1, 2006
    
    
    82,753
    
    
    
    52,730
    
    
    
    126,871
    
    
    
    219,315
    
    
    
    
    
    
    
    481,669Acquisitions through business combination
    
    
    
    
    
    
    
    
    
    
    72,683
    
    
    
    6,089
    
    
    
    
    
    
    
    78,772Other acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,474
    
    
    
    50,000
    
    
    
    65,474Balance as at March 31, 2007
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    240,878
    
    
    
    50,000
    
    
    
    625,915Acquisitions during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,238
    
    
    
    
    
    
    
    30,238Balance as at March 31, 2008
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    271,116
    
    
    
    50,000
    
    
    
    656,153Acquisitions during the year
    
    
    
    
    
    
    
    
    
    
    1,016
    
    
    
    48,099
    
    
    
    
    
    
    
    49,115Balance as at March 31, 2009
    
    
    82,753
    
    
    
    52,730
    
    
    
    200,570
    
    
    
    319,215
    
    
    
    50,000
    
    
    
    705,268(B) AmortizationBalance as at April 1, 2006
    
    
    79,240
    
    
    
    50,065
    
    
    
    117,433
    
    
    
    193,350
    
    
    
    
    
    
    
    440,128Amortization for the year
    
    
    3,513
    
    
    
    2,645
    
    
    
    18,796
    
    
    
    22,974
    
    
    
    906
    
    
    
    48,834Balance as at March 31, 2007
    
    
    82,753
    
    
    
    52,710
    
    
    
    136,269
    
    
    
    216,324
    
    
    
    906
    
    
    
    488,962Amortization for the year
    
    
    
    
    
    
    20
    
    
    
    13,657
    
    
    
    19,503
    
    
    
    2,500
    
    
    
    35,680Balance as at March 31, 2008
    
    
    82,753
    
    
    
    52,730
    
    
    
    149,926
    
    
    
    235,827
    
    
    
    3,406
    
    
    
    524,642Amortization for the year
    
    
    
    
    
    
    
    
    
    
    19,921
    
    
    
    20,794
    
    
    
    2,500
    
    
    
    43,215Balance as at March 31, 2009
    
    
    82,753
    
    
    
    52,730
    
    
    
    169,847
    
    
    
    256,621
    
    
    
    5,906
    
    
    
    567,857(C) Carrying amountsAs at March 31, 2007
    
    
    
    
    
    
    20
    
    
    
    63,285
    
    
    
    24,554
    
    
    
    49,094
    
    
    
    136,953As at March 31, 2008
    
    
    
    
    
    
    
    
    
    
    49,628
    
    
    
    35,289
    
    
    
    46,594
    
    
    
    131,511As at March 31, 2009
    
    
    
    
    
    
    
    
    
    
    30,723
    
    
    
    62,594
    
    
    
    44,094
    
    
    
    137,411
 Capital Commitments
  Interest Capitalization
  7. Investment in equity accounted investees
  120




---



##### 



Balance sheet
    
    March 31, 2009
    
    
    March 31, 2008Total assets
    
    
    3,435,921
    
    
    
    7,893,663Total liabilities
    
    
    1,617,159
    
    
    
    6,290,602Shareholders equity
    
    
    1,818,762
    
    
    
    1,603,061Total Liabilities and shareholders equity
    
    
    3,435,921
    
    
    
    7,893,663
 For the year endedStatement of operations
    
    March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Revenues
    
    
    1,413,643
    
    
    
    2,503,520
    
    
    
    1,293,383Net profit
    
    
    216,917
    
    
    
    606,255
    
    
    
    204,426
 8. Cash and Cash equivalents
  March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007(a) Restricted cashNon currentAgainst future performance obligation
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000CurrentBank deposits held under lien against borrowings from banks
    
    
    1,329,756
    
    
    
    877,582
    
    
    
    938,833Total restricted cash
    
    
    1,330,756
    
    
    
    878,582
    
    
    
    939,833(b) Non restricted cashCurrentCash and bank balances
    
    
    380,042
    
    
    
    628,745
    
    
    
    2,131,324Total cash (a+b)
    
    
    1,710,798
    
    
    
    1,507,327
    
    
    
    3,071,157Bank overdraft used for cash management purposes
    
    
    (1,397,083
    )
    
    
    (617,637
    )
    
    
    Less: Non current restricted cash
    
    
    (1,000
    )
    
    
    (1,000
    )
    
    
    (1,000
    )Cash and cash equivalents for the statement of cash flows
    
    
    312,715
    
    
    
    888,690
    
    
    
    3,070,157
 9. Lease prepayments
 March 31, 2009
    
    
    March 31, 2008Towards land**
    
    
    
    
    
    
    553,051Towards buildings*
    
    
    311,185
    
    
    
    15,858311,185
    
    
    
    568,909
 
 *
    
    Includes Rs.256,050 paid to VALS Developers Private Limited. Also refer note 35.**
    
    Also refer note 13 (ii) (b)  121




---



##### 



10. Other assets
 March 31, 2009
    
    
    March 31, 2008Non currentWithholding taxes (see note (a) below)
    
    
    174,234
    
    
    
    194,328Other deposits ( see note (b) and (c) below)
    
    
    322,091
    
    
    
    142,197Net investment in leases
    
    
    
    
    
    
    5,297496,325
    
    
    
    341,822CurrentNet investment in leases
    
    
    
    
    
    
    6,743
    
    
    
    6,743Financial assets included in other assets
    
    
    227,468
    
    
    
    154,237
 
 (a)
    
    Withholding taxes represent taxes deducted at source by the customers and paid to the
Government, which is adjustable against tax liability of the Company.(b)
    
    Includes Rs.26,775 paid to VALS Developers Private Limited. Also refer note 35.(c)
    
    Includes Rs. 111,333 paid to Emirates Integrated Telecommunications Company PJSC in relation
to supply of capacity from the Europe India Gateway. Net investment in leases
  March 31, 2009
    
    
    March 31, 2008Minimum
    
    
    
    
    
    
    Net
    
    
    Minimum lease
    
    
    
    
    
    
    Netlease
    
    
    Unearned
    
    
    investment
    
    
    payments
    
    
    Unearned
    
    
    investmentpayments
    
    
    income
    
    
    in leases
    
    
    receivable
    
    
    income
    
    
    in leasesLess than one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,275
    
    
    
    532
    
    
    
    6,743Between one and five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,431
    
    
    
    134
    
    
    
    5,297Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,706
    
    
    
    666
    
    
    
    12,040
  11. Deferred tax assets and liabilities
  Assets / (liabilities)Recognised deferred tax assets / (liabilities)
    
    March 31, 2009
    
    
    March 31, 2008Deferred tax assetsProperty, Plant and Equipment
    
    
    1,796
    
    
    
    1,733Intangible assets
    
    
    2,212
    
    
    
    3,155Allowance for doubtful trade and other receivables
    
    
    4,516
    
    
    
    10,644Carry forward capital losses
    
    
    67,735
    
    
    
    56,85976,259
    
    
    
    72,391
 122




---



##### 



Assets / (liabilities)Recognised deferred tax assets / (liabilities)
    
    March 31, 2009
    
    
    March 31, 2008Deferred tax liabilitiesInvestment in equity accounted investees
    
    
    (67,735
    )
    
    
    (56,821
    )(67,735
    )
    
    
    (56,821
    )Net deferred tax asset recognized in balance sheet
    
    
    8,524
    
    
    
    15,570
  Movement in temporary differences during the year
 Balance
    
    
    Recognised
    
    
    
    
    
    
    Balance
    
    
    Recognised
    
    
    
    
    
    
    Balanceas at
    
    
    in
    
    
    Recognised
    
    
    as at
    
    
    in
    
    
    Recognised
    
    
    as atApril 1,
    
    
    income
    
    
    in
    
    
    March
    
    
    income
    
    
    in
    
    
    March2007
    
    
    statement
    
    
    Equity
    
    
    31, 2008
    
    
    statement
    
    
    Equity
    
    
    31, 2009Property, Plant and Equipment
    
    
    1,671
    
    
    
    62
    
    
    
    
    
    
    
    1,733
    
    
    
    63
    
    
    
    
    
    
    
    1,796Intangible assets
    
    
    2,975
    
    
    
    180
    
    
    
    
    
    
    
    3,155
    
    
    
    (943
    )
    
    
    
    
    
    
    2,212Allowance for doubtful trade and other receivables
    
    
    6,040
    
    
    
    4,604
    
    
    
    
    
    
    
    10,644
    
    
    
    (6,128
    )
    
    
    
    
    
    
    4,516Tax loss carry forwards
    
    
    79,344
    
    
    
    (20,493
    )
    
    
    (1,992
    )
    
    
    56,859
    
    
    
    10,816
    
    
    
    60
    
    
    
    67,735Investment
in equity accounted investees
    
    
    (23,926
    )
    
    
    (34,887
    )
    
    
    1,992
    
    
    
    (56,821
    )
    
    
    (10,854
    )
    
    
    (60
    )
    
    
    (67,735
    )Actuarial gains/losses
    
    
    
    
    
    
    (957
    )
    
    
    957
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    (471
    )
    
    
    471
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,104
    
    
    
    (51,962
    )
    
    
    1,428
    
    
    
    15,570
    
    
    
    (7,046
    )
    
    
    
    
    
    
    8,524
 Unrecognized deferred tax assets / (liabilities)
 As at March 31, 2009
    
    
    As at March 31, 2008Deductible temporary differences
    
    
    82,062
    
    
    
    63,090Unrecognized tax losses
    
    
    3,440,680
    
    
    
    1,395,0423,522,742
    
    
    
    1,458,132
   Income Tax expense recognized in profit or loss
 March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Current tax expenseCurrent period
    
    
    90,003
    
    
    
    12,013
    
    
    
    90,003
    
    
    
    12,013
    
    
    
    Deferred tax expenseOrigination and reversal of temporary differences
    
    
    17,862
    
    
    
    31,469
    
    
    
    13,231
 123




---



##### 



March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Recognition of previously unrecognized tax losses
    
    
    (10,854
    )
    
    
    (34,887
    )
    
    
    (79,344
    )Reversal of previously recognized tax losses
    
    
    38
    
    
    
    55,380
    
    
    
    7,046
    
    
    
    51,962
    
    
    
    (66,113
    )Total income tax expense / (benefit)
    
    
    97,049
    
    
    
    63,975
    
    
    
    (66,113
    )
 Income tax directly recognised in equity
 March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Actuarial (gains) or losses
    
    
    
    
    
    
    957
    
    
    
    (9
    )Tax effect of changes in the fair value of other investments
    
    
    
    
    
    
    556
    
    
    
    Tax effect on foreign currency translation differences
    
    
    
    
    
    
    (85
    )
    
    
    Income tax benefit / (expense) recognized directly in equity
    
    
    
    
    
    
    1,428
    
    
    
    (9
    )
 Reconciliation of effective tax rate
  Year ended
    
    
    Year ended
    
    
    Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Profit / (loss) before income taxes
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    205,259Enacted tax rates in India
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.99
    %Computed expected tax expense / (benefit)
    
    
    (256,483
    )
    
    
    30,394
    
    
    
    69,768Effect of:Share based payment expense not deductible for tax purposes
    
    
    16,149
    
    
    
    14,234
    
    
    
    17,348Unrecognized deferred tax assets on losses incurred during the year (net of temporary differences, if any)
    
    
    359,669
    
    
    
    65,714
    
    
    
    1,824Unrecognized deferred tax asset on temporary differences
    
    
    
    
    
    
    12,634
    
    
    
    Share of profit of equity accounted investeee taxed at a lower rate
    
    
    (8,582
    )
    
    
    (24,253
    )
    
    
    (8,172
    )Recognition of previously unrecognized tax losses
    
    
    (13,203
    )
    
    
    (37,312
    )
    
    
    (87,516
    )Utilization of previously unrecognized tax losses
    
    
    
    
    
    
    
    
    
    
    (58,047
    )Others
    
    
    (501
    )
    
    
    2,564
    
    
    
    (1,318
    )97,049
    
    
    
    63,975
    
    
    
    (66,113
    )
 12. Inventories
  March 31, 2009
    
    
    March 31, 2008Communication hardware
    
    
    30,832
    
    
    
    28,700Application software
    
    
    4,264
    
    
    
    2,079Others
    
    
    3,992
    
    
    
    6,97239,088
    
    
    
    37,751
  124




---



##### 



13. Trade and other receivables
  March 31, 2009
    
    
    March 31, 2008(i) Trade receivables, net
    
    
    1,504,927
    
    
    
    1,694,542(ii) Other receivables including deposits
    
    
    950,599
    
    
    
    526,1842,455,526
    
    
    
    2,220,726
 
 (i)
    
    Trade receivable as of March 31, 2009 and March 31, 2008 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 collateralized except to the extent of
refundable deposits received from cybercafé franchisees and from cable television operators.
Trade receivables consist of: March 31, 2009
    
    
    March 31, 2008Trade receivables from related parties
    
    
    698
    
    
    
    Other trade receivables
    
    
    1,620,524
    
    
    
    1,777,8581,621,222
    
    
    
    1,777,858Less: Allowance for doubtful receivables
    
    
    (116,295
    )
    
    
    (83,316
    )Balance at the end of the year
    
    
    1,504,927
    
    
    
    1,694,542
  For the year endingMarch 31, 2009
    
    
    March 31, 2008Balance at the beginning of the year
    
    
    83,316
    
    
    
    101,624Add : Additional provision, net
    
    
    84,346
    
    
    
    131,954Less : Bad debts written off
    
    
    (51,367
    )
    
    
    (150,262
    )Balance at the end of the year
    
    
    116,295
    
    
    
    83,316
 (ii)
    
    Other receivables comprises of the following items: March 31, 2009
    
    
    March 31, 2008Advances and other deposits (Refer Note (a) and (b) below)
    
    
    745,876
    
    
    
    443,275Deposits with Department of Income tax / Withholding taxes (Refer Note (c) below)
    
    
    191,457
    
    
    
    77,724Employee advances
    
    
    13,266
    
    
    
    5,185950,599
    
    
    
    526,184Financial assets included in other receivables
    
    
    405,989
    
    
    
    298,862
 Notes:a)
    
    Advances and other deposits primarily comprises of receivables in the form of Custom duty
credit entitlement and other advances given in the ordinary course of business.b)
    
    In the year ending 31 March 2008, the Group entered into a lease for 16.97 acres of land
from Electronics Corporation of Tamil Nadu (ELCOT) for a period of 90 years. The Group had
paid a sum of Rs.555,616 as refundable security deposit towards such land. In 2009, the Group
returned 11.42 acres of land to ELCOT. Consequently, ELCOT has refunded to the 126




---



##### 



Group a sum of
Rs.374,576 representing the proportionate sum of refundable security deposit. Further in
March 2009, the
Group has made a application for refund of the security deposit relating to the balance 5.55
acres of land also. The Group believes that the same will be received within the next 12
months and accordingly, the receivable has been classified as a current asset.c)
    
    Deposit with Department of Income Tax represents tax demands paid amounting to Rs. Nil as
on March 31, 2009 (March, 31 2008 : Rs.77,724) to the authorities under protest. Also refer
note 33 (a). Also includes withholding taxes recoverable from the Department of Income Tax
for which the Company has filed tax returns for refund. The Company expects to realize such
refund of withholding taxes within the next 12 months. 14. Prepayments for current assets
  March 31, 2009
    
    
    March 31, 2008Prepayments for purchase of bandwidth
    
    
    63,961
    
    
    
    90,129Prepayments related to insurance
    
    
    12,682
    
    
    
    15,798Prepayments-others
    
    
    47,066
    
    
    
    34,485Lease prepayments
    
    
    4,839
    
    
    
    10,215128,548
    
    
    
    150,627
 15. Other Investments
  March 31, 2009
    
    
    March 31, 2008Gains/ (Loss)
    
    
    
    
    
    
    
    
    
    
    Gains/ (Loss)Gross
    
    
    recognized in
    
    
    
    
    
    
    Gross
    
    
    recognized inamount
    
    
    equity
    
    
    Fair value
    
    
    amount
    
    
    equity
    
    
    Fair valueInvestment in mutual funds
    
    
    20,315
    
    
    
    (6,441
    )
    
    
    13,874
    
    
    
    20,315
    
    
    
    (1,636
    )
    
    
    18,679
 127




---



##### 



16. Capital and reserves
 Reconciliation of movement in capital and reserves
 Share ofgains and
    
    
    
    
    
    Equity(losses)
    
    
    
    
    
    attributablefrom
    
    
    
    
    
    to theForeign
    
    
    
    
    
    investments
    
    
    
    
    
    equity
    
    AmountShare based
    
    Currency
    
    Recognised
    
    in equity
    
    
    
    
    
    holders of
    
    attributableShare
    
    Share
    
    Payment
    
    Translation
    
    actuarial
    
    accounted
    
    Accumulated
    
    the
    
    to MinorityParticulars
    
    Capital
    
    Premium
    
    Reserve
    
    Reserve
    
    gain / (loss)
    
    investee
    
    Deficit
    
    Company
    
    Interest
    
    Total EquityBalance 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
    
    
    
    139,234Total recognised income and expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    18
    
    
    
    10,793
    
    
    
    240,841
    
    
    
    251,336
    
    
    
    30,531
    
    
    
    281,867Share-based payments recognized
    
    
    
    
    
    
    
    
    
    
    60,933
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,933
    
    
    
    
    
    
    
    60,933Stock options exercised
    
    
    4,108
    
    
    
    84,275
    
    
    
    (15,738
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,645
    
    
    
    
    
    
    
    72,645Stock options lapsed
    
    
    
    
    
    
    
    
    
    
    (4,515
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,515
    
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2007
    
    
    428,003
    
    
    
    16,262,096
    
    
    
    101,540
    
    
    
    (316
    )
    
    
    2,944
    
    
    
    10,793
    
    
    
    (12,266,154
    )
    
    
    4,538,906
    
    
    
    169,765
    
    
    
    4,708,671
 Share ofgains and(losses)
    
    
    
    
    
    Equityfrom
    
    
    
    
    
    attributable
    
    AmountShare
    
    Foreign
    
    
    
    
    
    
    
    
    
    investments
    
    
    
    
    
    to the equity
    
    attributablebased
    
    Currency
    
    Recognised
    
    
    
    
    
    in equity
    
    
    
    
    
    holders of
    
    toShare
    
    Share
    
    Payment
    
    Translation
    
    actuarial
    
    Fair Value
    
    accounted
    
    Accumulated
    
    the
    
    MinorityParticulars
    
    Capital
    
    Premium
    
    Reserve
    
    Reserve
    
    gain / (loss)
    
    Reserve
    
    investee
    
    Deficit
    
    Company
    
    Interest
    
    Total EquityBalance at April 1, 2007
    
    
    428,003
    
    
    
    16,262,096
    
    
    
    101,540
    
    
    
    (316
    )
    
    
    2,944
    
    
    
    
    
    
    
    10,793
    
    
    
    (12,266,154
    )
    
    
    4,538,906
    
    
    
    169,765
    
    
    
    4,708,671Total recognised income and expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    (1,859
    )
    
    
    (1,080
    )
    
    
    (9,669
    )
    
    
    (4,696
    )
    
    
    (17,141
    )
    
    
    30,142
    
    
    
    13,001Share-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
    )
    
    
    1,124
    
    
    
    (12,265,055
    )
    
    
    4,694,984
    
    
    
    199,907
    
    
    
    4,894,891
 128




---



##### 



16. Capital and reserves (continued)
 Share ofgains and(losses) from
    
    
    
    
    
    Equity
    
    AmountShare
    
    Foreign
    
    
    
    
    
    
    
    
    
    investments
    
    
    
    
    
    attributable
    
    Attributablebased
    
    Currency
    
    Recognised
    
    
    
    
    
    in equity
    
    
    
    
    
    to the equity
    
    toShare
    
    Share
    
    Payment
    
    Translation
    
    actuarial
    
    Fair Value
    
    accounted
    
    Accumulated
    
    holders of the
    
    MinorityParticulars
    
    Capital
    
    Premium
    
    Reserve
    
    Reserve
    
    gain / (loss)
    
    Reserve
    
    investee
    
    Deficit
    
    Company
    
    Interest
    
    Total EquityBalance at April 1, 2008
    
    
    441,018
    
    
    
    16,368,647
    
    
    
    149,398
    
    
    
    (153
    )
    
    
    1,085
    
    
    
    (1,080
    )
    
    
    1,124
    
    
    
    (12,265,055
    )
    
    
    4,694,984
    
    
    
    199,907
    
    
    
    4,894,891Total recognised income and expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,256
    )
    
    
    (4,346
    )
    
    
    (5,361
    )
    
    
    296
    
    
    
    (900,574
    )
    
    
    (911,241
    )
    
    
    48,941
    
    
    
    (862,300
    )Share-based payments recognized
    
    
    
    
    
    
    
    
    
    
    61,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,380
    
    
    
    
    
    
    
    61,380Stock options lapsed
    
    
    
    
    
    
    
    
    
    
    (61,243
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,243
    
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    6,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,570
    
    
    
    
    
    
    
    6,570Balance at March 31, 2009
    
    
    441,018
    
    
    
    16,375,217
    
    
    
    149,535
    
    
    
    (1,409
    )
    
    
    (3,261
    )
    
    
    (6,441
    )
    
    
    1,420
    
    
    
    (13,104,386
    )
    
    
    3,851,693
    
    
    
    248,848
    
    
    
    4,100,541
 129




---



##### 



Share Capital and Share Premium
 No of shares
 Year ended March 31,2009
    
    
    2008
    
    
    2007Issued as at April 01
    
    
    55,637,082
    
    
    
    42,800,265
    
    
    
    42,389,514Issued for cash*
    
    
    
    
    
    
    12,817,000
    *
    
    
    Exercise of share options
    
    
    
    
    
    
    19,817
    
    
    
    410,751Shares forfeited*
    
    
    (12,817,000
    )
    
    
    
    
    
    
    Issued as at March 31
    
    
    42,820,082
    
    
    
    55,637,082
    
    
    
    42,800,625
 
 *
    
    Paid up Rs.1/- per share    Translation reserve
  Share based payment reserve
  Fair value reserve
  Recognised actuarial gain / loss
  130




---



##### 



17. Finance lease obligations
  March 31, 2009
    
    
    March 31, 2008Present
    
    
    
    
    
    
    
    
    
    
    PresentFuture
    
    
    
    
    
    
    value
    
    
    Future
    
    
    
    
    
    
    valueminimum
    
    
    
    
    
    
    minimum
    
    
    minimum
    
    
    
    
    
    
    minimumlease
    
    
    
    
    
    
    lease
    
    
    lease
    
    
    
    
    
    
    leasepayments
    
    
    Interest
    
    
    payments
    
    
    payments
    
    
    Interest
    
    
    paymentsLess than one year
    
    
    42,743
    
    
    
    (9,800
    )
    
    
    32,943
    
    
    
    3,344
    
    
    
    (445
    )
    
    
    2,899Between one and five years
    
    
    138,246
    
    
    
    (15,864
    )
    
    
    122,382
    
    
    
    2,656
    
    
    
    (163
    )
    
    
    2,493Total
    
    
    180,989
    
    
    
    (25,664
    )
    
    
    155,325
    
    
    
    6,000
    
    
    
    (608
    )
    
    
    5,392
 18. Employee benefits
 March 31, 2009
    
    
    March 31, 2008Gratuity payable
    
    
    15,082
    
    
    
    8,592Compensated absences
    
    
    49,218
    
    
    
    33,65864,300
    
    
    
    42,250
 Gratuity cost
  March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Service cost
    
    
    12,067
    
    
    
    8,533
    
    
    
    8,149Interest cost
    
    
    3,038
    
    
    
    1,639
    
    
    
    1,662Expected return on plan asset
    
    
    (1,672
    )
    
    
    (957
    )
    
    
    (163
    )13,433
    
    
    
    9,215
    
    
    
    9,648
  March 31, 2009
    
    
    March 31, 2008Present value of projected benefit obligation at the end of the year
    
    
    43,389
    
    
    
    27,332Funded status of the plans
    
    
    28,307
    
    
    
    18,740Recognised (asset) / liability
    
    
    15,082
    
    
    
    8,592
  Change in defined benefit obligation
    
    March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Projected benefit obligation at the beginning of the year
    
    
    27,332
    
    
    
    20,785
    
    
    
    22,959Service cost
    
    
    12,067
    
    
    
    8,533
    
    
    
    8,149Interest cost
    
    
    3,038
    
    
    
    1,639
    
    
    
    1,662Actuarial (gain) / loss
    
    
    3,662
    
    
    
    2,393
    
    
    
    604Benefits paid
    
    
    (2,710
    )
    
    
    (6,018
    )
    
    
    (12,589
    )Projected benefit obligation at the end of the year
    
    
    43,389
    
    
    
    27,332
    
    
    
    20,785
 131




---



##### 



Change in plan assets
    
    March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Fair value of plan assets at the beginning of the year
    
    
    18,740
    
    
    
    8,422
    
    
    
    1,717Expected return on plan assets
    
    
    1,672
    
    
    
    957
    
    
    
    163Actuarial gain / (loss)
    
    
    (684
    )
    
    
    (423
    )
    
    
    631Employer contributions
    
    
    11,290
    
    
    
    15,801
    
    
    
    18,500Benefits paid
    
    
    (2,711
    )
    
    
    (6,017
    )
    
    
    (12,589
    )Fair value of plan assets at the end of the year
    
    
    28,307
    
    
    
    18,740
    
    
    
    8,422Actual return on plan assets
    
    
    988
    
    
    
    534
    
    
    
    794
 Actuarial Assumptions at Balance Sheet date
  March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Discount rate
    
    
    7.95% P.a
    
    
    
    7.85% P.a
    
    
    
    8.15% P.aLong-term rate of compensation increase
    
    
    8.00% P.a
    
    
    
    6.00% P.a
    
    
    
    6.00% P.aExpected long term rate of return on plan assets
    
    
    8.00% P.a
    
    
    
    7.50% P.a
    
    
    
    7.50% P.aAverage future working life time
    
    10.99 years
    
    
    10.23 years
    
    
    9.97 years
 Discount rate: .
 Long term rate of compensation increase:
 Expected long term rate of return on plan assets:
   Historical Information
 March 31, 2009
    
    
    March 31, 2008Experience adjustment on plan liabilities
    
    
    1,574
    
    
    
    1,489Experience adjustment on plan assets
    
    
    (684
    )
    
    
    (423
    )
 Contributions
 Plan assets:
 March 31, 2009
    
    
    March 31, 2008Funds managed by insurers
    
    
    100
    %
    
    
    100
    %
 Actuarial gains and losses recognised in equity
  March 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Actuarial gain / (loss)
    
    
    (4,346
    )
    
    
    (2,816
    )
    
    
    27(4,346
    )
    
    
    (2,816
    )
    
    
    27
 132




---



##### 



Contributions to defined contribution plans
  19. Other liabilities
 March 31, 2009
    
    
    March 31, 2008Franchisee and other deposits
    
    
    134,116
    
    
    
    124,472134,116
    
    
    
    124,472
  20. Borrowings from banks
 March 31, 2009
    
    
    March 31, 2008CurrentLoan secured against fixed deposits (Refer note 1 below)
    
    
    310,000
    
    
    
    85,000Term Bank Loans (Refer note 2 below)
    
    
    331,944
    
    
    
    -71,426Other working capital facilities (Refer note 3 below)
    
    
    540,8261,182,770
    
    
    
    156,426Non currentTerm Bank loans
    
    
    201,389
    
    
    
    201,389
    
    
    
    
 The Group has short term borrowings which include:1.
    
    Loan secured against fixed deposits of Rs. 310,000 as at March 31, 2009 (Rs. 85,000 as at
March 31, 2008) represent Bank loans for working capital requirements. These borrowings bear
interest ranging from 10%-11.90% p.a and are repayable within one year from the balance sheet
date.2.
    
    Term bank loans are secured by fixed deposits and moveable fixed assets of the Group. These
loans bear interest ranging from 9.50% to 12.50% p.a. Term loan includes a balance of Rs
283,333 outstanding as at 31 March 2009 which is subject to put/call option every six
months. The Company has not met certain financial covenants relating to the said loan as of
31 March 2009. Subsequent to the balance sheet date, the bank has neither called the loan nor
demanded the loan for not meeting the financial covenants. As per the terms of the loan
agreement, no financial penalty is leviable.3.
    
    Other working capital facilities are secured by a certain current assets, fixed deposits
and trade receivables of the Company. These borrowings bear interest ranging from 11% to
13% p.a. Such facilities are renewable every year. 133




---



##### 



21. Trade and other payables
 March 31, 2009
    
    
    March 31, 2008Trade payables
    
    
    690,388
    
    
    
    613,422Advance from customers
    
    
    52,224
    
    
    
    124,921Accrued expenses
    
    
    668,769
    
    
    
    656,402Other payables
    
    
    143,849
    
    
    
    106,5911,555,230
    
    
    
    1,501,336Financial liabilities included in trade and other payables
    
    
    1,411,358
    
    
    
    1,467,288
 22. Deferred Income
  March 31, 2009
    
    
    March 31, 2008Corporate network/data services
    
    
    308,521
    
    
    
    276,844Internet access services
    
    
    28,065
    
    
    
    57,270Other services
    
    
    18,215
    
    
    
    34,242354,801
    
    
    
    368,356
 23. Revenue
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Rendering of ServicesService revenue
    
    
    5,253,535
    
    
    
    4,868,673
    
    
    
    4,587,873Initial franchise fee
    
    
    30,489
    
    
    
    43,503
    
    
    
    67,269Installation service revenue
    
    
    235,116
    
    
    
    318,466
    
    
    
    256,0405,519,140
    
    
    
    5,230,642
    
    
    
    4,911,182Sale of products
    
    
    643,021
    
    
    
    775,573
    
    
    
    536,1656,162,161
    
    
    
    6,006,215
    
    
    
    5,447,347
 24. Cost of goods sold and services rendered
  134




---



##### 



25. Other income
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Duty credit entitlement
    
    
    79,278
    
    
    
    46,152
    
    
    
    66,094Others
    
    
    9,827
    
    
    
    
    
    
    
    22689,105
    
    
    
    46,152
    
    
    
    66,320
 26. Selling, general and administrative expenses
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Selling, general and administrative expensesPersonnel expenses
    
    
    987,585
    
    
    
    715,365
    
    
    
    637,293Marketing and promotion expenses
    
    
    608,318
    
    
    
    558,573
    
    
    
    240,317Administrative and other expenses*
    
    
    1,217,522
    
    
    
    1,160,777
    
    
    
    1,217,3612,813,425
    
    
    
    2,434,715
    
    
    
    2,094,971
 
 *
    
    Includes foreign exchange gain / (loss) of Rs.21,320, Rs.(22,587) and Rs.8,332 for the years
ended March 31, 2009, 2008 and 2007 respectively.  27. Personnel expenses
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Salaries and wages
    
    
    1,532,378
    
    
    
    1,115,369
    
    
    
    940,942Contribution to provident fund and other funds
    
    
    70,354
    
    
    
    52,244
    
    
    
    40,838Staff welfare expenses
    
    
    38,225
    
    
    
    40,081
    
    
    
    26,168Employee stock compensation expense
    
    
    61,380
    
    
    
    56,410
    
    
    
    60,9331,702,337
    
    
    
    1,264,104
    
    
    
    1,068,881Attributable to cost of goods sold and services rendered
    
    
    714,752
    
    
    
    548,739
    
    
    
    431,588Attributable to selling, general and administration
expenses
    
    
    987,585
    
    
    
    715,365
    
    
    
    637,293
 28. Share-based payments
  135




---



##### 



(i) Associate Stock Option Plan 2000
   One sixth of the options:
    
    At the end of one year from the date of the grantTwo sixth of the options
    
    At the end of two years from the date of the grantThree sixth of the options:
    
    At the end of three years from the date of the grant.
   Number of options
    
    
    Weighted average exercise price in Rs.No. of options granted, exercised and forfeited
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Outstanding at beginning
of the year
    
    
    
    
    
    
    
    
    
    
    2,040
    
    
    
    
    
    
    
    
    
    
    
    182.47Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired during the year
    
    
    
    
    
    
    
    
    
    
    2,040
    
    
    
    
    
    
    
    
    
    
    
    182.47Exercised during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at the end
of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable 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 sixth 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.
  136




---



##### 



Number of options
    
    
    Weighted average exercise price in Rs.No. of options granted, exercised and forfeited
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Outstanding at beginning
of the year
    
    
    
    
    
    
    6,250
    
    
    
    378,657
    
    
    
    
    
    
    
    228.74
    
    
    
    172.83Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited during the year
    
    
    
    
    
    
    
    
    
    
    521
    
    
    
    
    
    
    
    
    
    
    
    265.35Expired during the year
    
    
    
    
    
    
    6,250
    
    
    
    31,323
    
    
    
    
    
    
    
    228.74
    
    
    
    188.45Exercised during the year
    
    
    
    
    
    
    
    
    
    
    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 sixth 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.
   Number of options
    
    
    Weighted average exercise price in Rs.No. of options granted, exercised and forfeited
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Outstanding at the beginning of the year
    
    
    326,093
    
    
    
    868,195
    
    
    
    1,676,400
    
    
    
    328.84
    
    
    
    238.32
    
    
    
    286.20Granted during the year
    
    
    
    
    
    
    119,400
    
    
    
    547,600
    
    
    
    
    
    
    
    340.82
    
    
    
    451.15Forfeited during the year
    
    
    (29,167
    )
    
    
    (122,442
    )
    
    
    (1,268,293
    )
    
    
    449.16
    
    
    
    376.64
    
    
    
    290.32Expired during the year
    
    
    (296,926
    )
    
    
    (28,293
    )
    
    
    (15,524
    )
    
    
    317.02
    
    
    
    461.51
    
    
    
    254.01Exercised during the year
    
    
    
    
    
    
    (13,567
    )
    
    
    (71,988
    )
    
    
    
    
    
    
    238.32
    
    
    
    238.32Replaced during the year (Refer to
notes below)
    
    
    
    
    
    
    (497,200
    )
    
    
    
    
    
    
    
    
    
    
    422.91
    
    
    
    Outstanding at the end of the year
    
    
    
    
    
    
    326,093
    
    
    
    868,195
    
    
    
    
    
    
    
    328.84
    
    
    
    391.59Vested and exercisable at the end of
the year
    
    
    
    
    
    
    235,010
    
    
    
    54,914
    
    
    
    
    
    
    
    328.84
    
    
    
    338.66Weighted average grant date fair value
of grants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120.00
    
    
    
    224.86
 137




---



##### 



(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 sixth 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.
   Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageNumber of
    
    
    exercise price
    
    
    Number of
    
    
    exercise priceoptions
    
    
    in Rs.
    
    
    options
    
    
    in Rs.No. of options granted, exercised and forfeited
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Outstanding at the beginning of the year
    
    
    1,200,400
    
    
    
    157.35
    
    
    
    
    
    
    
    Granted during the year
    
    
    142,500
    
    
    
    117.46
    
    
    
    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
    
    
    (131,000
    )
    
    
    158.77
    
    
    
    (5,000
    )
    
    
    308.42Expired during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at the end of the year
    
    
    1,211,900
    
    
    
    152.51
    
    
    
    1,200,400
    
    
    
    157.35Vested and Exercisable at the end of the year
    
    
    185,167
    
    
    
    157.35
    
    
    
    
    
    
    
    Weighted average grant date fair value of
grants during the year
    
    
    
    
    
    
    71.82
    
    
    
    
    
    
    
    80.78
   138




---



##### 



Year ended
    
    
    Year endedNo. of options granted, exercised and forfeited
    
    March 31, 2009
    
    
    March 31, 2008Weighted average share price
    
    
    130.41
    
    
    
    174.83Weighted average exercise price
    
    
    117.46
    
    
    
    157.35Expected volatility
    
    
    53.5% - 120.0
    %
    
    
    53.83% - 77.82
    %Option life
    
    3 - 4.5 years
    
    
    3 - 4.5 yearsExpected dividends
    
    
    
    
    
    
    Risk-free interest rate
    
    
    1.64% - 3.45
    %
    
    
    2.50% - 7.50
    %
  WeightedNumber
    
    Weighted
    
    average
    
    Number
    
    WeightedRange of
    
    outstanding at
    
    average
    
    remaining
    
    exercisable at
    
    averageexercise price
    
    March 31,
    
    exercise price
    
    contractual
    
    March 31,
    
    exercise pricein Rs.
    
    2009
    
    in Rs.
    
    life
    
    2008
    
    in Rs.ASOP 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ASOP 2007
    
    
    50.20-188.32
    
    
    
    12,11,900
    
    
    
    152.51
    
    
    
    3.87
    
    
    
    185,167
    
    
    
    157.35
 Modification
   139




---



##### 



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
    %
 29. Financial income and expense
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Interest income on bank deposits
    
    
    116,495
    
    
    
    160,262
    
    
    
    153,028Interest income from leases
    
    
    435
    
    
    
    1,232
    
    
    
    1,164Others
    
    
    5,635
    
    
    
    289
    
    
    
    Finance income
    
    
    122,565
    
    
    
    161,783
    
    
    
    154,192Interest expense on lease obligations
    
    
    2,243
    
    
    
    1,826
    
    
    
    389Bank charges
    
    
    86,216
    
    
    
    46,484
    
    
    
    17,428Interest expense on borrowings from banks
    
    
    163,201
    
    
    
    9,372
    
    
    
    7,733Finance expense
    
    
    (251,660
    )
    
    
    (57,682
    )
    
    
    (25,550
    )Net finance income / (expense)
recognised in profit or loss
    
    
    (129,095
    )
    
    
    104,101
    
    
    
    128,642
 30. Earnings / (loss) per share
  Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Net profit / (loss )  as reported
    
    
    (900,574
    )
    
    
    (4,696
    )
    
    
    240,841Weighted average number of shares  basic
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,704,619Basic earnings / (loss) per share
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.64Weighted average number of shares  diluted
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,792,514Diluted earnings / (loss) per share
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.63
 Weighted average number of ordinary shares basic
 Year ended March 31,2009
    
    
    2008
    
    
    2007Issued fully paid ordinary shares at 01 April
    
    
    42,820,082
    
    
    
    42,800,265
    
    
    
    42,389,514Effect of shares issued on exercise of stock options
    
    
    
    
    
    
    14,562
    
    
    
    315,105Effect of partly paid shares
    
    
    530,238
    
    
    
    62,899
    
    
    
    Weighted average number of equity shares and
equivalent shares outstanding
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,704,619
 Weighted average number of ordinary shares diluted
 Year ended March 31,2009
    
    
    2008
    
    
    2007Weighted average number of ordinary shares (basic)
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,704,619Effect of stock options
    
    
    
    
    
    
    
    
    
    
    87,895Weighted average number of equity shares outstanding (diluted)
    
    
    43,350,320
    
    
    
    42,877,726
    
    
    
    42,792,514
 140




---



##### 



31. Operating leases
  As at March 31, 2009
 Less
    
    
    
    
    
    
    More than 5Lease obligations
    
    Total
    
    
    than 1 year
    
    
    1-5 years
    
    
    yearsNon-cancellable operating lease obligations
    
    
    1,801,477
    
    
    
    135,165
    
    
    
    585,564
    
    
    
    1,080,748Non-cancellable obligations towards
proposed lease *
    
    
    2,423,554
    
    
    
    
    
    
    
    549,538
    
    
    
    1,874,016
 As at March 31, 2008
 Less
    
    
    
    
    
    
    More than 5Lease obligations
    
    Total
    
    
    than 1 year
    
    
    1-5 years
    
    
    yearsNon-cancellable operating lease obligations
    
    
    380,642
    
    
    
    73,200
    
    
    
    307,262
    
    
    
    
 *
    
    For details on proposed lease, refer Note 35 on related parties. 32. 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.
    141




---



##### 



142




---



##### 



Year ended March 31, 2009
 CorporateNetwork /
    
    
    Internet
    
    
    Online
    
    
    ConsumerData
    
    
    access
    
    
    portal
    
    
    One
    
    
    OtherServices
    
    
    services
    
    
    services
    
    
    (sub-total)
    
    
    Services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    4,305,235
    
    
    
    1,128,182
    
    
    
    177,324
    
    
    
    1,305,506
    
    
    
    551,420
    
    
    
    6,162,161Allocated segment expenses
    
    
    (2,842,889
    )
    
    
    (1,295,332
    )
    
    
    (220,967
    )
    
    
    (1,516,299
    )
    
    
    (473,008
    )
    
    
    (4,832,196
    )Segment operating income / (loss)
    
    
    1,462,346
    
    
    
    (167,150
    )
    
    
    (43,643
    )
    
    
    (210,793
    )
    
    
    78,412
    
    
    
    1,329,965Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (484,478
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,130,221
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (498,872
    )Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,200
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,105Finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,565Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (231,539
    )Share of profit of equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,091Profit or (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (754,584
    )Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,049
    )Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (851,633
    )
 Year ended March 31, 2008
 CorporateNetwork /
    
    
    Internet
    
    
    Online
    
    
    ConsumerData
    
    
    Access
    
    
    Portal
    
    
    One
    
    
    OtherServices
    
    
    Services
    
    
    Services
    
    
    (sub-total)
    
    
    Services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    3,822,108
    
    
    
    1,545,226
    
    
    
    210,766
    
    
    
    1,755,992
    
    
    
    428,115
    
    
    
    6,006,215Allocated segment expenses
    
    
    (2,434,316
    )
    
    
    (1,432,982
    )
    
    
    (298,031
    )
    
    
    (1,731,013
    )
    
    
    (366,851
    )
    
    
    (4,532,180
    )Segment operating income / (loss)
    
    
    1,387,792
    
    
    
    112,244
    
    
    
    (87,265
    )
    
    
    24,979
    
    
    
    61,264
    
    
    
    1,474,035Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333,681
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,014,382
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (394,337
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,152Finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,783Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,276
    )Share of profit of equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,127Profit / (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,421Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,975
    )Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,446
 143




---



##### 



Year ended March 31, 2007
 CorporateNetwork /
    
    
    Internet
    
    
    Online
    
    
    ConsumerData
    
    
    access
    
    
    portal
    
    
    One
    
    
    OtherServices
    
    
    services
    
    
    services
    
    
    (sub-total)
    
    
    Services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    3,022,285
    
    
    
    1,846,416
    
    
    
    262,904
    
    
    
    2,109,320
    
    
    
    315,742
    
    
    
    5,447,347Allocated segment expenses
    
    
    (1,833,432
    )
    
    
    (1,760,624
    )
    
    
    (261,949
    )
    
    
    (2,022,573
    )
    
    
    (258,749
    )
    
    
    (4,114,754
    )Segment operating income / (loss)
    
    
    1,188,854
    
    
    
    85,792
    
    
    
    955
    
    
    
    86,747
    
    
    
    56,993
    
    
    
    1,332,593Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283,433
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (646,894
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (463,780
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,320Finance Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,192Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,769
    )Share of profit in equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,030Profit / (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,259Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,113Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,372
 Reconciliations
 Selling, generalandadministrativeCost of goods sold
    
    
    expenses
    
    
    Finance expenses
    
    
    TotalYear ended March 31, 2009Allocated segment expenses
    
    
    3,128,871
    
    
    
    1,683,204
    
    
    
    20,121
    
    
    
    4,832,196Unallocated segment expenses
    
    
    484,478
    
    
    
    1,130,221
    
    
    
    231,539Total as per income statement
    
    
    3,613,349
    
    
    
    2,813,425
    
    
    
    251,660Year ended March 31, 2008Allocated segment expenses
    
    
    3,085,441
    
    
    
    1,420,333
    
    
    
    26,406
    
    
    
    4,532,180Unallocated segment expenses
    
    
    333,681
    
    
    
    1,014,382
    
    
    
    31,276Total as per income statement
    
    
    3,419,122
    
    
    
    2,434,715
    
    
    
    57,682Year ended March 31, 2007Allocated segment expenses
    
    
    2,655,896
    
    
    
    1,448,077
    
    
    
    10,781
    
    
    
    4,114,754Unallocated segment expenses
    
    
    283,433
    
    
    
    646,894
    
    
    
    14,769Total as per income statement
    
    
    2,939,329
    
    
    
    2,094,971
    
    
    
    25,550
 144




---



##### 



Geographic segments
  Rest of theDescription
    
    India
    
    world
    
    TotalRevenuesYear ended March 31, 2009
    
    
    5,071,137
    
    
    
    1,091,024
    
    
    
    6,162,161Year ended March 31, 2008
    
    
    5,342,248
    
    
    
    663,967
    
    
    
    6,006,215Year ended March 31, 2007
    
    
    4,797,543
    
    
    
    649,804
    
    
    
    5,447,347
  33. Contingencies
     34. Legal proceedings
   145




---



##### 



146




---



##### 



35. Related parties
  % of OwnershipinterestCountryParticulars
    
    of incorporation

    
    March 31, 2009
    
    
    March 31, 2008SubsidiariesSify Communications (till March 31, 2008 also
refer Note 38)
    
    India
    
    
    
    74
    
    
    
    74Sify International Inc
    
 US
    
    
    
    100
    
    
    
    100Sify Networks Private Limited
    
 India
    
    
    
    100
    
    
    
    100India World Communications Limited (wound up
during the year)
    
 India
    
    
    
    
    
    
    
    100Globe Travels Inc (wound up on April 17, 2008)
    
 US
    
    
    
    
    
    
    
    100Sify Americas Inc. (wound up on April 04, 2008)
    
  US
    
    
    
    
    
    
    
    100AssociatesMF Global-Sify securities India Private Limited
    
 India
    
    
    
    29.85
    
    
    
    29.85Others (Entities in which the Key Management
Personnel have controlling
interest/significant influence)Server Engines LLC
    
 USA
    
    
    
    
    
    
    
    Server Engines India Private Limited
    
 India
    
    
    
    
    
    
    
    VALS Developers Private Limited
    
 India
    
    
    
    
    
    
    
    Infinity Satcom Universal Private Limited
    
 India
    
    
    
    
    
    
    
    
  KeyManagementTransactions
    
    Associates
    
    
    Others
    
    
    Personnel**Sale of good / services
    
    
    6,600
    
    
    
    734
    
    
    
    Advance lease rentals and refundable deposits made*
    
    
    
    
    
    
    282,825
    
    
    
    Consultancy services received
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    1,220Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    50,672Contributions to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,389Share based payments
    
    
    
    
    
    
    
    
    
    
    33,579Amount of outstanding balancesDebtors
    
    
    524
    
    
    
    174
    
    
    
    Advance lease rentals and refundable deposits made
    
    
    
    
    
    
    282,825
    
    
    
    
 
 *
    
    Represents deposits made to VALS Developers Private Limited (VALS).VALS is owned and controlled
by Raju Vegesna Infotech & Industries Private Limited , in which Mr. Raju Vegesna , our principal
share holder and Chief Executive Officer, is holding 94.66% equity in his personal capacity. During
the year ended March 31, 2009, Sify entered into a memorandum of understanding with VALS Developers
Private Limited to obtain land and building which is in the process of being constructed on a long
term lease. The lease agreement, when final and executed, is expected to have an initial
non-cancellable term of 5 years, with a further option for Sify to renew or cancel the lease 147




---



##### 



for two five year terms. In connection with this memorandum of understanding, Sify has paid a
security deposit of Rs.125,700 and advance rental of Rs.157,125 to VALS. The security deposit will
be refunded at the end of lease term and the advance rental would be adjusted over a period of 15
months from the commencement of the lease.  KeyManagementTransactions
    
    Associates
    
    Others
    
    Personnel**Purchase of goods / services
    
    
    
    
    
    
    3,796
    
    
    
    Issue of shares for cash*
    
    
    
    
    
    
    112,149
    
    
    
    Consultancy services received
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    1,320Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    53,298Contribution to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,516Share based payments
    
    
    
    
    
    
    
    
    
    
    40,169
 
 *
    
    Also refer note 16 in relation to transactions relating to issue of equity shares to Infinity
Satcom Universal Private Limited.  KeyManagementTransactions
    
    Associates
    
    Others
    
    Personnel**Sale of goods / services
    
    
    2,494
    
    
    
    
    
    
    
    Consultancy services received
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    980Gain on divestment of 26% holding in Sify
Communications Limited
    
    
    
    
    
    
    226
    
    
    
    Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    48,446Contribution to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,314Share based payments
    
    
    
    
    
    
    
    
    
    
    22,147
 
 **
    
    Some of the key management personnel of the Group are also covered under the Groups gratuity
plan along with other employees of the Group. Proportionate amounts of gratuity accrued under the
gratuity plan have not been separately computed or included in the above disclosure. 36. Financial instruments
 Financial instruments by category
  Financial
 assets /liabilitiesat fairvaluethrough
    
    
    
    
    
    Other
    
    TotalLoans and
    
    profit and
    
    Available
    
    financial
    
    Carrying
    
    Total fairAssets
    
    Note
    
    receivables
    
    loss
    
    for sale
    
    liabilities
    
    value
    
    valueCash and cash equivalents
    
    
    8
    
    
    
    1,710,798
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,710,798
    
    
    
    1,710,798Other assets
    
    
    10
    
    
    
    227,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,468
    
    
    
    227,468Trade receivables
    
    
    13
    
    
    
    1,504,927
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,504,927
    
    
    
    1,504,927Other receivables
    
    
    13
    
    
    
    402,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    402,992
    
    
    
    402,992Derivative financial instruments
    
    
    13
    
    
    
    
    
    
    
    2,997
    
    
    
    
    
    
    
    
    
    
    
    2,997
    
    
    
    2,997Other investments
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    13,874
    
    
    
    
    
    
    
    13,874
    
    
    
    13,874LiabilitiesBank overdraft
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    1,397,083Finance lease liabilities
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,325
    
    
    
    155,325
    
    
    
    155,325Other liabilities
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,116
    
    
    
    134,116
    
    
    
    134,116Borrowings from banks
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,384,519
    
    
    
    1,384,519
    
    
    
    1,384,519Trade and other payables
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    1,411,358
 148




---



##### 



Financialassets /liabilitiesat fairvalueLoans
    
    through
    
    
    
    
    
    Other
    
    Totaland
    
    profit and
    
    Available
    
    Financial
    
    Carrying
    
    Total fairAssets
    
    Note
    
    receivables
    
    loss
    
    for sale
    
    liabilities
    
    value
    
    valueCash and cash equivalents
    
    
    8
    
    
    
    1,507,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,507,327
    
    
    
    1,507,327Other assets
    
    
    10
    
    
    
    154,237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,237
    
    
    
    154,237Trade receivables
    
    
    13
    
    
    
    1,694,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,694,542
    
    
    
    1,694,542Other receivables
    
    
    13
    
    
    
    298,862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,862
    
    
    
    298,862Other investments
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    18,679
    
    
    
    
    
    
    
    18,679
    
    
    
    18,679LiabilitiesBank overdraft
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617,637
    
    
    
    617,637
    
    
    
    617,637Finance lease liabilities
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,392
    
    
    
    5,392
    
    
    
    5,392Other liabilities
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,472
    
    
    
    124,472
    
    
    
    124,472Borrowings from banks
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,426
    
    
    
    156,426
    
    
    
    156,426Trade and other payables
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,463,976
    
    
    
    1,463,976
    
    
    
    1,463,976Derivative financial instruments
    
    
    21
    
    
    
    
    
    
    
    3,312
    
    
    
    
    
    
    
    
    
    
    
    3,312
    
    
    
    3,312
 Details of financial assets pledged as collaterals
  31 Mar 2009
    
    
    31 Mar 2008Cash and cash equivalents
    
    
    1,710,798
    
    
    
    1,507,327Other assets
    
    
    227,468
    
    
    
    154,237Trade receivables
    
    
    1,504,927
    
    
    
    1,694,542Other receivables
    
    
    402,992
    
    
    
    298,8623,846,185
    
    
    
    3,654,968
 Derivative financial instruments
  As ofMarch 31, 2009
    
    
    March 31, 2008Forward contractsIn U.S. Dollars (Sell)
    
    
    
    
    
    
    190,075In U.S Dollars (Buy)
    
    
    
    
    
    
    Option ContractsIn U.S Dollars (Sell)
    
    
    216,538
    
    
    
    In U.S Dollars (Buy)
    
    
    25,475
    
    
    
    
  149




---



##### 



As ofMarch 31, 2009
    
    
    March 31, 2008Sell:Not later than one month
    
    
    25,525
    
    
    
    40,020Later than one month and not later than three months
    
    
    50,950
    
    
    
    64,032Later than three months and not later than six months
    
    
    76,425
    
    
    
    38,019Later than six months and not later than one year
    
    
    63,638
    
    
    
    48,024216,538
    
    
    
    190,095
 As ofMarch 31, 2009
    
    
    March 31, 2008Buy:Not later than one month
    
    
    25,475
    
    
    
    Later than one month and not later than three months
    
    
    
    
    
    
    Later than three months and not later than six months
    
    
    
    
    
    
    Later than six months and not later than one year
    
    
    
    
    
    
    25,475
    
    
    
    
 Interest, (expenses), gains and (losses) recognized on financial assets and liabilities
 Recognised in profit or loss
 Year endedMarch 31, 2009
    
    
    March 31, 2008
    
    
    March 31, 2007Loans and receivablesInterest income on bank deposits
    
    
    116,495
    
    
    
    160,262
    
    
    
    153,028Interest income from leases
    
    
    435
    
    
    
    1,232
    
    
    
    1,164Interest income from other loans and receivables
    
    
    5,635
    
    
    
    289
    
    
    
    Impairment loss of trade receivables
    
    
    (84,346
    )
    
    
    (131,954
    )
    
    
    (153,638
    )Impairment loss on finance lease receivables
    
    
    (6,929
    )
    
    
    
    
    
    
    Financial assets at fair value through profit or lossNet change in fair value of derivative financial
instruments
    
    
    2,997
    
    
    
    (3,312
    )
    
    
    Other financial liabilitiesInterest expenses on lease obligations
    
    
    (2,243
    )
    
    
    (1,826
    )
    
    
    (389
    )Interest expenses on borrowings from banks and
overdrafts
    
    
    (163,201
    )
    
    
    (9,372
    )
    
    
    (7,733
    )
 Recognised directly in equity
 Year endedMarch 31, 2009
    
    March 31, 2008
    
    March 31, 2007Net change in fair
value of
available-for-sale
financial assets
    
    
    (5,361
    )
    
    
    (1,080
    )
    
    
    
 150




---



##### 



37. Financial risk management
   
    
    Credit risk
 
    
    Liquidity risk
 
    
    Market risk
  Credit Risk
 Trade and other receivables
  Cash and cash equivalents and other investments
   Exposure to credit risk
  March 31, 2009
    
    
    March 31, 2008Cash and cash equivalents
    
    
    1,710,798
    
    
    
    1,507,327Other assets
    
    
    227,468
    
    
    
    154,237Trade receivables
    
    
    1,504,927
    
    
    
    1,694,542Other receivables
    
    
    402,992
    
    
    
    298,862Derivative financial instruments
    
    
    2,997
    
    
    
    Other investments
    
    
    20,315
    
    
    
    20,315
 151




---



##### 



Financial assets that are past due but not impaired
  Period (in days)
    
    March 31, 2009
    
    
    March 31, 2008Past due 181 - 270 days
    
    
    120,662
    
    
    
    121,339Past due 271 - 365 days
    
    
    59,534
    
    
    
    55,703180,196
    
    
    
    177,042
  Financial assets that are neither past due nor impaired
  Details of collaterals and other credit enhancements held
 March 31, 2009
    
    
    March 31, 2008Security deposits received for internet access services
    
    
    32,918
    
    
    
    36,413
 Liquidity Risks
  As at March 31, 2009
 Carrying
    
    
    Contractualamount
    
    
    cash flows
    
    
    0-12 months
    
    
    1-2 years
    
    
    2-5 yearsNon-derivative financial liabilitiesBank overdrafts
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    
    
    
    
    Finance lease liabilities
    
    
    155,325
    
    
    
    180,989
    
    
    
    42,743
    
    
    
    84,746
    
    
    
    53,500Other liabilities
    
    
    134,116
    
    
    
    134,116
    
    
    
    134,116
    
    
    
    
    
    
    
    Borrowing from banks
    
    
    1,384,159
    
    
    
    1,498,236
    
    
    
    1,261,604
    
    
    
    200,694
    
    
    
    35,938Trade and other payables
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    
    
    
    
    4,482,041
    
    
    
    4,621,782
    
    
    
    4,246,904
    
    
    
    285,440
    
    
    
    89,438
 152




---



##### 



As at March 31, 2008
 Carrying
    
    
    Contractualamount
    
    
    cash flows
    
    
    0-12 months
    
    
    1-2 years
    
    
    2-5 yearsNon-derivative financial liabilitiesBank overdrafts
    
    
    617,637
    
    
    
    617,637
    
    
    
    617,637
    
    
    
    
    
    
    
    Finance lease liabilities
    
    
    5,392
    
    
    
    6,600
    
    
    
    3,344
    
    
    
    2,656
    
    
    
    Other liabilities
    
    
    124,472
    
    
    
    124,472
    
    
    
    124,472
    
    
    
    
    
    
    
    Borrowings from banks
    
    
    156,426
    
    
    
    156,426
    
    
    
    156,426
    
    
    
    
    
    
    
    Trade and other payables
    
    
    1,463,976
    
    
    
    1,463,976
    
    
    
    1,463,976
    
    
    
    
    
    
    
    2,367,903
    
    
    
    2,369,111
    
    
    
    2,365,855
    
    
    
    2,656
    
    
    
    
 Market Risk:
 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.
    
    Carrying out a variance analysis between estimate and actual on an ongoing basis, and
taking stop-loss action when the adverse movements breaches the 5% barrier of deviation,
subject to review by Audit Committee.
  All amounts in respective currencies as mentioned (in thousands)USD
    
    
    CAD
    
    
    CHF
    
    
    Euro
    
    
    GBP
    
    
    SGD
    
    
    HKDCash and cash equivalents
    
    
    1,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trade receivables
    
    
    5,770
    
    
    
    301
    
    
    
    161
    
    
    
    2
    
    
    
    91
    
    
    
    16
    
    
    
    Trade payables
    
    
    (3,390
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (14
    )
    
    
    (26
    )
    
    
    (6
    )Gross balance sheet exposure
    
    
    3,727
    
    
    
    301
    
    
    
    161
    
    
    
    (13
    )
    
    
    77
    
    
    
    (10
    )
    
    
    (6
    )Forward exchange / option
contracts
    
    
    (3,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net exposure
    
    
    (23
    )
    
    
    301
    
    
    
    161
    
    
    
    (14
    )
    
    
    77
    
    
    
    (10
    )
    
    
    (6
    )
  All amounts in respective currencies as mentioned (in thousands)USD
    
    
    CAD
    
    
    CHF
    
    
    Euro
    
    
    GBP
    
    
    SGD
    
    
    DHSCash and cash equivalents
    
    
    267Trade receivables
    
    
    6,608
    
    
    
    27
    
    
    
    
    
    
    
    1
    
    
    
    55
    
    
    
    
    
    
    
    Trade payables
    
    
    (2,383
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (1
    )
    
    
    
    
    
    
    (68
    )Gross balance sheet exposure
    
    
    4,492
    
    
    
    27
    
    
    
    
    
    
    
    (14
    )
    
    
    54
    
    
    
    
    
    
    
    (68
    )Forward exchange / option
contracts
    
    
    (4,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net exposure
    
    
    (258
    )
    
    
    27
    
    
    
    
    
    
    
    (14
    )
    
    
    54
    
    
    
    
    
    
    
    (68
    )
 153




---



##### 



Sensitivity analysis
  Equity
    
    
    Profit or lossMarch 31, 2009
    
    
    
    
    
    
    (2,253
    )March 31, 2008
    
    
    
    
    
    
    658
  Interest Rate Risk:
 Profile
  Carrying amountMarch 31, 2009
    
    
    March 31, 2008Fixed rate instrumentsFinancial assets- Fixed deposits with banks
    
    
    1,401,224
    
    
    
    1,309,219Financial liabilities- Borrowings from banks
    
    
    850,826
    
    
    
    156,426Variable rate instrumentsFinancial liabilities- Borrowings from banks
    
    
    533,333
    
    
    
    - Bank overdrafts
    
    
    1,397,083
    
    
    
    617,637
 Fair value sensitivity for fixed rate instruments
  Cash flow sensitivity for variable rate instruments
  Equity
    
    
    Profit or lossMarch 31, 2009
    
    
    
    
    
    
    (19,304
    )March 31, 2008
    
    
    
    
    
    
    (6,176
    )
  154




---



##### 



38. Subsequent events
 Acquisition of minority interest in subsidiary
  
    
    reversal of current tax provision established by Sify Communications Limited for the period
subsequent to April 1, 2008 amounting to Rs.90,003.
 
    
    write off of deferred tax assets established in the books of Sify Communications Limited
amounting to Rs.8,524.
 
    
    recognition of the difference between the fair value of the consideration paid and the
carrying amount of minority interests as an adjustment in equity.
  155




---



##### 



MF Global Sify Securities India Private Limited
 IFRS Consolidated Financial Statements
 As at March 31, 2009 and 2008 and for the years ended March 31, 2009, 2008, 2007
 156




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Price Waterhouse
 
 156




---



##### 



MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 CONSOLIDATED BALANCE SHEET
 As at March 31,Note
    
    
    2009
    
    
    2008ASSETSCash and bank balance
    
    
    11
    
    
    
    181,616
    
    
    
    287,465Cash-restricted
    
    
    12
    
    
    
    2,347,862
    
    
    
    5,414,723Interest bearing deposits with bank
    
    
    
    
    
    
    107,495
    
    
    
    16,500Receivable from broker-dealers and clearing organizations
    
    
    9
    
    
    
    42,228
    
    
    
    354,441Receivable from customers (net of provision of Rs.80,000
and Rs.77,075 respectively)
    
    
    8
    
    
    
    171,993
    
    
    
    930,671Available-for-sale securities:Marketable, at market value
    
    
    
    
    
    
    
    
    
    
    161,280Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    9,920
    
    
    
    20,393Deposits with clearing organizations
    
    
    
    
    
    
    120,865
    
    
    
    151,515Interest accrued but not due
    
    
    
    
    
    
    102,170
    
    
    
    234,126Other assets
    
    
    10
    
    
    
    189,581
    
    
    
    170,896Intangible assets:Computer software
    
    
    5.1
    
    
    
    16,074
    
    
    
    15,680Memberships in exchanges
    
    
    5.2
    
    
    
    9,495
    
    
    
    8,409Furniture and equipment
    
    
    6
    
    
    
    80,540
    
    
    
    72,882Deferred tax asset
    
    
    7
    
    
    
    56,082
    
    
    
    54,682Total assets
    
    
    
    
    
    
    3,435,921
    
    
    
    7,893,663EQUITYCapital and reserves attributable to the Equity holdersOrdinary shares
    
    
    13
    
    
    
    518,942
    
    
    
    518,942Additional paid in capital
    
    
    
    
    
    
    28,968
    
    
    
    28,968Retained earnings
    
    
    
    
    
    
    1,256,688
    
    
    
    1,039,771Other components of equity
    
    
    
    
    
    
    14,164
    
    
    
    15,380Total Equity
    
    
    
    
    
    
    1,818,762
    
    
    
    1,603,061LIABILITIESPayable to broker dealers and clearing organizations
    
    
    9
    
    
    
    227,786
    
    
    
    2,984,232Payable to customers
    
    
    
    
    
    
    985,075
    
    
    
    2,494,634Borrowings
    
    
    15
    
    
    
    4,645
    
    
    
    105,059Accounts payable, accrued expenses, and other liabilities
    
    
    17
    
    
    
    351,958
    
    
    
    682,289Employee benefit obligation
    
    
    16
    
    
    
    47,695
    
    
    
    24,388Total Liabilities
    
    
    
    
    
    
    1,617,159
    
    
    
    6,290,602Total liabilities and Equity
    
    
    
    
    
    
    3,435,921
    
    
    
    7,893,663
   For and on behalf of the Board
 Vineet Bhatnagar
 157




---



##### 



MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 CONSOLIDATED INCOME STATEMENT
 Years ended March 31,Note
    
    
    2009
    
    
    2008
    
    
    2007RevenueCommissions
    
    
    
    
    
    
    914,969
    
    
    
    1,761,848
    
    
    
    1,025,505Depository and clearing fees
    
    
    
    
    
    
    34,456
    
    
    
    78,324
    
    
    
    44,352Interest on fixed deposits with banks
    
    
    
    
    
    
    325,547
    
    
    
    497,683
    
    
    
    141,681Other Income
    
    
    20
    
    
    
    138,671
    
    
    
    165,665
    
    
    
    81,845Total Revenue
    
    
    
    
    
    
    1,413,643
    
    
    
    2,503,520
    
    
    
    1,293,383ExpensesEmployee compensation and benefits
    
    
    19
    
    
    
    515,234
    
    
    
    745,773
    
    
    
    453,488Exchange expenses and clearance fees
    
    
    
    
    
    
    130,904
    
    
    
    253,658
    
    
    
    104,065Brokerage to other broker-dealers
    
    
    
    
    
    
    95,859
    
    
    
    177,795
    
    
    
    109,319Communications and data processing
    
    
    
    
    
    
    27,585
    
    
    
    24,707
    
    
    
    14,611Bank Interest and guarantee commission
    
    
    
    
    
    
    28,883
    
    
    
    42,522
    
    
    
    19,896Depreciation and amortization
    
    
    
    
    
    
    38,348
    
    
    
    36,086
    
    
    
    33,698Occupancy
    
    
    
    
    
    
    69,933
    
    
    
    37,990
    
    
    
    30,839Provision for receivable from customers
    
    
    
    
    
    
    2,925
    
    
    
    675
    
    
    
    73,300Advertisement and business promotion
    
    
    
    
    
    
    34,987
    
    
    
    72,426
    
    
    
    45,418Other expenses
    
    
    18
    
    
    
    125,693
    
    
    
    151,964
    
    
    
    100,493Total Expenses
    
    
    
    
    
    
    1,070,351
    
    
    
    1,543,596
    
    
    
    985,127Profit before income tax
    
    
    
    
    
    
    343,292
    
    
    
    959,924
    
    
    
    308,256Income tax expense
    
    
    21
    
    
    
    126,375
    
    
    
    353,669
    
    
    
    103,830Profit for the year attributable to
the Equity holders
    
    
    
    
    
    
    216,917
    
    
    
    606,255
    
    
    
    204,426
   For and on behalf of the Board
 Vineet Bhatnagar
 158




---



##### 



MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 Number of
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Otherordinary
    
    
    Par
    
    
    Share
    
    
    paid-in
    
    
    Retained
    
    
    components
    
    
    Totalshares
    
    
    value
    
    
    capital
    
    
    capital
    
    
    earnings
    
    
    of 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 loss 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
    
    
    
    1,603,061Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,257
    
    
    
    9,257Fair value loss on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,473
    )
    
    
    (10,473
    )Net loss directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,216
    )
    
    
    (1,216
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216,917
    
    
    
    
    
    
    
    216,917Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216,917
    
    
    
    (1,216
    )
    
    
    215,701Balance at March 31, 2009
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    1,256,688
    
    
    
    14,164
    
    
    
    1,818,762
   159




---



##### 



MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 CONSOLIDATED CASH FLOW STATEMENT
 Years ended March 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activitiesProfit before income tax
    
    
    343,292
    
    
    
    959,924
    
    
    
    308,256Adjustments forDepreciation and amortization
    
    
    38,348
    
    
    
    35,980
    
    
    
    33,635Profit on sale of Available-for-sale securities
    
    
    (6,724
    )
    
    
    (51,816
    )
    
    
    Provision on receivable from customers
    
    
    2,925
    
    
    
    675
    
    
    
    73,300Stock appreciation rights
    
    
    23,973
    
    
    
    15,218
    
    
    
    7,455Others
    
    
    (2,617
    )
    
    
    (33
    )
    
    
    996Movements in working capitalCash-restricted
    
    
    3,066,861
    
    
    
    (2,852,691
    )
    
    
    (1,522,917
    )Interest bearing deposits with banks
    
    
    (90,995
    )
    
    
    113,924
    
    
    
    (28,174
    )Deposits with clearing organizations
    
    
    30,650
    
    
    
    (31,467
    )
    
    
    300,342Receivable from broker-dealers and clearing organizations
    
    
    312,213
    
    
    
    (293,525
    )
    
    
    77,385Receivable from customers
    
    
    755,753
    
    
    
    (314,554
    )
    
    
    (68,859
    )Interest accrued but not due
    
    
    131,956
    
    
    
    (172,401
    )
    
    
    (34,690
    )Other assets
    
    
    5,237
    
    
    
    (19,620
    )
    
    
    (22,562
    )Payable to broker dealers and clearing organizations
    
    
    (2,756,446
    )
    
    
    1,788,638
    
    
    
    829,384Payable to customers
    
    
    (1,509,559
    )
    
    
    697,534
    
    
    
    525,279Accounts payable, accrued expenses, and other liabilities
    
    
    (330,331
    )
    
    
    321,549
    
    
    
    161,307Cash provided by/(used in) operations
    
    
    14,536
    
    
    
    197,335
    
    
    
    640,137Income taxes paid
    
    
    (151,697
    )
    
    
    (389,865
    )
    
    
    (157,945
    )Net cash provided by/(used in) operating activities
    
    
    (137,161
    )
    
    
    (192,530
    )
    
    
    482,192Cash flows from investing activitiesAvailable for Sale Securities: Marketable, At Market Value
    
    
    168,004
    
    
    
    72,325
    
    
    
    (191,571
    )Available for Sale Securities: Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    23,722
    
    
    
    Expenditure on furniture and equipment
    
    
    (35,695
    )
    
    
    (36,840
    )
    
    
    (39,676
    )Expenditure on computer software
    
    
    (12,118
    )
    
    
    (7,265
    )
    
    
    (19,248
    )Sale of furniture and equipment
    
    
    2,278
    
    
    
    205
    
    
    
    Net cash provided by/(used in) investing activities
    
    
    122,469
    
    
    
    52,147
    
    
    
    (250,495
    )Cash flows from financing activitiesProceeds from borrowings
    
    
    (100,414
    )
    
    
    105,059
    
    
    
    Net cash provided by/(used in) financing activities
    
    
    (100,414
    )
    
    
    105,059
    
    
    
    Effect of foreign exchange fluctuation
    
    
    9,257
    
    
    
    (1,586
    )
    
    
    (1,061
    )Net increase/(decrease) in cash and bank balance
    
    
    (105,849
    )
    
    
    (36,910
    )
    
    
    230,636Cash and bank balance at beginning of the year
    
    
    287,465
    
    
    
    324,375
    
    
    
    93,739Cash and bank balance at end of the year
    
    
    181,616
    
    
    
    287,465
    
    
    
    324,375
   FOR AND ON BEHALF OF THE BOARD
 VINEET BHATNAGAR  MANAGING DIRECTOR
 160




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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    General informationMF Global Sify Securities India Private Limited (formerly known as Man Financial-Sify
Securities India Private Limited) and its consolidated subsidiaries (hereinafter referred to
as MF or the group) are engaged as a stock and commodity broker for foreign institutional
investors (FIIs), mutual funds, domestic financial institutions and retail investors. The
group also acts as a depository participant and provides depository services to FIIs, mutual
funds, domestic financial institutions and retail investors.MF Global Sify Securities India Private Limited (MF Global Sify) was incorporated on
December 29, 1999 in India as a private limited company under the Companies Act, 1956. The
address of its registered office is 2nd Floor, C block, Modern Centre, 101 K. K.
Marg, Jacob Circle, Mahalaxmi, Mumbai  400 011. MF Global Sify has two wholly owned
subsidiaries, MF Global Commodities India Private Ltd. and MF Global Capital India Private
Limited, incorporated in India. MF Global Commodities India Private Limited has one wholly
owned subsidiary, MF Global Middle East Limited DMCC incorporated in Dubai.MF Global Overseas Limited (MFG) (formerly Man Financial Holdings Limited UK), a company
incorporated in United Kingdom holds 70.15% of MF Global Sify and Sify Technologies Limited
(Sify) holds the balance, 29.85% of MF Global Sifys equity shares. The ultimate holding
company of MF Global Sify is MF Global Limited, Bermuda.These consolidated financial statements have been approved for issue by the Board of
Directors on September 25, 2009.2.
    
    Summary of significant accounting policies2.1.
    
    Basis of preparationThese consolidated financial statements have been prepared in accordance with the
International Financial Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (IASB). They have been prepared under the historical cost
convention, on accrual basis as modified for certain financial instruments which are measured
at fair value.The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.The preparation of financial statements in accordance with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise judgement in the
process of applying the groups accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 4.2.1.1.
    
    Interpretations effective as at 31 March 2009
 
    
    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.
    
    IAS 18 (Amendment), Revenue, which is issued as part of the IASBs annual
improvements project published in April 2009. The amendment relates to non-mandatory
guidance on determining whether an entity is acting as a principal or as an agent.
 2.1.2.
    
    Amendments and interpretations effective as at 31 March 2009 but not relevantThe following standards, amendments and interpretations to published standards are effective
as at 31 March 2009 but are not relevant to the groups operations:
 
    
    IAS 39 (Amendment), Financial instruments: Recognition and measurement, and IFRS 7,
Financial instruments: Disclosure, which permit the reclassification of some financial
assets.
    
    IFRIC 12, Service concession arrangements, applies to contractual arrangements
whereby a private sector operator participates in the development, financing, operation
and maintenance of infrastructure for public sector services.
 161




---



##### 



2.1.3.
    
    Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the groupThe following standards, amendments and interpretations to existing standards have been
published and are mandatory for the groups financial year beginning on 1 April 2009 or later
periods, but the group has not early adopted them:
 
    
    IAS 1 (Revised), and Amendments to IAS 1(Revised) Presentation of financial
statements. The new standard prohibits the presentation of items of income and expenses
(that is, non-owner changes in equity) in the statement of changes in equity,
requiring owner changes in equity to be presented separately from non-owner changes in
equity. In addition, entities making restatements or reclassifications of comparative
information will be required to present a restated balance sheet as at the beginning of
the comparative period. The group will apply the revised standard from April 1, 2009.
    
    IAS 23(Amendment), 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 the revised standard from April 1,
2009. The group does not expect the adoption of this standard to have a material effect
as there are no qualifying assets.
    
    IAS 27 (Revised), Consolidated and Separate Financial Statements. It requires a
mandatory adoption of the 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 a 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 of the interest and book value of the interest.The revised 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.The group will apply IAS 27 (Revised) from 1 April 2010. The group does not expect the
adoption of this standard to have a material effect on the consolidated financial
statements.
    
    IFRS 2 (Amendment), Share-based payment. It clarifies that only service conditions
and performance conditions are vesting conditions. All other features need to be
included in the grant date fair value and do not impact the number of awards expected to
vest or the valuation subsequent to grant date. The amendment also specifies that all
cancellations, whether by the entity or by other parties, should receive the same
accounting treatment. The group will apply the amendment from 1 April 2009. The Group is
in the process of evaluating the impact this amendment will have on its consolidated
financial statements..
    
    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.Consideration would include fair value of all interests previously held by the acquirer.
Remeasurement of such interests to fair value would be through the income statement.
Contingent consideration is required to be recognised at fair value even if not deemed
probable of payment at the date of acquisition. All subsequent changes in debt contingent
consideration are recognised in income statement and not in goodwill as required in the
existing standard.IFRS 3 (Revised) provides an explicit option, available on a transaction-by-transaction
basis, to measure any NCI in the entity acquired at fair value of their proportion of
identifiable assets and liabilities or full fair value. The first will result in
measurement of goodwill little different from existing IFRS 3; the second approach will
record goodwill on the NCI as well as on the acquired controlling interest.The group will apply IFRS 3 (Revised) from 1 April 2010. The effect of the standard on
future periods will depend on the nature and significance of any acquisitions that are
subject to this standard.
    
    IFRS 8, Operating segments. 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 purposes. This standard is not applicable to the group as the groups debt or
equity instruments are not traded
 162




---



##### 



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..
    
    IFRS 5 (Amendment), Non-current assets held-for-sale and discontinued operations(and
consequential amendment to IFRS 1, First-time adoption). The amendment clarifies that
all of a subsidiarys assets and liabilities are classified as held for sale if a
partial disposal sale plan results in loss of control. The group will apply the IFRS 5
(Amendment) prospectively to all partial disposals of subsidiaries from 1 April 2010.
    
    IAS 23 (Amendment), Borrowing costs. The definition of borrowing costs has been
amended so that interest expense is calculated using the effective interest method
defined in IAS 39, Financial instruments: Recognition and measurement. The group will
apply the IAS 23 (Amendment) prospectively to the capitalisation of borrowing costs on
qualifying assets from 1 April 2009.
    
    IAS 36 (Amendment), Impairment of assets. Where fair value less costs to sell is
calculated on the basis of discounted cash flows, disclosures equivalent to those for
value-in-use calculation should be made. The group will apply the IAS 36 (Amendment) and
provide the required disclosure where applicable for impairment tests from 1 April 2009.
    
    IAS 19 (Amendment), Employee benefits.The amendment clarifies the meaning of
curtailment, amends the definition of return on plan assets, clarifies that the
distinction between short term and long term employee benefits will be based on whether
benefits are due to be settled within or after 12 months of employee service being
rendered. The group will apply the IAS 19 (Amendment) from 1 April 2009.
    
    IFRIC 17, Distributions of non-cash assets to owners.IFRIC 17 clarifies how an
entity should measure distributions of assets, other than cash, when it pays dividends
to its owners. The group will apply IFRIC 17 from 1 April 2010.
    
    IFRIC 18, Transfers of assets from customers. IFRIC 18 clarifies the accounting for
arrangements where an item of property, plant and equipment, which is provided by the
customer, is used to provide an ongoing service. The interpretation applies
prospectively to transfers of assets from customers received on or after 1 July 2009,
although some limited retrospective application is permitted.
    
    IAS 1 (Amendment), Presentation of financial statements. The amendment clarifies that
classification of a liability, that can at the option of the counterparty be settled by
the issue of the entitys equity instruments, on the basis of the requirements to
transfer cash or other assets rather than on settlement better reflects the liquidity
and solvency position of an entity. The group will apply the IAS 1 (Amendment) from 1
April 2010. It is not expected to have an impact on the groups financial statements.
    
    IAS 17 (Amendment), Leases.The amendment modified the criteria for classification of
lease that includes both land and buildings elements requiring an entity to assess the
classification of each element as a finance or an operating lease separately in the same
way as leases of other assets. The group will apply the IAS 17 (Amendment) from April
1, 2010. The impact, if any, will be known after assessing the companys lease
arrangements that include both land and building elements.
 2.1.4.
    
    Amendments and interpretations to existing standards that are not yet effective and not
relevant for the groups operationsThe following interpretations to existing standards have been published and are mandatory for
the groups accounting period beginning on 1 April 2009 or later periods but are not relevant
for the groups operations:
 
    
    IFRIC 13, Customer loyalty programmes,clarifies that where goods or services are
sold together with a customer loyalty incentive, 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 15, Agreements for construction of real estates,clarifies whether IAS 18,
Revenue, or IAS 11, Construction contracts, should be applied to particular
transactions.
    
    IFRIC 16, Hedges of a net investment in a foreign operation, clarifies the accounting
treatment in respect of net investment hedging. This includes the fact that net
investment hedging relates to differences in functional currency not presentation
currency, and hedging instruments may be held anywhere in the group. The requirements of
IAS 21, The effects of changes in foreign exchange rates, do apply to the hedged item.
 163




---



##### 




    
    IAS 38 (Amendment), Intangible assets. The amendment deletes the wording that states
that there is rarely, if ever support for use of a method that results in a lower rate
of amortisation than the straight-line method. The amendment will not have an impact on
the groups operations, as all intangible assets are amortised using the straight-line
method.
    
    IAS 20 (Amendment), Accounting for government grants and disclosure of government
assistance(effective from 1 January 2009). The benefit of a below-market rate
government loan is measured as the difference between the carrying amount in accordance
with IAS 39, Financial instruments: Recognition and measurement, and the proceeds
received with the benefit accounted for in accordance with IAS 20. IAS 39 (Amendment),
Financial instruments: Recognition and measurement. The amendment makes an exemption
from separation in respect of embedded prepayment penalties the exercise prices of which
compensate the lender for the loss of interest by reducing the economic loss from
reinvestment risk.
    
    There are a number of minor amendments to existing standards and interpretations
includingIAS 39 (Amendment), Financial instruments: Recognition and measurement , IFRS
7, Financial instruments: Disclosures, IAS 8, Accounting policies, changes in accounting
estimates and errors, IAS 10, Events after the reporting period, IAS 18, Revenueand IAS
34, Interim financial reporting, IFRS 2 (Amendment), Share-based payment, IAS 7
(Amendment), Statement of cash flowsIAS 36 (Amendment), Impairment of assets,IAS 38
(Amendment), Intangible assets,which are part of the IASBs annual improvements project
published in May 2008 and April 2009 (not addressed above). These amendments are
unlikely to have an impact on the groups accounts and have therefore not been analysed
in detail.
 2.2.
    
    ConsolidationDomestic and foreign subsidiaries considered for consolidation are as follows:
 Percentage of
    
    
    Percentage ofholding as at
    
    
    holding as atCountry of
    
    
    March 31,
    
    
    March 31,incorporation
    
    
    2009
    
    
    2008Direct subsidiaries1) MF Global Commodities India Private
Limited
    
    India
    
    
    100
    %
    
    
    100
    %2) MF Global Capital India Private Limited
    
    India
    
    
    100
    %
    
    
    100
    %Indirect Subsidiary1) MF Global Middle East Limited DMCC
    
    Dubai
    
    
    100
    %
    
    
    100
    %
 The reporting date for all the above companies is March 31.Subsidiaries are all entities over which the group has the power to govern the financial and
operating policies so as to obtain economic benefits from its activities, generally
accompanying a shareholding of more than one half of the voting rights. Subsidiaries are
fully consolidated from the date on which control is transferred to the group.All significant intercompany transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also eliminated but considered
an impairment indicator of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the group.During the year ended March 31, 2008 MF Global Sify transferred its entire stake in wholly
owned subsidiary MF Global Middle East Limited DMCC to its wholly owned subsidiary MF Global
Commodities India Private limited; a transaction under common control, as defined in IFRS 3,
Business Combinationsat carrying value. The group accounts for common control transaction by
pooling of interest method. Under that method of accounting, the carrying amount of the
assets and liabilities affected by the common control transaction are unchanged in the group
financial statement.
 164




---



##### 



2.3.
    
    Foreign currency translation
 a)
    
    Functional and presentation currency
 Items included in the financial statements in each of the groups entities are measured using
the currency of the primary economic environment in which the entity operates (the
functional currency). Indian rupee is the functional currency of MF Global Sify and its
domestic subsidiaries. US dollar is the functional currency of MF Global Middle East Limited
DMCC located in Dubai. These consolidated financial statements are presented in Indian Rupee
(INR), which is the groups presentation currency. The results and financial position are
translated into presentation currency as follows:
 
    
    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
 Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at yearend
exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognized in the income statement.2.4.
    
    Furniture and equipmentFurniture and equipment are stated at actual cost less accumulated depreciation and any
accumulated impairment losses. The cost of an item of premises and equipment comprises its
purchase price and any costs directly attributable to bringing the asset into use, while
maintenance and repairs are charged to expense when incurred. Depreciation is provided over
the estimated useful lives of the assets on the reducing balance method.The estimated rates of depreciation are as follows:
 Furniture and fixtures
    
    
    18.10
    %Computer systems
    
    
    40.00
    %Office equipments
    
    
    13.91
    %Vehicles
    
    
    25.89
    %
 The residual values and useful economic lives of premises and equipment are reviewed annually.Depreciation on leasehold improvements is provided using the straightline method over the
shorter of the lease term or the useful life of the asset.2.5.
    
    Intangible assetsAll intangible assets are stated at cost less accumulated amortisation and any accumulated
impairment losses.
 165




---



##### 



a)
    
    Software
 Capitalised costs of computer software obtained for internal use represents costs incurred to
purchase computer software from third parties. These capitalised costs are amortised over the
estimated useful life of the software on a straightline basis, if the estimated useful
lives are beyond one year. However, if the estimated useful life of an asset is short i.e.
less than a year, it is charged to the income statement. They are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
 b)
    
    Trading rights in Stock Exchange
 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 the 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. (refer to
note 5.2  Membership in Exchanges)DGCX membershipMF Global Middle East Limited DMCC (DMCC) is registered with and has been granted a trading
license by the Dubai Multi Commodities Centre on February 7, 2006. The United Arab Emirates
Securities and Commodities Authority (ESCA) issued the DMCC a license on June 18, 2006 to
operate as a broker on the Dubai Gold and Commodities Exchange (DGCX). DMCC has been
admitted as a member of the DGCX on September 1, 2006. DMCC has paid and capitalized US$ 100
thousand towards the license of DGCX, which is assessed for impairment.Trading rights in stock exchanges have indefinite useful life and are carried at cost less
any accumulated impairment. They are reviewed for impairment annually or whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.2.6.
    
    Impairment of nonfinancial assetsAssets that have an indefinite useful life are not subject to amortisation and are tested for
impairment annually or whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. Both external as well as internal indicators are considered by the group
for impairment testing. An impairment loss is recognized for the amount by which the assets
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an
assets fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cashgenerating units). Nonfinancial assets that suffered
impairment are reviewed for possible reversal of the impairment at each reporting date.2.7.
    
    Financial instrumentsFinancial assets and financial liabilities are recognised in the consolidated balance sheet,
when the Group becomes a party to the contractual provisions of an instrument, at fair value
adjusted for transaction costs, except for financial assets classified at fair value through
profit or loss where transaction costs are immediately recognised in the consolidated income
statement. Financial assets are de-recognised when the rights to receive cash flows from the
investments have expired or where they have been transferred and the Group has also
transferred substantially all risks and rewards of ownership. Financial liabilities are
de-recognised when the obligation under the liability has been discharged or cancelled.Financial assets principally comprise investments, receivable from broker dealers, clearing
organisations, customers and other receivables, bank deposits and cash and bank balance.
Financial liabilities principally comprise bank overdraft, and payables to broker dealers,
clearing organisations, customers, other payables and accrued expenses.
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Financial assets and liabilities are offset and the net amount reported in the balance sheet
if, and only if, there is a legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis, or to realise an asset and settle the
liability simultaneously. In many cases, even though there is a legal right to set off is in
place, the lack of an intention to settle on a net basis results in the related assets and
liabilities being presented gross in the balance sheet.2.8.
    
    Financial assetsThe financial assets of the group are classified into following categories: loans and
receivables and available for sale. The classification of financial assets depends on the
purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
 a)
    
    Loans and Receivables
 Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. The entitys loans and receivables comprise
receivable from broker dealers, clearing organisations, customers and other receivables,
investments in bank deposits and cash and bank balance and loans to staff classified under
other assets in balance sheet (Notes 2.10, 2.11 and 2.12).
 b)
    
    Available for sale
 Available for sale financial assets are non-derivatives that are either designated in this
category or not classified in any other categories. Available for sale consists of marketable
securities, which are investments in units of mutual funds and are reported at fair values.
Securities not readily marketable represent investments in equity shares of Bombay Stock
Exchange Limited (BSEL), obtained by MF Global Sify pursuant to the exchange transaction
under the Bombay Stock Exchange (Corporatisation and Demutualization) scheme 2005.After initial recognition, investments, which are classified as available-for-sale, are
measured at fair value. Gains or losses, on available-for-sale investments are recognised as
a separate component of equity until the investment is sold, collected or otherwise disposed
of, or until the investment is determined to be impaired, at which time the cumulative gain
or loss previously reported in equity is transferred to the consolidated income statement.
For investments that are actively traded in organised financial markets, fair value is
determined by reference to quoted market price at the close of business on the balance sheet
date. For investments where there is no quoted market price, fair value is determined by
using valuation techniques.MF assesses at each balance sheet date whether there is objective evidence that a financial
asset or a group of financial assets is impaired. In the case of securities classified as
available for sale, a significant or prolonged decline in the fair value of the security
below its cost is considered as an indicator that the equity securities are impaired. If any
such evidence exists for available-for-sale financial assets, the cumulative loss  measured
as the difference between the cost and the current fair value, less any impairment loss on
that financial asset previously recognised in profit or loss  is removed from equity and
recognised in the income statement. Impairment losses recognised in the income statement on
equity instruments are not reversed through the income statement. Impairment testing of trade
receivables is described in Note 2.10.2.9.
    
    Derivatives and TradingFinancial assets at fair value through profit or loss are financial assets held for trading
or upon initial recognition are designated by the group as at fair value through profit or
loss. A financial asset is primarily classified as held for trading in this category if
acquired principally for the purpose of selling in the short-term. Derivatives are also
categorised as held for trading unless they are designated as hedges. Assets in this category
are classified as current assets. Gains or losses arising from changes in the fair value of
the financial assets at fair value through profit or loss category are presented in the
income statement within other (losses)/gains  net in the period in which they arise.
Derivatives are initially recognised at fair value on the date a derivative contract is
entered into and are subsequently remeasured at their fair value at each reporting date.2.10.
    
    ReceivablesReceivables are recognized initially at fair value. They are subsequently measured at
amortised cost using the effective interest method, net of provision for impairment, if the
effect of discounting is considered material. The carrying amounts, net of provision for
impairment, reported in the balance sheet approximate the fair value due to their short
realisation period. A provision for impairment of trade receivables is established when there
is objective evidence that Group will not be able to collect all amounts due according to the
original terms of receivables. The provision is established at amounts considered to
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be appropriate, based primarily upon Groups past credit loss experience and an evaluation of
potential losses on the receivables. The amount of the provision is recognized in the income
statement. Receivables include receivables from broker-dealers and clearing organizations and
receivables from customers, whereas the securities owned by customers are held as collateral
for receivables.2.11.
    
    Interest bearing deposits with banksInterest bearing deposits with bank represent fixed term deposits placed with banks earning
fixed rate of interest. At the balance sheet date, these deposits are measured at amortised
cost using effective interest method.2.12.
    
    Cash and bank balanceCash and bank balance include cash in hand and at bank, and shortterm deposits with an
original maturity period of three months or less. The Groups exposure to credit risk is
represented by the carrying value of the assets. Bank overdrafts that are an integral part of
cash management and where there is a legal right of setoff against positive cash balances
are included in cash and bank balance. Otherwise bank overdrafts are classified as
borrowings.2.13.
    
    Restricted CashIndividual entities within the group are members of exchange, where cash or securities are
deposited or bank guarantees are issued to conduct day-to-day trading and clearance
activities. As required by the respective exchange, margin obligations towards clearing
organizations are determined based on open positions by clearing organizations of the
exchanges.The group classifies bank fixed deposits as restricted cash on the balance sheet, when they
are either placed with banks as margin for bank guarantees issued to clearing organisation or
specifically earmarked as liens to clearing organizations towards margin.2.14.
    
    PayablesPayables include payables to broker-dealers and clearing organizations and payable to
customers. The payable to broker-dealers and clearing organizations are at fair values
because of their nature of short-term maturity. Amount payable to customers include amounts
due on cash and margin transactions. These are recognized initially at fair value and
subsequently measured at amortised cost using the effective interest method.2.15.
    
    Borrowings  Bank overdraftBorrowings are recognized initially at fair value, net of transaction costs incurred.
Borrowings are subsequently stated at amortised cost; any difference between the proceeds
(net of transaction costs) and the redemption value is recognized in the income statement
over the period of the borrowings using the effective interest method.2.16.
    
    ProvisionsProvisions are recognised when the group has a present obligation (legal or constructive) as
a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. In the event that the time value of money is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate
that reflects a current market assessment of the time value of money and, where appropriate,
the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.2.17.
    
    Current and deferred income taxThe current income tax charge is calculated on the basis of the tax laws in the countries
where the group operates and generates taxable income. The tax rate of MF Global Sify and its
Indian Subsidiaries is 33.99%. MF Global Middle East
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DMCC, the Dubai based subsidiary operates in a tax free jurisdiction. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions, where appropriate, on
the basis of amounts expected to be paid to the tax authorities.Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, the deferred income tax is not accounted for if
it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred income tax is determined using tax rates and laws that have
been enacted or substantially enacted by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised or the deferred income tax liability
is settled.Deferred income tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.Deferred income tax is provided on temporary differences, if any, arising on investments in
subsidiaries, except where the timing of the reversal of the temporary difference is
controlled by the group and it is probable that the temporary difference will not reverse in
the foreseeable future.Current and deferred income tax are recognized in the income statement, except when the tax
relates to items charged or credited directly to equity, in which case the tax is also dealt
with directly in equity.2.18.
    
    Employee benefitsEmployee benefits are accrued in the period in which the associated services are rendered by
employees of the group. The group provides employees with retirement benefits through both
defined benefit and defined contribution schemes. Contributions to the defined contribution
scheme are charged to the consolidated income statement as they become payable in accordance
with the rules of the scheme.
 a)
    
    Provident Fund
 In accordance with Indian law, all employees receive benefits from a provident fund, which is
a defined contribution plan. Both the employee and employer make monthly contributions to
the plan, each equal to a specified percentage of employees basic salary. The group has no
further obligations under the plan beyond its monthly contributions.
 b)
    
    Gratuity
 The Gratuity Plan is a defined benefit plan that, at retirement or termination of employment,
provides all employees with a lump sum payment, which is a function of the respective
employees salary and completed years of service with the group. The group provides the
gratuity benefit through annual contributions to a fund managed by the Life Insurance
Corporation of India (LIC). Under this scheme, the settlement obligation remains with the
group, although the LIC administers the scheme and determines the contribution premium
required to be paid by the group. The liability recognised in the balance sheet in respect of
gratuity plan is the present value of the defined benefit obligation at the balance sheet
date less the fair value of plan assets, if any, together with adjustments for unrecognised
pastservice costs. The defined benefit obligation is calculated annually by independent
actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using interest
rates of Government of India securities (representing risk-free interest rates) and that have
terms to maturity approximating to the terms of the related gratuity liability.Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to income statement in the period in which they arise.
 c)
    
    Sharebased payment
 The groups employees participate in share-based payment plans; that is stock appreciation
rights plan sponsored by MF and co-investment plan sponsored by Man Group plc. The group
follows IFRS 2, Share Based Payment(IFRS 2).For Equity settled share based payments; the fair value of the employee services received in
exchange for the share awards and options granted is recognised as an expense. Equity-settled
share-based payments are measured at the fair value of the
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equity instruments at the grant date and expensed, together with a corresponding increase in
equity, on a straight-line basis over the vesting period, based on the Groups estimate of
 shares that will eventually vest.
 For cash settled share based payments; the fair value of the employee services received in
exchange for the stock appreciation rights is recognised as an expense. The cost of
cash-settled transactions is measured initially at fair value at the grant date. The fair
value of each tranche of rights issued under the plan is expensed over the period until
vesting, with recognition of a corresponding liability. The liability is remeasured at each
balance sheet date up to and including the settlement date, with changes in fair value
recognised in the consolidated income statement.The impact of non-market vesting conditions is included in assumptions about the number of
options that are expected to vest. At each balance sheet date, the group revises its
estimates of the number of options that are expected to become exercisable. It recognises the
impact of the revision of original estimates, if any, in the income statement.2.19.
    
    Revenue Recognition
 a)
    
    Commission, clearing fees, depository fee income
 Commission, clearing fees and related expenses are recorded on a trade-date basis as
securities transactions occur. Depository fee income earned from customer is recognized in
the period in which services are rendered.
 b)
    
    Dividend and Interest Income
 Dividend income is recognised when the right to receive the payment is established. Interest
income is recognised on accrual basis using the effective interest rate method.2.20.
    
    Leases
 Leases in which a significant portion of the risks and rewards of ownership are retained
by the lessor are classified as operating leases. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the income statement on a
straight-line basis over the period of the lease. All leases are classified as operating
leases.Under these arrangements, interest free deposits have been given to the lessor and are
refundable at the end of lease term. The group recognises the security deposit at fair value
using the market rate of interest for a deposit of similar term. The difference between the
amount of security deposit and fair value is considered as prepaid lease rental, which is a
non-financial asset.The security deposit initially recognised at fair value will accrete to the amount of
security deposit received through accruals as interest income over the term of security
deposit and prepaid lease rental will be charged to income statement as lease rental over the
lease term.
 3.
    
    Financial risk management objectives and policies3.1.
    
    Financial risk factorsThe group is exposed to a variety of financial risks. The principal risks are business risk,
interest rate risk, price risk, foreign currency risk, credit risk and cash liquidity risk.
Each of these risks is discussed in detail below. The Group monitors financial risks on a
consolidated basis. The groups overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the
financial performance. The group has a comprehensive risk management structure and processes
to monitor, evaluate and manage the principal risks in conducting business.Business RiskThe groups results of operations will be affected by many factors including economic,
political and market conditions, broad trends in the brokerage and finance industry, changes
in level of trading activity in the broader market place, price levels and price volatility
in the derivative, equity and commodity markets, legislative and regulatory changes and
competition, among other factors. In particular, the revenues of the group are substantially
dependent on the volume of client transactions that it executes and clears, the volatility in
the principal markets in which it operates and the prevailing interest rates.
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Interest rate RiskThe group is exposed to interest rate risk primarily due to changes in interest rates on bank
fixed deposits that impact the amount of interest income the Group earns. Interest income is
earned on fixed deposit placed with banks out of the Groups funds and margin monies placed
by clients. The Group monitors the movement of interest rates to determine whether deposits
need to be placed at fixed or floating interest rates. Investment in fixed deposits placed
with banks earn fixed rate of interest. As at March 31, 2009 the carrying value of bank
deposits approximates fair value of these deposits as having original maturity of less than a
year. The weighted average rate of interest earned on bank fixed deposits amounted to 10.77%
p.a. and 9.23% p.a. during year ended March 31, 2009 and March 31, 2008, respectively.The Group rolls-over fixed deposit on maturity based on the market condition and business
needs; weighted average remaining term of fixed deposits as at the balance sheet date is
approximately 6.3 months and 5.5 months as at March 31, 2009 and March 31, 2008 respectively.Price RiskThe group is subject to price risk in respect of investments held by the Group in BSE shares
and investment in money market mutual funds, which are held as available for sale securities.
The impact of price risk on carrying value of BSE shares is not material compared to the size
and operations of the group. Investments in money market funds are subject to minimum price
risk due to their investment in call money market instruments.Foreign Exchange RiskThe group has minimal transactional currency exposure arising from operations in currencies
other than its functional currency.Credit RiskCredit risk is the possibility that the Group may suffer a loss from the failure of clients
or counterparties to meet their financial obligations at all or in a timely manner. The
group acts as an agent in providing execution and clearing services for exchange-traded
products. The groups clients security activities are transacted on either cash or margin
basis. In the event that a client fails to satisfy its obligations for cash transactions,
the group may be required to purchase or sell financial instruments at the prevailing market
price to fulfill the clients obligations. The clients are required to maintain margin
accounts with collateral sufficient to support their open trading positions. Initially, the
group establishes each clients margin requirements to levels it believes are sufficient to
cover their open positions. However, later if the clients subsequent trading activity or
adverse market conditions may cause the clients previous margin payments to be inadequate to
support their trading obligations, the group then serves as the exchange clearing member for
the trade and thus the group would cover any shortfall and thereby expose itself to potential
losses.The Credit exposure also arises in relation to fixed deposits placed with Banks. The Group
places fixed deposits with highly rated banks and which is reviewed on an on-going basis.The groups policy is to place fixed deposits with credit worthy banks. The following table
depicts that the majority of the groups fixed deposits are placed in highly rated banks
 % of fixed depositsInvestment grade
    
    2009
    
    
    2008Highest safety
    
    
    100
    
    
    
    74High safety
    
    
    
    
    
    
    8Adequate safety
    
    
    
    
    
    
    18100
    
    
    
    100
 Highest Safety represents a credit rating equivalent of AAA, A1+, P1+; High Safety represents
a credit rating equivalent of AA; and Adequate Safety represents a credit rating of A.
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Risk Management Process and MitigationThe Group has a separate risk management department, which monitors, evaluates and manages
the risks. Client-wise position limits are set by the risk department based on the
collateral placed by the respective clients. The risk department is responsible for making
daily risk reports based on day-end positions of clients. Client orders are directed to the
exchange only if the risk parameters set by the risk department are met. The risk department
monitors client activity levels to ensure exposures are within the risk parameters of the
group. Intra-day margin calls are made on the clients to reflect market movements on the
client positions and may result in clients being asked to reduce positions. Generally, the
group reserves the right to liquidate any client position immediately in the event of a
failure to meet a margin call. For the year ended March 31, 2009 and March 31, 2008, groups
bad debts as a percentage of broking income were 0.49% and 0.22%, respectively. For clearing
business, the group generally mandates that initial margin be paid by the clients as deposit
before they commence trading. The clients are required to provide collateral as margin to
secure the performance of their obligations.The group employs following techniques to monitor the market environment and clients risk of
default based upon the exposure created by their open positions: -
 
    
    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 does 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 has 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 has 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, 2009
 Within 6
    
    
    6 months
    
    
    2 to 3
    
    
    After 3months
    
    
    to 1 Year
    
    
    years
    
    
    years
    
    
    TotalFinancial LiabilitiesPayable to broker dealers and clearing organizations
    
    
    227,786
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,786Payable to customers
    
    
    985,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    985,075Borrowings
    
    
    781
    
    
    
    781
    
    
    
    3,070
    
    
    
    895
    
    
    
    5,527Accounts payable, accrued expenses, and other
liabilities
    
    
    351,958
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351,9581,565,600
    
    
    
    781
    
    
    
    3,070
    
    
    
    895
    
    
    
    1,570,346
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Within 6
    
    
    6 months
    
    
    2 to 3
    
    
    After 3months
    
    
    to 1 Year
    
    
    years
    
    
    years
    
    
    TotalThe group has at its disposal following financial
assets in addition to unused lines of credit.Cash and Bank balance
    
    
    181,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,616Cash-restricted
    
    
    1,081,574
    
    
    
    1,266,288
    
    
    
    
    
    
    
    
    
    
    
    2,347,862Interest bearing deposits with bank
    
    
    87,495
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    107,495Deposits with clearing organizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,865
    
    
    
    120,865Receivable from broker-dealers and clearing
organizations
    
    
    42,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,228Receivable from customers
    
    
    171,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,993Available-for-sale securities Marketable, at market
value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest accrued but not due
    
    
    102,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,1701,667,076
    
    
    
    1,286,288
    
    
    
    
    
    
    
    120,865
    
    
    
    3,074,229
 Year ended March 31, 2008
 Within 6
    
    
    6 months
    
    
    2 to 3
    
    
    After 3months
    
    
    to 1 Year
    
    
    years
    
    
    years
    
    
    TotalFinancial LiabilitiesPayable to broker dealers and clearing organizations
    
    
    2,984,232
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,984,232Payable to customers
    
    
    2,494,634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,494,634Borrowings
    
    
    100,274
    
    
    
    768
    
    
    
    3,070
    
    
    
    2,430
    
    
    
    106,542Accounts payable, accrued expenses, and other
liabilities
    
    
    682,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    682,2896,261,429
    
    
    
    768
    
    
    
    3,070
    
    
    
    2,430
    
    
    
    6,267,697
 Within 6
    
    
    6 months
    
    
    2 to 3
    
    
    After 3months
    
    
    to 1 Year
    
    
    years
    
    
    years
    
    
    TotalThe group has at its disposal following financial
assets in addition to unused lines of credit.Cash and Bank balance
    
    
    287,465
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,465Cash-restricted
    
    
    2,640,245
    
    
    
    2,774,478
    
    
    
    
    
    
    
    
    
    
    
    5,414,723Interest bearing deposits with bank
    
    
    
    
    
    
    16,500
    
    
    
    
    
    
    
    
    
    
    
    16,500Deposits with clearing organizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,280Interest accrued but not due
    
    
    234,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,1264,608,228
    
    
    
    2,790,978
    
    
    
    
    
    
    
    151,515
    
    
    
    7,550,721
  As at March 31,2009
    
    
    2008Fund based facilities (working capital)
    
    
    350,950
    
    
    
    2,260,000Nonfund facilities
    
    
    402,148
    
    
    
    1,000,075Total
    
    
    753,098
    
    
    
    3,260,075
 173




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##### 



3.2.
    
    Capital risk managementThe objectives of the Group when managing capital are to safeguard the groups ability to
continue as a going concern in order to provide returns for shareholders and to maintain
minimal debt. Capital of the group is equity as shown in the consolidated balance sheet.
The exchange in which the group is a member has stipulated minimum net worth that must be
maintained. In order to maintain or adjust the capital structure, the group may adjust the
amount of dividends to shareholders, issue new shares or sell assets to reduce debt. The
group has embedded in its regulatory compliance framework the necessary test to ensure the
continuous and full compliance with the net worth criteria set by the Exchange at each entity
level. The group has complied with the net worth requirement at each entity level during the
year and as at March 31, 2009 and March 31, 2008.3.3.
    
    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 non-financial 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 the Black-Scholes model and expensed over the vesting period based
on the groups estimate of shares that will eventually vest.
 174




---



##### 



5.
    
    Intangible assets5.1.
    
    Software
 WebComputer
    
    DevelopmentSoftware
    
    Costs
    
    TotalCostAs 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
    
    
    
    258,898Additions
    
    
    12,118
    
    
    
    
    
    
    
    12,118Exchange difference
    
    
    50
    
    
    
    
    
    
    
    50As at March 31, 2009
    
    
    63,614
    
    
    
    207452
    
    
    
    271,066Accumulated amortisationAs 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
    
    
    
    243,218Charge for the year
    
    
    11,733
    
    
    
    
    
    
    
    11,733Exchange difference
    
    
    41
    
    
    
    
    
    
    
    41As at March 31, 2009
    
    
    47,540
    
    
    
    207,452
    
    
    
    254,992Net book amount as atMarch 31, 2009
    
    
    16,074
    
    
    
    
    
    
    
    16,074March 31, 2008
    
    
    15,680
    
    
    
    
    
    
    
    15,680
 5.2.
    
    Membership in ExchangesMembership in exchanges consists of:
 a)
    
    BSE membership of Rs 4,387 as at March 31, 2009 and 2008, andb)
    
    DGCX membership of Rs.5,108 and Rs.4,022 as at March 31, 2009 and 2008,
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 BSEL
 175




---



##### 



Equity 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 the consolidated income statement during the year ended
March 31, 2006.6.
    
    Furniture and equipment
 Furnitureand
    
    
    Computers
    
    
    OfficeFixtures
    
    
    Systems
    
    
    equipments
    
    
    Vehicles
    
    
    TotalCostAs 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
    
    
    
    193,715Additions
    
    
    1,537
    
    
    
    18,243
    
    
    
    15,915
    
    
    
    
    
    
    
    35,695Disposals
    
    
    
    
    
    
    (813
    )
    
    
    
    
    
    
    (6,108
    )
    
    
    (6,921
    )Exchange difference
    
    
    262
    
    
    
    190
    
    
    
    165
    
    
    
    213
    
    
    
    830As at March 31, 2009
    
    
    8,182
    
    
    
    165,061
    
    
    
    36,861
    
    
    
    13,215
    
    
    
    223,319Accumulated
depreciationAs 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
    
    
    
    106,150
    
    
    
    7,038
    
    
    
    6,153
    
    
    
    120,833Charge for the year
    
    
    1,571
    
    
    
    19,780
    
    
    
    2,401
    
    
    
    2,864
    
    
    
    26,616Disposals
    
    
    
    
    
    
    (647
    )
    
    
    
    
    
    
    (4,304
    )
    
    
    (4,951
    )Exchange difference
    
    
    107
    
    
    
    108
    
    
    
    46
    
    
    
    20
    
    
    
    281As at March 31, 2009
    
    
    3,170
    
    
    
    125,391
    
    
    
    9,485
    
    
    
    4,733
    
    
    
    142,779Net book amount as atMarch 31, 2009
    
    
    5,012
    
    
    
    39,670
    
    
    
    27,376
    
    
    
    8,482
    
    
    
    80,540March 31, 2008
    
    
    4,891
    
    
    
    41,291
    
    
    
    13,743
    
    
    
    12,957
    
    
    
    72,882
 7.
    
    Deferred income taxThe movement in deferred tax assets and liabilities during the respective years, is as
follows:
 2009
    
    
    2008At April 1
    
    
    54,682
    
    
    
    47,725Furniture and equipment
    
    
    (867
    )
    
    
    (1,677
    )Provision on receivable from customers
    
    
    994
    
    
    
    229Stock appreciation rights
    
    
    8,200
    
    
    
    4,899Bonus payable
    
    
    (6,528
    )
    
    
    3,442Others
    
    
    (399
    )
    
    
    64At March 31
    
    
    56,082
    
    
    
    54,682Comprised Of:Deferred tax assets
    
    
    56,486
    
    
    
    55,229Deferred tax liabilities
    
    
    (404
    )
    
    
    (547
    )56,082
    
    
    
    54,682
 176




---



##### 



An analysis of the gross deferred tax asset and liability balances is as follows:
 2009
    
    
    2008Deferred tax assets:Furniture and equipment
    
    
    4,282
    
    
    
    5,159Provision on receivable from customers
    
    
    27,147
    
    
    
    26,153Stock appreciation rights
    
    
    15,537
    
    
    
    7,337Bonus payable
    
    
    9,520
    
    
    
    16,048Others
    
    
    
    
    
    
    53256,486
    
    
    
    55,229Deferred tax liabilities:Furniture and equipment
    
    
    (31
    )
    
    
    (41
    )Others
    
    
    (373
    )
    
    
    (506
    )(404
    )
    
    
    (547
    )
 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, 2009, receivables of Rs.9,725 (March 31, 2008: Rs.39,831) 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 31,2009
    
    
    2008Up to 6 months
    
    
    162,268
    
    
    
    890,840more than 6 months
    
    
    9,725
    
    
    
    39,831171,993
    
    
    
    930,671
 As at March 31, 2009, receivables of Rs.80,000 (March 31, 2008: Rs.77,055) were impaired and
provided for. The amount of the provision was Rs.80,000 as at March 31, 2009 (March 31, 2008:
Rs.77,075). Receivables are tested individually for impairment.The ageing of these receivables is as follows:
 As at March 31,2009
    
    
    2008Up to 6 months
    
    
    13,020
    
    
    
    13,061more than 6 months
    
    
    66,980
    
    
    
    63,99480,000
    
    
    
    77,055
 The carrying amounts of the groups receivables are denominated in the following currencies:
 As at March 31,2009
    
    
    2008US dollar
    
    
    
    
    
    
    332,834INR
    
    
    171,993
    
    
    
    597,837171,993
    
    
    
    930,671
 177




---



##### 



Movements on the groups provision for impairment of trade receivables are as follows:
 As at March 31,2009
    
    
    2008
    
    
    2007As at the beginning of the year
    
    
    77,075
    
    
    
    76,400
    
    
    
    3,100Provision for impairment
    
    
    2,925
    
    
    
    675
    
    
    
    73,300As at the closing of the year
    
    
    80,000
    
    
    
    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
(non-interest bearing) within six months from the balance sheet date consist of the
following:
 As of March 31,2009

    2008Receivable
    
    
    Payable
    
    
    Receivable
    
    
    PayableClearing organizations
 Unsettled trade
    
    
    27,760
    
    
    
    29,614
    
    
    
    223,496
    
    
    
    Broker-Dealer
    
    
    14,468
    
    
    
    198,172
    
    
    
    130,945
    
    
    
    2,984,23242,228
    
    
    
    227,786
    
    
    
    354,441
    
    
    
    2,984,232
 10.
    
    Other assets
 As at March 31,2009
    
    
    2008Prepaid expenses
    
    
    28,983
    
    
    
    21,806Advance tax (net of provisions)
    
    
    97,281
    
    
    
    75,479Deposits
    
    
    29,015
    
    
    
    34,462Loans and advances (to staff)
    
    
    10,579
    
    
    
    16,693Gratuity Trust
    
    
    2,343
    
    
    
    Others*
    
    
    21,380
    
    
    
    22,456189,581
    
    
    
    170,896
 
 *
    
    Includes Advances to vendors towards expenses, delayed payment charges from clients,
withholding tax recoverable, etc 178




---



##### 



11.
    
    Cash and bank balanceCash and bank balance consist of:
 As at March 31,2009
    
    
    2008
    
    
    2007Cash in hand
    
    
    20
    
    
    
    21
    
    
    
    1Cash at bank
    
    
    181,596
    
    
    
    287,444
    
    
    
    324,374181,616
    
    
    
    287,465
    
    
    
    324,375
 12.
    
    Cash  restrictedRestricted cash as of March 31, 2009 includes fixed deposits of Rs.351,762 (Rs.1,082,523 as
of March 31, 2008) placed with banks as margins for bank guarantees issued to clearing
organizations and fixed deposits of Rs.1,996,100 (Rs.4,332,200 as of March 31, 2008)
specifically earmarked as liens to clearing organizations towards margins.Excess margin placed in the form of fixed deposits or bank guarantees can be withdrawn by
giving one-day notice to the clearing organizations of the exchange.Bank guarantees outstanding are Rs.797,602 as at March 31, 2009 (2008: Rs.1,938,489). Bank
guarantees are generally provided to the Exchanges for the purposes of Margins. An exchange
may revoke these guarantees if they suffer any losses or damage through the breach of any of
the covenants contained in the agreements.13.
    
    Share capital and Dividend distribution
 As at March 31,2009
    
    
    2008Authorised capital
65,000,000 ordinary shares of Rs.10/- per share
    
    
    650,000
    
    
    
    650,000
 As at March 31, 2009, 51,894,182 ordinary shares (March 31, 2008: 51,894,182 ordinary shares)
of Rs.10/- each, issued and fully paidup.Dividend distributionDividends payable to equity shareholders are based on the net income available for
distribution as reported in the standalone financial statements of MF Global Sify prepared
in accordance with Indian GAAP. As such, dividends are declared and paid in Indian Rupees.
The net income in accordance with IFRS may, in certain years, either not be fully available
or will be additionally available for distribution to equity shareholders.Under the Companies Act, 1956 of India dividends may be paid out of the profits of a company
in the year in which the dividend is declared or out of the undistributed profits of
previous fiscal years. Before declaring a dividend greater than 10% of the par value of its
equity shares, a company is required to transfer to its reserves a minimum percentage of its
profits for that year, ranging from 2.5% to 10%, depending on the dividend percentage to be
declared in such year. Dividends declared are subject to a dividend distribution tax of
16.99%.
 179




---



##### 



14.
    
    Sharebased payments
 Employees Stock Appreciation SchemeThe group had introduced the Stock Appreciation Rights Plan 2006  (SARs Plan 2006),
Stock Appreciation Rights Plan 2007 (SARS Plan 2007) and and Stock Appreciation Rights
Plan 2008 (SARS Plan 2008) during the years ended March 31, 2007, March 31, 2008 and March
31, 2009, respectively, and granted stock appreciation rights to eligible employees. The
group believes that such awards better align the interests of its employees with those of its
shareholders. The stock appreciation rights vest with the employee and are settled in cash on
the day following the fourth anniversary of the grant date. The exercise price for the grant
is Rs. Nil. SARs are accounted as cash settled share-based payments.The group has granted a total of 711,247 SARs under the SARs Plan 2006, 809,500 SARs
under the SARs Plan 2007 and 1,386,000 SARs under the SARs Plan 2008 to the employees. The
weighted-average grant date fair value of SARs was Rs.34, Rs.82 and Rs.66 for SARs Plan 2006,
SARs plan 2007 and SARs plan 2008, respectively. The forfeited SARs are reissued to the other
eligible employees, where the vesting period is from the date of reissue to the vesting date
as per the initial grant of SARs.The Company has carried out an independent fair valuation of the stock appreciation
rights as of March 31, 2009. The total unrecognized compensation costs relating to SARs to be
recognized in future over the remaining vesting period is estimated to be Rs.144,440,
Rs.101,449 and Rs.22,425 as of March 31, 2009, March 31, 2008 and March 31, 2007,
respectively.The fair value of each SARs is estimated on the date of grant using a Black-Scholes
valuation model that uses the following variables:Stock Price: Current value of the underlying asset is derived through a valuation
exercise, wherein the profit earning capacity has been considered as an appropriate method of
valuation.Exercise price: As per the plan grant price of the SARs is Rs.NILThe Company has no past track record for dividend payments. Hence, a zero percent
dividend yield has been assumed for the purpose of the valuation.Changes in number of SARs representing stock options outstanding were as follows:
 As at March 31,2009
    
    
    2008
    
    
    2007As at the beginning of the year
    
    
    1,512,747
    
    
    
    711,247
    
    
    
    Granted during the year
    
    
    1,386,000
    
    
    
    809,500
    
    
    
    711,247Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (111,500
    )
    
    
    (62,000
    )Reissued
    
    
    111,500
    
    
    
    54,000
    
    
    
    Lapsed
    
    
    
    
    
    
    
    
    
    
    As at the end of the year
    
    
    2,898,747
    
    
    
    1,512,747
    
    
    
    711,247Exercisable at the end of the year
    
    
    
    
    
    
    Approximate remaining vesting period in years
    
    
    2.98
    
    
    
    3.92
    
    
    
    3.00
 180




---



##### 



Co-investment planThe co-investment plan allows selected senior employees of Man Group Plc, including
those of MF, to use a portion of their cash bonus to purchase shares of Man Group Plc for
investment within the plan. Shares held as investment within the plan for at least three
years are matched by four shares of Man Group Plc. The plan limits the total value that can
be received by a participant at 100% of their cash bonus, including both of their original
investment in the plan and matching shares of Man Group Plc.MF requested Man Group Plc for application to co-investment plan for certain senior
employees. Man Group Plc consented and framed an India sub-plan (Plan) of the co-investment
scheme, which was approved by the board of Man Group on May 31, 2006.During the year ended March 31, 2007, 4476 shares of Man Group Plc were purchased by MF
for its senior employees as a part of the Plan by contributing an amount of USD 200,000
(Rs.8,833 thousand) to ED & F Man Group (No.2) Employees Trust, which in turn issued 27,300
matching shares with a weighted-average grant date fair value of $ 6.84 to be held in
trust. There was no forfeiture, vesting or exercise of the grant during the year. The total
unrecognized compensation to be expensed is Rs.2,208. MF is no longer a part of Man Group
plc. and has not participated in the co-investment plan during the year ended March 31, 2009
and March 31, 2008.15.
    
    Borrowings
 Effective
    
    
    As at March 31,interest rate
    
    
    2009
    
    
    2008Bank overdraft (Unsecured)
    
    
    15
    %
    
    
    
    
    
    
    99,507Car Loan (Secured)
    
    
    10
    %
    
    
    4,645
    
    
    
    5,5524,645
    
    
    
    105,059
 Aggregate maturities of the borrowings are as follows:
 As at March 31,2009
    
    
    2008On demand or within one year
    
    
    1,156
    
    
    
    100,441In one to three years
    
    
    2,622
    
    
    
    2,376In three to five years
    
    
    867
    
    
    
    2,2424,645
    
    
    
    105,059
 16.
    
    Employee benefit obligation
 Years ended March 31,2009
    
    
    2008
    
    
    2007Gratuity
    
    
    844
    
    
    
    1,772
    
    
    
    2,260Stock appreciation rights
    
    
    46,851
    
    
    
    22,616
    
    
    
    7,45147,695
    
    
    
    24,388
    
    
    
    9,711
 The movement in the defined benefit obligation of gratuity over the period is as follows:
 Years ended March 31,2009
    
    
    2008
    
    
    2007Opening defined benefit obligation
    
    
    9,458
    
    
    
    6,287
    
    
    
    4,131Current service cost
    
    
    3,000
    
    
    
    3,110
    
    
    
    2,214Interest cost
    
    
    755
    
    
    
    505
    
    
    
    296Actuarial losses/ (gains)
    
    
    (3,471
    )
    
    
    (444
    )
    
    
    (354
    )Benefits paid
    
    
    (42
    )
    
    
    
    
    
    
    Closing defined benefit obligation
    
    
    9,700
    
    
    
    9,458
    
    
    
    6,287
 181




---



##### 



The movement in the fair value of plan assets of the year is as follows:
 Years ended March 31,2009
    
    
    2008
    
    
    2007Beginning of year
    
    
    7,686
    
    
    
    4,027
    
    
    
    2,264Expected return on plan assets
    
    
    832
    
    
    
    321
    
    
    
    210Actuarial (losses)/gains
    
    
    (129
    )
    
    
    32
    
    
    
    Employer contributions
    
    
    2,853
    
    
    
    3,306
    
    
    
    1,553Benefits paid
    
    
    (42
    )
    
    
    
    
    
    
    Closing fair value of plan assets
    
    
    11,200
    
    
    
    7,686
    
    
    
    4,027
 The amounts recognised in the income statement in respect of gratuity are as follows:
 Years ended March 31,2009
    
    
    2008
    
    
    2007Current service cost
    
    
    3,000
    
    
    
    3,153
    
    
    
    2,214Interest cost
    
    
    755
    
    
    
    505
    
    
    
    296Actuarial loss
    
    
    (3,342
    )
    
    
    (537
    )
    
    
    Expected return on plan asset
    
    
    (832
    )
    
    
    (321
    )
    
    
    (170
    )(419
    )
    
    
    2,800
    
    
    
    2,340
 The principal actuarial assumptions used were as follows:
 Years ended March 31,2009
    
    
    2008
    
    
    2007Discount rate
    
    
    8
    %
    
    
    8
    %
    
    
    8
    %Expected return on plan assets
    
    
    9.15
    %
    
    
    8
    %
    
    
    8
    %Long term rate of compensation increase
    
    
    6
    %
    
    
    6
    %
    
    
    6
    %
 Mortality rates at various age groups are taken as per 1994-96 Life Insurance Corporation (LIC) Ultimate table.
 182




---



##### 



17.
    
    Accounts payables, accrued expenses and other liabilities
 As at March 31,2009
    
    
    2008
    
    
    2007Accruals
    
    
    35,541
    
    
    
    42,205
    
    
    
    62,425Withholding tax payable
    
    
    52,060
    
    
    
    147,729
    
    
    
    63,925Bonus Payable
    
    
    126,350
    
    
    
    307,076
    
    
    
    152,164Other payables
    
    
    138,007
    
    
    
    185,279
    
    
    
    82,226Total
    
    
    351,958
    
    
    
    682,289
    
    
    
    360,740
 18.
    
    Other Expenses
 Years ended March 31,2009
    
    
    2008
    
    
    2007Professional Fees
    
    
    10,590
    
    
    
    17,562
    
    
    
    14,465Travelling and conveyance
    
    
    15,872
    
    
    
    18,844
    
    
    
    15,388Books & Periodicals, Postage, printing and stationary
    
    
    33,466
    
    
    
    46,284
    
    
    
    33,958Loss on account of error trades (net)
    
    
    12,452
    
    
    
    30,818
    
    
    
    21,988Repairs & maintenance
    
    
    2,717
    
    
    
    708
    
    
    
    1,687Service fee expenses
    
    
    15,735
    
    
    
    22,222
    
    
    
    1,713Insurance Premium
    
    
    19,801
    
    
    
    3,632
    
    
    
    1,354Others
    
    
    15,060
    
    
    
    11,894
    
    
    
    9,940Total
    
    
    125,693
    
    
    
    151,964
    
    
    
    100,493
 19.
    
    Employee benefit expense
 Years ended March 312009
    
    
    2008
    
    
    2007Salaries and bonus
    
    
    483,382
    
    
    
    720,070
    
    
    
    437,135Defined contribution plans
    
    
    3,968
    
    
    
    3,828
    
    
    
    3,617Defined benefit plans
    
    
    285
    
    
    
    2,800
    
    
    
    2,340Staff welfare expenses
    
    
    2,896
    
    
    
    3,688
    
    
    
    2,787Sharebased compensation expense
    
    
    23,973
    
    
    
    15,218
    
    
    
    7,455Fringe benefit tax
    
    
    730
    
    
    
    169
    
    
    
    154Total
    
    
    515,234
    
    
    
    745,773
    
    
    
    453,488
 20.
    
    Other income
 Years ended March 31,2009
    
    
    2008
    
    
    2007Profit on sale of available-for-sale securities
    
    
    6,724
    
    
    
    51,816
    
    
    
    Delayed payment charges
    
    
    39,215
    
    
    
    52,622
    
    
    
    28,719Research fees
    
    
    2,824
    
    
    
    7,861
    
    
    
    1,587Referral fees
    
    
    51,990
    
    
    
    20,527
    
    
    
    9,741Interest and dividend
    
    
    5,341
    
    
    
    11,708
    
    
    
    19,917Miscellaneous income
    
    
    32,577
    
    
    
    21,131
    
    
    
    21,881Total
    
    
    138,671
    
    
    
    165,665
    
    
    
    81,845
 183




---



##### 



21.
    
    Income tax expense
 Years ended March 31,2009
    
    
    2008
    
    
    2007Current tax
    
    
    127,269
    
    
    
    360,626
    
    
    
    138,650Deferred tax
    
    
    (894
    )
    
    
    (6,957
    )
    
    
    (34,820
    )126,375
    
    
    
    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:
 Years ended March 31,2009
    
    
    2008
    
    
    2007Net income before taxes
    
    
    343,292
    
    
    
    959,924
    
    
    
    308,256Enacted tax rates in India
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.66
    %Computed tax expense
    
    
    116,685
    
    
    
    326,278
    
    
    
    103,759Income exempt from tax:Dividend
    
    
    (57
    )
    
    
    (198
    )
    
    
    (3174
    )Non-deductible expenses:Contribution to co-investment plan
    
    
    751
    
    
    
    751
    
    
    
    2,973Security transaction tax not allowable
    
    
    
    
    
    
    3,022
    
    
    
    Others including donations, FBT, etc.
    
    
    1,275
    
    
    
    1,335
    
    
    
    935Recharges by parent and affiliate companies
    
    
    8,498
    
    
    
    
    
    
    
    Provision for disallowance of previous year expenses
    
    
    
    
    
    
    26,675
    
    
    
    Income charged at lower rate
    
    
    
    
    
    
    (2,536
    )
    
    
    (Gain) / Loss in Subsidiaries
    
    
    (1,123
    )
    
    
    491
    
    
    
    352Others
    
    
    346
    
    
    
    (2,149
    )
    
    
    (1,015
    )Income taxes recognized in the statement of income
    
    
    126,375
    
    
    
    353,669
    
    
    
    103,830
 22.
    
    Financial instruments by categoryThe accounting policies for financial instruments have been applied to the line items below:
 Loans and
    
    
    AvailableMarch 31, 2009
    
    receivables
    
    
    for sale
    
    
    TotalAssets as per balance sheetCash and Bank balance
    
    
    181,616
    
    
    
    
    
    
    
    181,616Cash-restricted
    
    
    2,347,862
    
    
    
    
    
    
    
    2,347,862Interest bearing deposits with bank
    
    
    107,495
    
    
    
    
    
    
    
    107,495Deposits with clearing organizations and others
    
    
    120,865
    
    
    
    
    
    
    
    120,865Receivable from broker-dealers and clearing organizations
    
    
    42,228
    
    
    
    
    
    
    
    42,228Receivable from customers
    
    
    171,993
    
    
    
    
    
    
    
    171,993Available-for-sale securities:Marketable, at market value
    
    
    
    
    
    
    
    
    
    
    Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    9,920
    
    
    
    9,920Interest accrued but not due
    
    
    102,170
    
    
    
    
    
    
    
    102,170Other assets
    
    
    189,581
    
    
    
    
    
    
    
    189,5813,263,810
    
    
    
    9,920
    
    
    
    3,273,730
 184




---



##### 



OtherfinancialMarch 31, 2009
    
    liabilities
    
    
    TotalLiabilities as per balance sheetPayable to broker dealers and clearing organizations
    
    
    227,786
    
    
    
    227,786Payable to customers
    
    
    985,075
    
    
    
    985,075Borrowings
    
    
    4,645
    
    
    
    4,645Accounts payable, accrued expenses, and other liabilities
    
    
    351,958
    
    
    
    351,9581,569,464
    
    
    
    1,569,464
 Loans and
    
    
    AvailableMarch 31, 2008
    
    receivables
    
    
    for sale
    
    
    TotalAssets 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
    
    
    170,896
    
    
    
    
    
    
    
    170,8967,560,337
    
    
    
    181,673
    
    
    
    7,742,010
 OtherfinancialMarch 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
 The carrying amounts reported in the balance sheet for cash and cash equivalents,
receivables, amounts due to or from related parties, accounts payable and other liabilities
approximate their respective fair values due to their short maturity.
 23.
    
    Commitments and contingencies
 a)
    
    Operating lease commitments  MF as lessee
 185




---



##### 



The group has obligations under long term operating leases with initial non-cancelable terms
in excess of one year. Aggregate annual rentals for office space as of March 31, 2009, are
approximately as listed below:
 As at March 31, 2009Not later than 1 year
    
    
    61,067Later than 1 year and not later than 5 years
    
    
    71,636Later than 5 years
    
    
    Total minimum lease commitments
    
    
    132,703
 Rent expense for the current year aggregated to Rs.56,174 (2008: Rs27,982) and is included in
the occupancy expense line item on the consolidated statements of income.
 b)
    
    Contingencies
 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.24.
    
    Related party transactionsThe share capital of MF is held jointly by MF Global Overseas Ltd. (UK) and Sify Technologies
Ltd. The ultimate holding company of MF Global Sify is MF Global Ltd. (Bermuda).
 a)
    
    Transactions involving services
 Years ended March 31,2009
    
    
    2008
    
    
    2007Services provided by MF toHolding companies & Parties having substantial interestReimbursement of Expenses
    
    
    3,205
    
    
    
    
    
    
    
    Fellow Subsidiary CompaniesReferral Fees
    
    
    51,992
    
    
    
    20,527
    
    
    
    9,741Reimbursement of Expenses
    
    
    5,185
    
    
    
    
    
    
    
    Service Fees (included in miscellaneous income)
    
    
    8,715
    
    
    
    
    
    
    
    69,097
    
    
    
    20,527
    
    
    
    9,741Services received by MF fromHolding companies & Parties having substantial interestReimbursement of Expenses
    
    
    
    
    
    
    
    
    
    
    2,303Service Fees
    
    
    9,349
    
    
    
    8,263
    
    
    
    Bank Guarantee Commission
    
    
    1,692
    
    
    
    14,616
    
    
    
    Insurance Premium
    
    
    17,842
    
    
    
    
    
    
    
    Purchase / AMC of Computer Hardware
    
    
    6,600
    
    
    
    
    
    
    
    Fellow Subsidiary CompaniesReimbursement of Expenses
    
    
    
    
    
    
    2,780
    
    
    
    870Service Fees
    
    
    6,386
    
    
    
    13,998
    
    
    
    Membership & Subscription
    
    
    
    
    
    
    3,447
    
    
    
    Insurance Premium
    
    
    
    
    
    
    1,809
    
    
    
    Lease Line Charges
    
    
    1,675
    
    
    
    1,346
    
    
    
    IB Commission Expense
    
    
    1,454
    
    
    
    
    
    
    
    Interest Expense
    
    
    1,039
    
    
    
    
    
    
    
    Others
    
    
    247
    
    
    
    
    
    
    
    46,284
    
    
    
    46,259
    
    
    
    3,173Loan taken and repaid
    
    
    270,000
    
    
    
    
    
    
    
    
 186




---



##### 



b)
    
    Key management compensation
 Years ended March 31,2009
    
    
    2008
    
    
    2007Salaries and other short-term employee benefits
    
    
    63,112
    
    
    
    170,488
    
    
    
    70,734Other long-term benefits (Co-Investment Plan)
    
    
    2,208
    
    
    
    2,208
    
    
    
    2,208Share-based payments
    
    
    5,420
    
    
    
    6,824
    
    
    
    1.90170,740
    
    
    
    179,520
    
    
    
    74,843
 c)
    
    Year-end balances arising from transactions involving services
 As at March 31,2009
    
    
    2008Due To Related PartiesMF Global Ltd. (Bermuda)
    
    
    58,139
    
    
    
    23,038MF Global UK Ltd.
    
    
    37,859
    
    
    
    13,755MF Global Inc. DE
    
    
    577
    
    
    
    454MF Global Holdings USA Inc.
    
    
    2,298
    
    
    
    1,809MF Global Singapore Pte Ltd.
    
    
    1,582
    
    
    
    3,313MF Global Holdings HK Ltd.
    
    
    
    
    
    
    1,346100,455
    
    
    
    43,715
 187




---



##### 



As at March 31,2009
    
    
    2008Due from Related PartiesMF Global Inc. DE
    
    
    2,497
    
    
    
    7,344MF Global Mauritius Pvt. Ltd.
    
    
    408
    
    
    
    43MF Global Singapore Pte Ltd.
    
    
    1,427
    
    
    
    107MF Global Holdings HK Ltd.
    
    
    155
    
    
    
    7MF Global UK Ltd.
    
    
    1,172
    
    
    
    465MF Global Overseas Ltd.
    
    
    3,204
    
    
    
    MF Global Capital Services India Pvt. Ltd.
    
    
    2,592
    
    
    
    2,592MF Global India Pvt. Ltd.
    
    
    947
    
    
    
    MF Global Centralised Services India Pvt. Ltd.
    
    
    66
    
    
    
    12,468
    
    
    
    10,558
 d)
    
    Loans and advances to key management personnel
 Years ended March 31,2009
    
    
    2008At the beginning of the year
    
    
    259
    
    
    
    1,150Advances during the year
    
    
    989
    
    
    
    1,999Repayments during the year
    
    
    (971
    )
    
    
    (2,890
    )At the end of the year
    
    
    277
    
    
    
    259
  For and on behalf of the Board
 Vineet Bhatnagar
 188




---



##### 



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
Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository
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 Depository
Shares evidenced by American Depository 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 Depository
Shares evidenced by American Depository 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(erstwhile subsidiary). (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 (14)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)4.10
    
    Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15)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 Officer
 189




---



##### 



Number
    
    Description12.2
    
    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
 
 (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.(14)
    
    Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on
October 11, 2008 and incorporated herein by reference(15)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January
23, 2009 and incorporated herein by reference 190




---



##### 



SIGNATURES
  SIFY TECHNOLOGIES LIMITEDBy:
Name:
    
    /s/ Raju Vegesna

Raju VegesnaTitle:
    
    Chief Executive OfficerBy:
Name:
    
    /s/ M P Vijay Kumar

M P Vijay KumarDate: September 28, 2009
    
    Title:
    
    Chief Financial Officer
 191




---



##### 



Item 19. Exhibits (continued)
 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
Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository
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 Depository
Shares evidenced by American Depository 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 Depository
Shares evidenced by American Depository 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(erstwhile subsidiary). (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 (14)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)4.10
    
    Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15)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 Officer
 192




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##### 



Number
    
    Description12.2
    
    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
 
 (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.(14)
    
    Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on
October 11, 2008 and incorporated herein by reference(15)
    
    Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January
23, 2009 and incorporated herein by reference 
 193