##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F/A

(Amendment No. 1)

(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

Or



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -------------------------------------------------------------------------------------

For the fiscal year ended March 31, 2012.

Or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -----------------------------------------------------------------------------------------

For the transition period from
                    to



| ̈ | 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)



|              
|--------------
|Not Applicable

(Translation at Registrants name into English)



|                          
|--------------------------
|Chennai, Tamil Nadu, India

(Jurisdiction of incorporation or organization)



|                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------
|Tidel Park, 2nd Floor 4, Rajiv Gandhi Salai Taramani, Chennai 600 113 India
(91) 44-2254-0770, Fax (91) 44 -2254 0771

(Address of principal executive office)



|                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|M.P.Vijay Kumar, Chief Financial Officer, (91) 44-2254-0770;
vijaykumar.mp@sifycorp.com Tidel Park, 2nd Floor, 4, Rajiv Gandhi Salai, Taramani, Chennai 600113
India

(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 registered
|American Depository Shares, each represented by
One Equity Share, par value Rs.10 per share |  |  |  | NASDAQ Global Select Market              

Securities registered or to be registered pursuant to Section 12(g) of the Act



|                    |  |  |  |                                          
|------------------- |  |  |  | -----------------------------------------
|Title of each class |  |  |  | Name of each Exchange on which registered
|None                |  |  |  | Not Applicable                           

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act



|              
|--------------
|Not Applicable

(Title of class)

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.

178,513,589 Equity Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.    Yes   ̈    No  x

NoteChecking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those
Sections.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.YesxNo   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   ̈    No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated
filer   ̈                 Accelerated
filerx                 Non-accelerated
filer   ̈

Indicate by check mark which basis of accounting the registrant has used
to prepare the financial statements included in this filing:



|           |  |                                                                                                       |  |         
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|US GAAP   ̈ |  | International Financial Reporting Standards as issued by the International Accounting Standard
Boardx |  | Other   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2
of the Exchange Act).    Yes ̈No  x









---

##### Table of Contents

EXPLANATORY NOTE

This Amendment No. 1 on Form 20-F/A (this Amendment No. 1) to the Annual Report on Form 20-F for the year ended
March 31, 2012, filed with the Securities and Exchange Commission on August 13, 2012 (the Original Form 20-F) by Sify Technologies Limited (the Company), is filed solely to file a correct copy of the
final audit report of Price Waterhouse related to the consolidated financial statements of MF Global Sify Securities India Private Limited and its subsidiaries as of March 31, 2010. As required by Rule 12b-15 under the Securities Exchange Act of
1934, as amended, new certifications by our Chief Executive Officer and Chief Financial Officer are being filed as exhibits to this Amendment No.1 under Item 19.

Other than as described above, this Amendment No.1 does not, and does not purport to, amend, update or restate any other information or disclosure included in the Original Form 20-F or reflect any events
that have occurred after the filing date of the Original Form 20-F. Among other things, forward-looking statements contained in the Original Form 20-F have not been revised to reflect events, results or developments that occurred or facts that
became known to us after the original filing date, and such forward-looking statements should be read in their historical context.



---

##### Table of Contents

Table of Contents



|                              |  |      |     | 
|----------------------------- |  | ---- | --- | 
|Item                          |  | Page |    
|Item 18. Financial Statements |  |      | 96  | 
|Item 19. Exhibits             |  |      | 194 | 



i



---

##### Table of Contents

|Item 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Consolidated Statements and other Financial Information



96



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Sify
Technologies Limited

We have audited the accompanying consolidated statements of financial position of Sify Technologies Limited and
subsidiaries (the Company) as of March 31, 2012 and 2011 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years ended March 31, 2012 and 2011. These consolidated
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements, based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, based on our audit, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Sify Technologies Limited and subsidiaries as of March 31, 2012 and 2011 and the results of their operations and their cash flows for the years ended March 31, 2012 and 2011, in conformity with the International Financial
Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), Sify Technologies Limiteds internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated August 13, 2012 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

We also have audited the reclassification adjustments to the consolidated financial statements for the year ended March 31, 2010 to
retrospectively apply the change in presentation described in note 34 under the heading Reorganization of business segments. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to
audit, review, or apply any procedures to the consolidated financial statements for year ended March 31, 2010 of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of
assurance on the consolidated financial statements for the year ended March 31, 2010 taken as a whole.

ASA & Associates

Independent Registered Public Accounting Firm

Chennai, India

August 13, 2012



97



---

##### Table of Contents

Report of KPMG, Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Sify
Technologies Limited

We have audited, before the effects of the adjustments to retrospectively revise the segment disclosures as described in
note 34 under the heading reorganization of business segments, the accompanying consolidated statements of income, comprehensive income, changes in equity and cash flows of Sify Technologies Limited and subsidiaries (the
Company) for the year ended March 31, 2010. The 2010 segment disclosures before the effects of the retrospective adjustments as discussed in note 34 under the heading reorganization of business segments are not presented
herein. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements, based on our audit. We did not audit the consolidated
financial statements of MF Global Sify Securities Private Limited (MF Global), (a 29.85% percent owned investee company). The Companys equity in earnings of MF Global was Rs.91,135 (in thousands) for the year ended March 31, 2010. The
consolidated financial statements of MF Global were audited by other auditors whose report has been furnished to us, and our opinion, in so far as it relates to the amounts included for MF Global, is based solely on the report of the other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of the
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the 2010
consolidated financial statements referred to above, before the effects of the adjustments to retrospectively revise the segment disclosures as described in note 34 under the heading reorganization of business segments present
fairly, in all material respects, the results of the operations and cash flows of Sify Technologies Limited and subsidiaries for the year ended March 31, 2010, in conformity with the International Financial Reporting Standards as issued by the
International Accounting Standards Board.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively
revise the segment disclosures as described in note 34 under the heading reorganization of business segments, and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are
appropriate and have been properly applied. Those adjustments were audited by a successor auditor.

KPMG

Chennai, India

November 30, 2010



98



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Financial Position

(In thousands of Rupees, except share data
and as otherwise stated)



|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|---------------------------------------------------------- |  | ---- | --------------- |  | ------- | --------------- | ----------- | ------- |  |  | ----------------------------------------------- | - |  |  | -------- | -
|                                                           |  |      | As at March 31, |  |         | As at March 31, |            
|                                                           |  | Note |                 |  | 2012 Rs |                 |             | 2011 Rs |  |  | 2012 Convenience translation into
US$ thousands |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  | (Unaudited) Note 2(c)                           |  
|Assets                                                     |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Property, plant and equipment                              |  |      | 5               |  |         |                 | 3,860,287   |         |  |  | 3,760,473                                       |   |  |  | 75,455   |  
|Intangible assets                                          |  |      | 6               |  |         |                 | 105,727     |         |  |  | 104,626                                         |   |  |  | 2,067    |  
|Investment in equity accounted investee                    |  |      | 7               |  |         |                 |            |         |  |  | 702,363                                         |   |  |  |         |  
|Lease prepayments                                          |  |      | 9               |  |         |                 | 364,190     |         |  |  | 63,068                                          |   |  |  | 7,119    |  
|Other assets                                               |  |      | 10              |  |         |                 | 1,073,479   |         |  |  | 672,843                                         |   |  |  | 20,983   |  
|Other investments                                          |  |      | 15              |  |         |                 | 160         |         |  |  | 160                                             |   |  |  | 3        |  
|Deferred tax assets                                        |  |      | 11              |  |         |                 |            |         |  |  |                                                |   |  |  |         |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Total non-current assets                                   |  |      |                 |  |         |                 | 5,403,843   |         |  |  | 5,303,533                                       |   |  |  | 105,627  |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Inventories                                                |  |      | 12              |  |         |                 | 20,259      |         |  |  | 15,637                                          |   |  |  | 396      |  
|Trade and other receivables, net                           |  |      | 13              |  |         |                 | 3,335,223   |         |  |  | 3,185,913                                       |   |  |  | 65,192   |  
|Prepayments for current assets                             |  |      | 14              |  |         |                 | 198,033     |         |  |  | 190,191                                         |   |  |  | 3,871    |  
|Restricted cash                                            |  |      | 8               |  |         |                 | 150,533     |         |  |  | 84,538                                          |   |  |  | 2,942    |  
|Cash and cash equivalents                                  |  |      | 8               |  |         |                 | 742,235     |         |  |  | 458,559                                         |   |  |  | 14,508   |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Current assets before non-current asset held for sale      |  |      |                 |  |         |                 | 4,446,283   |         |  |  | 3,934,838                                       |   |  |  | 86,909   |  
|Non-current asset held for sale                            |  |      | 7               |  |         |                 | 732,692     |         |  |  |                                                |   |  |  | 14,322   |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Total current assets                                       |  |      |                 |  |         |                 | 5,178,975   |         |  |  | 3,934,838                                       |   |  |  | 101,231  |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Total assets                                               |  |      |                 |  |         |                 | 10,582,818  |         |  |  | 9,238,371                                       |   |  |  | 206,858  |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Equity                                                     |  |      | 16              |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Share capital                                              |  |      |                 |  |         |                 | 1,329,203   |         |  |  | 858,832                                         |   |  |  | 25,981   |  
|Share premium                                              |  |      |                 |  |         |                 | 18,267,148  |         |  |  | 17,216,121                                      |   |  |  | 357,059  |  
|Share based payment reserve                                |  |      |                 |  |         |                 | 221,710     |         |  |  | 190,325                                         |   |  |  | 4,334    |  
|Other components of equity                                 |  |      |                 |  |         |                 | 22,781      |         |  |  | 7,365                                           |   |  |  | 445      |  
|Accumulated deficit                                        |  |      |                 |  |         |                 | (13,990,188 | )       |  |  | (13,606,851                                     | ) |  |  | (273,460 | )
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Total equity attributable to equity holders of the Company |  |      |                 |  |         |                 | 5,850,654   |         |  |  | 4,665,792                                       |   |  |  | 114,359  |  
|                                                           |  |      |                 | 
|Non-controlling interest                                   |  |      |                 |  |         |                 |            |         |  |  |                                                |   |  |  |         |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  
|Total equity                                               |  |      |                 |  |         |                 | 5,850,654   |         |  |  | 4,665,792                                       |   |  |  | 114,359  |  
|                                                           |  |      |                 |  |         |                 |             |         |  |  |                                                 |   |  |  |          |  



99



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Financial Position

(In thousands of Rupees, except share data
and as otherwise stated)



|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|---------------------------------------------------------- |  | ---- | --------------- |  | ------- | --------------- | ---------- | ------- |  |  | ---------------------------------------------------- |  |  |  | ------- | 
|                                                           |  |      | As at March 31, |  |         | As at March 31, |           
|                                                           |  | Note |                 |  | 2012 Rs |                 |            | 2011 Rs |  |  | 2012 Convenience                                     | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  | translation into
US$ thousands
(Unaudited)
Note 2(c) | 
|Liabilities                                                |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Finance lease obligations, other than current installments |  |      | 17              |  |         |                 | 101,141    |         |  |  | 127,746                                              |  |  |  | 1,977   | 
|Borrowings                                                 |  |      | 20              |  |         |                 | 186,312    |         |  |  | 262,608                                              |  |  |  | 3,642   | 
|Employee benefits                                          |  |      | 18              |  |         |                 | 50,066     |         |  |  | 47,788                                               |  |  |  | 979     | 
|Other liabilities                                          |  |      | 19              |  |         |                 | 211,504    |         |  |  | 163,245                                              |  |  |  | 4,134   | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Total non-current liabilities                              |  |      |                 |  |         |                 | 549,023    |         |  |  | 601,387                                              |  |  |  | 10,732  | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Finance lease obligations, current installments            |  |      | 17              |  |         |                 | 75,785     |         |  |  | 60,507                                               |  |  |  | 1,481   | 
|Borrowings                                                 |  |      | 20              |  |         |                 | 543,031    |         |  |  | 1,035,802                                            |  |  |  | 10,614  | 
|Bank overdraft                                             |  |      | 8               |  |         |                 | 798,180    |         |  |  | 678,901                                              |  |  |  | 15,602  | 
|Trade and other payables                                   |  |      | 21              |  |         |                 | 2,382,352  |         |  |  | 1,783,388                                            |  |  |  | 46,568  | 
|Deferred income                                            |  |      | 22              |  |         |                 | 383,793    |         |  |  | 412,594                                              |  |  |  | 7,502   | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Total current liabilities                                  |  |      |                 |  |         |                 | 4,183,141  |         |  |  | 3,971,192                                            |  |  |  | 81,767  | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Total liabilities                                          |  |      |                 |  |         |                 | 4,732,164  |         |  |  | 4,572,579                                            |  |  |  | 92,499  | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 
|Total equity and liabilities                               |  |      |                 |  |         |                 | 10,582,818 |         |  |  | 9,238,371                                            |  |  |  | 206,858 | 
|                                                           |  |      |                 |  |         |                 |            |         |  |  |                                                      |  |  |  |         | 

The accompanying notes form an integral part of these consolidated financial statements



100



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Income

(In thousands of Rupees, except share data and as
otherwise stated)

|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|------------------------------------------------- |  | ---- | ----- |  | -------------------- |  | ---------- | ------------------- |  |  | ---------- | - |  | --------------------------------------------------- | ---------- | - |  |  | ------- | -
|                                                  |  |      |       |  | Year ended March 31, |  |            | Year endedMarch 31, | 
|                                                  |  | Note |       |  | 2012 Rs              |  |            | 2011 Rs             |  |  | 2010 Rs    |   |  | 2012 Convenience                                    |           
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  | translation into
US$ thousands
(Unaudited)
Note2(c) |           
|Revenue                                           |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
| Rendering of services                           |  |      |       |  |                      |  | 6,809,663  |                     |  |  | 6,283,569  |   |  |                                                     | 5,657,140  |   |  |  | 133,105 |  
| Sale of products                                |  |      |       |  |                      |  | 889,286    |                     |  |  | 603,060    |   |  |                                                     | 1,053,048  |   |  |  | 17,382  |  
|Total                                             |  |      | 23    |  |                      |  | 7,698,949  |                     |  |  | 6,886,629  |   |  |                                                     | 6,710,188  |   |  |  | 150,487 |  
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Cost of goods sold and services rendered          |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|                                                  |  |      |       |  |                     
| Rendering of services                           |  |      |       |  |                      |  | (3,841,219 | )                   |  |  | (3,655,994 | ) |  |                                                     | (3,157,472 | ) |  |  | (75,082 | )
| Sale of products                                |  |      |       |  |                      |  | (819,554   | )                   |  |  | (553,436   | ) |  |                                                     | (939,066   | ) |  |  | (16,019 | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Total                                             |  |      | 25    |  |                      |  | (4,660,773 | )                   |  |  | (4,209,430 | ) |  |                                                     | (4,096,538 | ) |  |  | (91,101 | )
|Other income                                      |  |      | 26    |  |                      |  | 37,377     |                     |  |  | 72,693     |   |  |                                                     | 131,789    |   |  |  | 731     |  
|                                                  |  |      |       |  |                     
|Selling, general and administrative expenses      |  |      | 28    |  |                      |  | (2,547,209 | )                   |  |  | (2,441,799 | ) |  |                                                     | (2,482,415 | ) |  |  | (49,789 | )
|Depreciation and amortization                     |  |      | 5 & 6 |  |                      |  | (691,560   | )                   |  |  | (685,836   | ) |  |                                                     | (656,797   | ) |  |  | (13,518 | )
|                                                  |  |      |       |  |                     
|Impairment loss on intangibles including goodwill |  |      | 6     |  |                      |  |           |                     |  |  | (1,857     | ) |  |                                                     | (47,269    | ) |  |  |        |  
|                                                  |  |      |       |  |                     
|Income from legal settlement                      |  |      | 27    |  |                      |  |           |                     |  |  |           |   |  |                                                     | 561,120    |   |  |  |        |  
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Profit / (loss) from operating activities         |  |      |       |  |                      |  | (163,216   | )                   |  |  | (379,600   | ) |  |                                                     | 120,078    |   |  |  | (3,190  | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Finance income                                    |  |      | 31    |  |                      |  | 59,313     |                     |  |  | 45,698     |   |  |                                                     | 27,994     |   |  |  | 1,159   |  
|                                                  |  |      |       |  |                     
|Finance expenses                                  |  |      | 31    |  |                      |  | (306,732   | )                   |  |  | (258,622   | ) |  |                                                     | (293,873   | ) |  |  | (5,996  | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Net finance income / (expense)                    |  |      | 31    |  |                      |  | (247,419   | )                   |  |  | (212,924   | ) |  |                                                     | (265,879   | ) |  |  | (4,837  | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Share of profit of equity accounted investee      |  |      | 7     |  |                      |  | 27,298     |                     |  |  | 73,032     |   |  |                                                     | 91,135     |   |  |  | 534     |  
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Profit / (loss) before tax                        |  |      |       |  |                      |  | (383,337   | )                   |  |  | (519,492   | ) |  |                                                     | (54,666    | ) |  |  | (7,493  | )
|                                                  |  |      |       |  |                     
|Income tax (expense) / benefit                    |  |      | 11    |  |                      |  |           |                     |  |  |           |   |  |                                                     | 81,479     |   |  |  |        |  
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Profit / (loss) for the year                      |  |      |       |  |                      |  | (383,337   | )                   |  |  | (519,492   | ) |  |                                                     | 26,813     |   |  |  | (7,493  | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Attributable to:                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Equity holders of the Company                     |  |      |       |  |                      |  | (383,337   | )                   |  |  | (519,492   | ) |  |                                                     | 17,027     |   |  |  | (7,493  | )
|                                                  |  |      |       |  |                     
|Non-controlling interest                          |  |      |       |  |                      |  |           |                     |  |  |           |   |  |                                                     | 9,786      |   |  |  |        |  
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|                                                  |  |      |       |  |                      |  | (383,337   | )                   |  |  | (519,492   | ) |  |                                                     | 26,813     |   |  |  | (7,493  | )
|                                                  |  |      |       |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Earnings / (loss) per share                       |  |      | 32    |  |                      |  |            |                     |  |  |            |   |  |                                                     |            |   |  |  |         |  
|Basic earnings /(loss) per share                  |  |      |       |  |                      |  | (3.71      | )                   |  |  | (8.20      | ) |  |                                                     | 0.33       |   |  |  | (0.07   | )
|Diluted earnings/(loss) per share                 |  |      |       |  |                      |  | (3.71      | )                   |  |  | (8.20      | ) |  |                                                     | 0.33       |   |  |  | (0.07   | )

The accompanying notes form an integral part of these consolidated financial statements



101



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Comprehensive Income

(In thousands of Rupees, except share data
and as otherwise stated)



|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|------------------------------------------------------------------------------------- |  | ---- | -- |  | -------------------- |  | -------- | ------- |  |  | -------- | - |  | ----------------------------------------------------- | ------ | - |  |  | ------ | -
|                                                                                      |  |      |    |  | Year ended March 31, |  |          |         | 
|                                                                                      |  | Note |    |  | 2012 Rs              |  |          | 2011 Rs |  |  | 2010 Rs  |   |  | 2012Conveniencetranslationinto US$thousands
Note 2(c) |       
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  | (Unaudited)                                           |       
|Profit / (loss) for the year                                                          |  |      |    |  |                      |  | (383,337 | )       |  |  | (519,492 | ) |  |                                                       | 26,813 |   |  |  | (7,493 | )
|                                                                                      |  |      |    |  |                     
|Other comprehensive income                                                            |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Foreign currency translation differences for foreign operations                       |  |      |    |  |                      |  | 3,006    |         |  |  | (229     | ) |  |                                                       | 1,682  |   |  |  | 59     |  
|Defined benefit plan actuarial gains / (losses)                                       |  |      |    |  |                      |  | 9,372    |         |  |  | 8,358    |   |  |                                                       | 5,508  |   |  |  | 183    |  
|Change in fair value of available for sale investments, transferred to profit or loss |  |      |    |  |                      |  |         |         |  |  |         |   |  |                                                       | 6,441  |   |  |  |       |  
|Share of gains and (losses) from equity accounted investees (net of taxes)            |  |      |    |  |                      |  | 3,038    |         |  |  | (4,138   | ) |  |                                                       | (566   | ) |  |  | 60     |  
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Other comprehensive income for the year, net of income tax                            |  |      |    |  |                      |  | 15,416   |         |  |  | 3,991    |   |  |                                                       | 13,065 |   |  |  | 302    |  
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Total comprehensive income for the year                                               |  |      | 16 |  |                      |  | (367,921 | )       |  |  | (515,501 | ) |  |                                                       | 39,878 |   |  |  | (7,191 | )
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Attributable to:                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Equity holders of the Company                                                         |  |      |    |  |                      |  | (367,921 | )       |  |  | (515,501 | ) |  |                                                       | 30,092 |   |  |  | (7,191 | )
|Non-controlling interest                                                              |  |      |    |  |                      |  |         |         |  |  |         |   |  |                                                       | 9,786  |   |  |  |       |  
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  
|Total comprehensive income/(expense) for the year                                     |  |      |    |  |                      |  | (367,921 | )       |  |  | (515,501 | ) |  |                                                       | 39,878 |   |  |  | (7,191 | )
|                                                                                      |  |      |    |  |                      |  |          |         |  |  |          |   |  |                                                       |        |   |  |  |        |  

The accompanying notes form an integral part of these consolidated financial statements



102



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Changes in Equity

(In thousands of Rupees, except share data and
as otherwise stated)

For year ended March 31, 2012



|                                                      |  |              |           |  |              |  |            |                          |  |  |                          |  |  |                                        |        |  |       |  |             |                         |  |  |              |   |  |  |   |  |  |  |           |  
|----------------------------------------------------- |  | ------------ | --------- |  | ------------ |  | ---------- | ------------------------ |  |  | ------------------------ |  |  | -------------------------------------- | ------ |  | ----- |  | ----------- | ----------------------- |  |  | ------------ | - |  |  | - |  |  |  | --------- | -
|Particulars                                           |  | Sharecapital |           |  | Sharepremium |  |            | Sharebasedpaymentreserve |  |  | Othercomponentsof equity |  |  | Retainedearnings /(accumulateddeficit) |        |  | Total |  |             | Non-controllinginterest |  |  | Total equity |  
|Balance at April 1, 2011                              |  |              | 858,832   |  |              |  | 17,216,121 |                          |  |  | 190,325                  |  |  |                                        | 7,365  |  |       |  | (13,606,851 | )                       |  |  | 4,665,792    |   |  |  |  |  |  |  | 4,665,792 |  
|                                                      |  |              |           |  |              |  |            |                         
|Total comprehensive income for the year               |  |              |          |  |              |  |           |                          |  |  |                         |  |  |                                        | 15,416 |  |       |  | (383,337    | )                       |  |  | (367,921     | ) |  |  |  |  |  |  | (367,921  | )
|                                                      |  |              |           |  |              |  |            |                         
|Transactions with owners, recorded directly in equity |  |              |           |  |              |  |            |                          |  |  |                          |  |  |                                        |        |  |       |  |             |                         |  |  |              |   |  |  |   |  |  |  |           |  
|Issue of share capital                                |  |              | 470,371   |  |              |  | 1,051,027  |                          |  |  |                         |  |  |                                        |       |  |       |  |            |                         |  |  | 1,521,398    |   |  |  |  |  |  |  | 1,521,398 |  
|                                                      |  |              |           |  |              |  |            |                         
|Share-based payment transactions                      |  |              |          |  |              |  |           |                          |  |  | 31,385                   |  |  |                                        |       |  |       |  |            |                         |  |  | 31,385       |   |  |  |  |  |  |  | 31,385    |  
|                                                      |  |              |           |  |              |  |            |                         
|Balance at March 31, 2012                             |  |              | 1,329,203 |  |              |  | 18,267,148 |                          |  |  | 221,710                  |  |  |                                        | 22,781 |  |       |  | (13,990,188 | )                       |  |  | 5,850,654    |   |  |  |  |  |  |  | 5,850,654 |  

For year ended March 31, 2011



|                                                      |  |              |         |  |              |  |            |                          |  |  |                          |  |  |                                        |       |  |       |  |             |                         |  |  |              |   |  |  |   |  |  |  |           |  
|----------------------------------------------------- |  | ------------ | ------- |  | ------------ |  | ---------- | ------------------------ |  |  | ------------------------ |  |  | -------------------------------------- | ----- |  | ----- |  | ----------- | ----------------------- |  |  | ------------ | - |  |  | - |  |  |  | --------- | -
|Particulars                                           |  | Sharecapital |         |  | Sharepremium |  |            | Sharebasedpaymentreserve |  |  | Othercomponentsof equity |  |  | Retainedearnings /(accumulateddeficit) |       |  | Total |  |             | Non-controllinginterest |  |  | Total equity |  
|Balance at April 1, 2010                              |  |              | 546,332 |  |              |  | 16,528,621 |                          |  |  | 180,124                  |  |  |                                        | 3,374 |  |       |  | (13,087,359 | )                       |  |  | 4,171,092    |   |  |  |  |  |  |  | 4,171,092 |  
|                                                      |  |              |         |  |              |  |            |                         
|Total comprehensive income for the year               |  |              |        |  |              |  |           |                          |  |  |                         |  |  |                                        | 3,991 |  |       |  | (519,492    | )                       |  |  | (515,501     | ) |  |  |  |  |  |  | (515,501  | )
|                                                      |  |              |         |  |              |  |            |                         
|Transactions with owners, recorded directly in equity |  |              |         |  |              |  |            |                          |  |  |                          |  |  |                                        |       |  |       |  |             |                         |  |  |              |   |  |  |   |  |  |  |           |  
|Issue of share capital                                |  |              | 312,500 |  |              |  | 687,500    |                          |  |  |                         |  |  |                                        |      |  |       |  |            |                         |  |  | 1,000,000    |   |  |  |  |  |  |  | 1,000,000 |  
|                                                      |  |              |         |  |              |  |            |                         
|Share-based payment transactions                      |  |              |        |  |              |  |           |                          |  |  | 10,201                   |  |  |                                        |      |  |       |  |            |                         |  |  | 10,201       |   |  |  |  |  |  |  | 10,201    |  
|                                                      |  |              |         |  |              |  |            |                         
|Balance at March 31, 2011                             |  |              | 858,832 |  |              |  | 17,216,121 |                          |  |  | 190,325                  |  |  |                                        | 7,365 |  |       |  | (13,606,851 | )                       |  |  | 4,665,792    |   |  |  |  |  |  |  | 4,665,792 |  



103



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statement of Changes in Equity

(In thousands of Rupees, except share data and
as otherwise stated)

For year ended March 31, 2010



|                                                                                       |  |              |         |  |              |  |            |                          |  |  |                          |  |  |                                        |        |   |       |  |             |                         |  |  |              |   |  |  |          |   |  |  |           |  
|-------------------------------------------------------------------------------------- |  | ------------ | ------- |  | ------------ |  | ---------- | ------------------------ |  |  | ------------------------ |  |  | -------------------------------------- | ------ | - | ----- |  | ----------- | ----------------------- |  |  | ------------ | - |  |  | -------- | - |  |  | --------- | -
|Particulars                                                                            |  | Sharecapital |         |  | Sharepremium |  |            | Sharebasedpaymentreserve |  |  | Othercomponentsof equity |  |  | Retainedearnings /(accumulateddeficit) |        |   | Total |  |             | Non-controllinginterest |  |  | Total equity |  
|Balance at April 1, 2009                                                               |  |              | 441,018 |  |              |  | 16,375,217 |                          |  |  | 149,535                  |  |  |                                        | (9,691 | ) |       |  | (13,104,386 | )                       |  |  | 3,851,693    |   |  |  | 248,848  |   |  |  | 4,100,541 |  
|                                                                                       |  |              |         |  |              |  |            |                         
|Total comprehensive income for the year                                                |  |              |        |  |              |  |           |                          |  |  |                         |  |  |                                        | 13,065 |   |       |  | 17,027      |                         |  |  | 30,092       |   |  |  | 9,786    |   |  |  | 39,878    |  
|                                                                                       |  |              |         |  |              |  |            |                         
|Transactions with owners, recorded directly in equity                                  |  |              |         |  |              |  |            |                          |  |  |                          |  |  |                                        |        |   |       |  |             |                         |  |  |              |   |  |  |          |   |  |  |           |  
|Issue of share capital                                                                 |  |              | 105,300 |  |              |  | 737,537    |                          |  |  |                         |  |  |                                        |       |   |       |  |            |                         |  |  | 842,837      |   |  |  |         |   |  |  | 842,837   |  
|Share options exercised                                                                |  |              | 14      |  |              |  | 70         |                          |  |  |                          |  |  |                                        |        |   |       |  |             |                         |  |  | 84           |   |  |  |         |   |  |  | 84        |  
|Share-based payment transactions                                                       |  |              |        |  |              |  |           |                          |  |  | 30,589                   |  |  |                                        |       |   |       |  |            |                         |  |  | 30,589       |   |  |  |         |   |  |  | 30,589    |  
|Changes in ownership interests in subsidiaries that do not result in a loss of control |  |              |         |  |              |  |            |                          |  |  |                          |  |  |                                        |        |   |       |  |             |                         |  |  |              |   |  |  |          |   |  |  |           |  
|Acquisition of non-controlling interest                                                |  |              |        |  |              |  | (584,203   | )                        |  |  |                         |  |  |                                        |       |   |       |  |            |                         |  |  | (584,203     | ) |  |  | (258,634 | ) |  |  | (842,837  | )
|Balance at March 31, 2010                                                              |  |              | 546,332 |  |              |  | 16,528,621 |                          |  |  | 180,124                  |  |  |                                        | 3,374  |   |       |  | (13,087,359 | )                       |  |  | 4,171,092    |   |  |  |         |   |  |  | 4,171,092 |  

The accompanying notes form an integral part of these consolidated financial statements.



104



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statements of Cash Flows

For the fiscal years ended March 31,

(In thousands of Rupees, except share data and as otherwise stated)



|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|---------------------------------------------------------- |  | -------------------- | -------- | - | ------- |  | -------- | ------- |  |  | ------------------------------------------- | - |  |  | ------ | -
|                                                           |  | Year ended March 31, |          |   |         | 
|                                                           |  | 2012 Rs              |          |   | 2011 Rs |  |          | 2010 Rs |  |  | 2012Conveniencetranslationinto US$thousands |  
|                                                           |  |                      |          |   |         |  |          |         |  |  | (Unaudited) Note 2(c)                       |  
|Profit/(loss) for the year                                 |  |                      | (383,337 | ) |         |  | (519,492 | )       |  |  | 26,813                                      |   |  |  | (7,493 | )
|Adjustments for:                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|Depreciation and amortization                              |  |                      | 691,560  |   |         |  | 685,836  |         |  |  | 656,797                                     |   |  |  | 13,518 |  
|Impairment loss on intangibles including goodwill          |  |                      |         |   |         |  | 1,857    |         |  |  | 47,269                                      |   |  |  |       |  
|Share of profit of equity accounted investee               |  |                      | (27,298  | ) |         |  | (73,032  | )       |  |  | (91,135                                     | ) |  |  | (534   | )
|(Gain) / loss on sale of property, plant and equipment     |  |                      | (680     | ) |         |  | (594     | )       |  |  | (2,414                                      | ) |  |  | (13    | )
|Provision for doubtful receivables                         |  |                      | 95,405   |   |         |  | 161,922  |         |  |  | 121,987                                     |   |  |  | 1,865  |  
|Realized loss on sale of investments                       |  |                      |         |   |         |  |         |         |  |  | 373                                         |   |  |  |       |  
|Stock compensation expense                                 |  |                      | 31,385   |   |         |  | 10,201   |         |  |  | 30,589                                      |   |  |  | 613    |  
|Net finance (income) / expense                             |  |                      | 247,419  |   |         |  | 212,924  |         |  |  | 265,879                                     |   |  |  | 4,836  |  
|Income tax expense/(benefit)                               |  |                      |         |   |         |  |         |         |  |  | (81,479                                     | ) |  |  |       |  
|Unrealized (gain)/ loss on account of exchange differences |  |                      | 17,644   |   |         |  | 1,196    |         |  |  | 703                                         |   |  |  | 345    |  
|Amortization of leasehold prepayments                      |  |                      | 6,308    |   |         |  |         |         |  |  | 3,917                                       |   |  |  | 123    |  
|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|                                                           |  |                      | 678,406  |   |         |  | 480,818  |         |  |  | 979,299                                     |   |  |  | 13,260 |  
|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|Change in trade and other receivables                      |  |                      | (105,449 | ) |         |  | (153,560 | )       |  |  | (585,805                                    | ) |  |  | (2,061 | )
|Change in inventories                                      |  |                      | (4,622   | ) |         |  | 5,851    |         |  |  | 17,600                                      |   |  |  | (90    | )
|Change in other assets                                     |  |                      | (326,006 | ) |         |  | (34,082  | )       |  |  | (64,112                                     | ) |  |  | (6,372 | )
|Change in trade and other payables                         |  |                      | 472,443  |   |         |  | (26,597  | )       |  |  | 517,497                                     |   |  |  | 9,235  |  
|Change in employee benefits                                |  |                      | 11,650   |   |         |  | 1,341    |         |  |  | (3,984                                      | ) |  |  | 228    |  
|Change in deferred income                                  |  |                      | (4,533   | ) |         |  | (5,972   | )       |  |  | 63,762                                      |   |  |  | (89    | )
|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|                                                           |  |                      | 721,889  |   |         |  | 267,799  |         |  |  | 924,257                                     |   |  |  | 14,111 |  
|Income taxes paid                                          |  |                      | (121,675 | ) |         |  | (42,440  | )       |  |  | (164,455                                    | ) |  |  | (2,379 | )
|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  
|Net cash from / (used in) operating activities             |  |                      | 600,214  |   |         |  | 225,359  |         |  |  | 759,802                                     |   |  |  | 11,732 |  
|                                                           |  |                      |          |   |         |  |          |         |  |  |                                             |   |  |  |        |  



105



---

##### Table of Contents

Sify Technologies Limited

Consolidated Statements of Cash Flows

For the fiscal years ended March 31,

(In thousands of Rupees, except share data and as otherwise stated)



|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|----------------------------------------------------------------------------------- |  | -------------------- | --------- | - | ------- |  | --------- | ------- |  |  | ------------------------------------------- | - |  |  | ------- | -
|                                                                                    |  | Year ended March 31, |           |   |         | 
|                                                                                    |  | 2012 Rs              |           |   | 2011 Rs |  |           | 2010 Rs |  |  | 2012Conveniencetranslationinto US$thousands |  
|                                                                                    |  |                      |           |   |         |  |           |         |  |  | (Unaudited) Note 2(c)                       |  
|Cash flows from / (used in) investing activities                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Acquisition of property, plant and equipment                                        |  |                      | (840,653  | ) |         |  | (674,558  | )       |  |  | (759,435                                    | ) |  |  | (16,432 | )
|Expenditure on intangible assets                                                    |  |                      | (111,081  | ) |         |  | (120,710  | )       |  |  | (220,299                                    | ) |  |  | (2,171  | )
|Proceeds from sale of property, plant and equipment                                 |  |                      | 1,029     |   |         |  | 3,109     |         |  |  | 5,979                                       |   |  |  | 20      |  
|Payment towards purchase of unquoted equity shares                                  |  |                      |          |   |         |  | (160      | )       |  |  |                                            |   |  |  |        |  
|Finance income received                                                             |  |                      | 48,734    |   |         |  | 61,669    |         |  |  | 57,130                                      |   |  |  | 953     |  
|Short term investments (net)                                                        |  |                      |          |   |         |  |          |         |  |  | 19,942                                      |   |  |  |        |  
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Net cash from / (used in) investing activities                                      |  |                      | (901,971  | ) |         |  | (730,650  | )       |  |  | (896,683                                    | ) |  |  | (17,630 | )
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Cash flows from / (used in) financing activities                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Proceeds from issue of share capital (including share premium)                      |  |                      | 1,500,000 |   |         |  | 1,000,000 |         |  |  | 84                                          |   |  |  | 29,320  |  
|Proceeds from issue of shares on exercise of ASOP (including share premium)         |  |                      | 21,398    |   |         |  |          |         |  |  |                                            |   |  |  | 418     |  
|Proceeds from / (repayment) of borrowings (net)                                     |  |                      | (600,588  | ) |         |  | (103,860  | )       |  |  | 8,409                                       |   |  |  | (11,739 | )
|Finance expenses paid                                                               |  |                      | (312,927  | ) |         |  | (293,265  | )       |  |  | (318,723                                    | ) |  |  | (6,117  | )
|Repayment of finance lease liabilities                                              |  |                      | (71,476   | ) |         |  | (51,175   | )       |  |  | (44,256                                     | ) |  |  | (1,397  | )
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Net cash from / (used in) financing activities                                      |  |                      | 536,407   |   |         |  | 551,700   |         |  |  | (354,486                                    | ) |  |  | 10,485  |  
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Net increase / (decrease) in cash and cash equivalents                              |  |                      | 234,650   |   |         |  | 46,409    |         |  |  | (491,367                                    | ) |  |  | 4,587   |  
|Cash and cash equivalents at April 1                                                |  |                      | (135,804  | ) |         |  | (181,586  | )       |  |  | 312,715                                     |   |  |  | (2,654  | )
|Effect of exchange fluctuations on cash held                                        |  |                      | (4,258    | ) |         |  | (627      | )       |  |  | (2,934                                      | ) |  |  | (83     | )
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|Cash and cash equivalents at March 31                                               |  |                      | 94,588    |   |         |  | (135,804  | )       |  |  | (181,586                                    | ) |  |  | 1,850   |  
|                                                                                    |  |                      |           |   |         |  |           |         |  |  |                                             |   |  |  |         |  
|                                                                                    |  |                      |          
|Refer note 3 (c) and note 8 for the composition of cash and cash equivalents.       |  |                      |           |   |         |  |           |         |  |  |                                             |   | 
|                                                                                    |  |                     
|Supplementary information                                                           |  |                      |           |   |         |  |           |         | 
|Additions to property, plant and equipment represented by finance lease obligations |  |                      | 60,149    |   |         |  | 38,111    |         |  |  | 99,950                                      |   |  |  | 1,176   |  

The accompanying notes form an integral part of these consolidated financial statements



106



---

##### Table of Contents

SIFY TECHNOLOGIES LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of Rupees, except share data and as stated otherwise)

1. Reporting
entity

Sify Technologies Limited, (Sify or the Company) formerly known as Sify Limited and Satyam Infoway Private
Limited, is a leading internet services provider headquartered in Chennai, India. These Consolidated Financial Statements comprise the Company and its subsidiaries (Sify Software Limited (formerly Sify Networks Private Limited), Sify Technologies
(Singapore) Pte. Limited, Sify International Inc., Hermit Projects Private Limited and Pace Info Com Park Private Limited) (together referred to as the Group and individually as Group entities) and the Groups interest
in MF Global Sify Securities India Private Limited, an equity accounted investee. The Group is primarily involved in providing services, such as Network and IT Services, Online Portal and Content offerings and in selling hardware and software
related to such services. Sify is listed on the NASDAQ Global Select Market in the United States.

2. Basis of preparation

a. Statement of compliance

The
accompanying Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as issued by the International Accounting Standards Board (IASB).

These Consolidated Financial Statements have been approved for issue by the Board of Directors on August 13, 2012.

b. Basis of measurement

These
Consolidated Financial Statements have been prepared on the historical cost basis except for the following:



| |  | Available for sale financial assets are measured at fair value
|- |  | --------------------------------------------------------------



| |  | Non-current asset held for sale measured at lower of carrying value and fair value less costs to sell.
|- |  | ------------------------------------------------------------------------------------------------------



| |  | Derivative financial instruments are measured at fair value
|- |  | -----------------------------------------------------------



| |  | Financial instruments at fair value through profit or loss are measured at fair value.
|- |  | --------------------------------------------------------------------------------------



| |  | The defined benefit asset is recognized as the net total of the plan assets, plus unrecognized past service cost and unrecognized actuarial losses,
less unrecognized 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.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above items have been measured at fair value and the methods used to measure fair values are discussed further in Note 4.

c. Functional and presentation currency

Items included in the financial statements of each Group entity 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 Sify, its domestic subsidiaries and affiliates. The U.S. dollar is the functional currency of Sifys foreign subsidiaries located in the United States
and in Singapore.

The Consolidated Financial Statements are presented in Indian Rupees which is the Groups presentation currency. All
financial information presented in Indian Rupees has been rounded up to the nearest thousand except where otherwise indicated.



107



---

##### Table of Contents

Convenience translation (unaudited): Solely for the convenience of the reader, the financial
statements as of and for the year ended March 31, 2012 have been translated into United States dollars (neither the presentation currency nor the functional currency of the Group) based on the reference rate in the City of Mumbai on
March 31, 2012, for cable transfers in Indian rupees as published by the Reserve Bank of India which was Rs.51.16 per $1.00. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United
States dollar at such a rate or at any other rate on March 31, 2012 or at any other date.

d. Use of estimates and judgements

The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods which are affected.

In particular, areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements include
the following:



| |  |  | 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, 9, 17 and 33)
| | - |  | ---------------------------------------------



| |  |  | Utilization of tax losses (Note 11)
| | - |  | -----------------------------------



| |  |  | Measurement of defined employee benefit obligations (Note 18)
| | - |  | -------------------------------------------------------------



| |  |  | Measurement of share-based payments (Note 30 and Note 37)
| | - |  | ---------------------------------------------------------



| |  |  | Valuation of financial instruments (Note 3 c, 4, 38 and 39)
| | - |  | -----------------------------------------------------------



| |  |  | Provisions and contingencies (Note 3 m and 35)
| | - |  | ----------------------------------------------

3. Significant accounting policies

The accounting policies set out below have been applied
consistently to all periods presented in these Consolidated Financial Statements.

a. Basis of consolidation

(i) Subsidiaries

Subsidiaries are
entities controlled by the Company. Control exists when the Company has the power directly/indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting
rights that currently are exercisable are taken into account. The financial statements of subsidiaries are consolidated from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been
changed where necessary to align them with the policies adopted by the Group.

(ii) Associates (equity accounted investees)

Associates are those entities where the Group has significant influence, but not control, over the financial and operating policies. Significant influence
is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Associates are accounted for using the equity method (equity accounted investees) and are initially recognized at cost. The Groups
investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The Consolidated Financial Statements include the Groups share of the income and expenses and equity movements of equity accounted investees from
the date that significant influence commences until the date that significant influence ceases. The investment would be classified as held for sale when the carrying amount of the investment will be recovered through a sale transaction
rather than through its continued use and such sale is highly probable. Such investments are measured at the lower of its carrying amount and fair value less cost to sell. When the Groups share of losses exceeds its interest in an equity
accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the investee.



108



---

##### Table of Contents

(iii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the
Consolidated Financial Statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Groups interest in the investee. Unrealized losses are eliminated in the
same way as unrealized gains, but only to the extent that there is no evidence of impairment.

b. Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies on initial recognition are translated to the respective functional currencies of Group entities at exchange rates
prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rates at that date. The foreign currency gain or loss on
monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange
rate at the end of the reporting period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. Foreign currency differences arising on retranslation are
recognized in profit or loss, except for differences arising on the retranslation of available-for-sale financial assets that are not monetary items, are recognized directly in other comprehensive income.

(ii) Foreign operations

The assets and
liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Indian Rupees at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Indian
rupees using average exchange rates during the period. Foreign currency differences are recognized in other comprehensive income. Such differences are captured in the foreign currency translation reserve FCTR within other components of
equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.

c.
Financial instruments

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognized initially at fair value plus any directly attributable transaction costs. However if the
instrument is recognized as at fair value through profit or loss then any directly attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition non-derivative financial instruments are measured as
described below:

Non-derivative financial assets

a) Available-for-sale financial assets

Available-for-sale (AFS) financial assets are
those non-derivative financial assets that are designated as available for sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss in
accordance with IAS 39.

Investments in equity and certain debt securities are initially recognized at fair value and classified as
available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized
directly in other comprehensive income. When an investment is de-recognized, the cumulative gain or loss in equity is transferred to profit or loss. These are presented as current assets unless the management intends to dispose of the assets after
12 months from the balance sheet date.



109



---

##### Table of Contents

b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These are presented as current assets, except for those maturing
later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are initially measured at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest
method, less any impairment loss. Loans and receivables are represented by trade receivables, unbilled revenue, cash and cash equivalents. Cash and cash equivalents comprise cash balances and demand deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Groups cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

c) Others

Other non-derivative financial instruments are measured at amortized cost using
the effective interest method, less any impairment losses.

Non-derivative financial liabilities

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal
right to offset the amounts and intends either to settle on a net basis or to realize the assets and settle the liability simultaneously.

The
Group classifies non-derivative financial liabilities to the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
these financial liabilities are measured at amortized cost using the effective interest method.

Other financial liabilities comprise loans
and borrowings and trade and other payables.

(ii) Derivative financial instruments

Foreign exchange forward contracts and options are purchased to mitigate the risk of changes in foreign exchange rates associated with certain payables,
receivables and forecasted transactions denominated in certain foreign currencies.

These derivative contracts do not qualify for hedge
accounting under IAS 39, and are initially recognized at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Gains or losses arising from changes in the fair value of the derivative contracts are
recognized immediately in profit or loss. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a
separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

d. Share capital

Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or share options are recognized as a deduction from equity, net of any tax effects.

e.
Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and where applicable
accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to
bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized as part of the cost of that asset. To the extent the Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowing costs
eligible for capitalization by applying a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined based on the weighted average of borrowing costs applicable to the borrowings of the Group which are
outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing costs that the Group capitalizes during a period does not exceed the amount of borrowing costs incurred during
that period. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.



110



---

##### Table of Contents

When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and
equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within other income / other expenses in statement of income.

(i) Subsequent costs

The cost of
replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably.
The carrying amount of the replaced part is de-recognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

(ii) Depreciation

Depreciation is recognized in the consolidated statement of income on a
straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term. Managements estimated useful lives for the years ended March 31, 2012, 2011 and 2010 were as follows:



|                                                       |  |                                 |       |  
|------------------------------------------------------ |  | ------------------------------- | ----- | -
|                                                       |  | Estimate of useful lifein
years |      
|Buildings                                              |  |                                 | 28    |  
|Plant and machinery comprising computers, servers etc. |  |                                 | 3  5 | *
|Plant and machinery comprising other items             |  |                                 | 8     | *
|Furniture and fittings                                 |  |                                 | 5     |  
|Office equipment                                       |  |                                 | 5     |  
|Motor vehicles                                         |  |                                 | 3  5 |  



|* | Revised during the year ended March 31, 2008. Also refer note 5.
|- | ----------------------------------------------------------------

Depreciation method, useful lives and residual values are reviewed at each of the reporting date.

f. Business combinations and intangible assets

(i) Business combinations

Business combinations are accounted for using IFRS 3 (Revised),
Business Combinations. IFRS 3 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree.
Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuation are conducted by independent valuation experts.

Business combinations have been accounted for using the acquisition method under the provisions of IFRS 3(Revised). The cost of acquisition is measured at the fair value of the assets transferred, equity
instruments issued and liabilities incurred or assumed at the date of acquisition. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair value on the date of acquisition.

Transactions costs that the group incurs in
connection with a business combination such as finders fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.

The acquisition of an asset or a group of assets that does not constitute a business as per IFRS 3 is accounted for by identifying and recognizing the individual identifiable assets acquired
and liabilities assumed. The cost of the group is allocated to such individual identifiable assets and liabilities on the basis of their relative fair values on the date of purchase.



111



---

##### Table of Contents

(ii) Goodwill

Goodwill represents the cost of a business acquisition in excess of the Groups interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree.

Acquisitions prior to April 1, 2006

In respect of acquisitions prior to April 1, 2006, goodwill, if any, represents the amount recognized under the Groups previous accounting framework, US GAAP.

Acquisitions on or after April 1, 2006

For acquisitions on or after April 1, 2006, goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), the Group reassesses the identification and measurement of identifiable assets, liabilities and contingent liabilities, and the measurement of the cost of
acquisition, and recognizes any remaining excess in profit or loss immediately on acquisition.

Acquisition of non-controlling interest

Acquisition of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity-holders and
therefore no goodwill is recognized as a result of such transactions.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in
the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investee.

(iii) Other intangible assets

Other intangible assets that are acquired by the Group,
which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the intangible asset. Borrowing costs that are
directly attributable to the acquisition of qualifying intangible asset are capitalized as part of the cost of that asset. To the extent the Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Group
determines the amount of borrowings costs eligible for capitalization by applying a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined based on the weighted average of borrowing costs applicable to
the borrowings of the Group which are outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing costs that the Group capitalizes during a period does not exceed the
amount of borrowing costs incurred during that period.

(iv) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other
expenditure, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(v)
Amortization of intangible assets with finite useful lives

Amortization is recognized in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and previous year are as follows:



112



---

##### Table of Contents

|                                 |  |                                  |          | 
|-------------------------------- |  | -------------------------------- | -------- | 
|                                 |  | Estimate of useful life 
inyears |         
|Software                         |  | Not exceeding 3 years            |         
|Technical know-how               |  |                                  | 5 years  | 
|License fees                     |  |                                  | 20 years | 
|Portals and web development cost |  |                                  | 5 years  | 
|Customer related intangibles     |  |                                  | 5 years  | 

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

g. Leases

At the inception
of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.

Assets taken on finance lease:

A finance lease is recognized as an asset and a liability
at the commencement of lease, at lower of the fair value of leased asset or the present value of the minimum lease payments. Initial direct costs, if any, are also capitalized and subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Assets taken
on operating lease:

Other leases are operating leases and the leased assets are not recognized on the Groups statement of financial
position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.

Assets given on finance lease:

The
Group is a dealer lessor for leasing various types of products sold to its customers. Profit or loss on sale of such products is recognized in accordance with the policy on outright sales. Finance income i.e., excess of gross minimum lease payments
and normal selling price is recognized over the lease period.

Deposits provided to lessors:

The Group is generally required to pay refundable security deposits in order to obtain property leases from various lessors. Such security deposits are
financial assets and are recorded at fair value on initial recognition. The difference between the initial fair value and the refundable amount of the deposit is recognized as a lease prepayment. The initial fair value is estimated as the present
value of the refundable amount of security deposit, discounted using the market interest rates for similar instruments.

Subsequent to initial
recognition, the security deposit is measured at amortized cost using the effective interest method with the carrying amount increased over the lease period up to the refundable amount. The amount of increase in the carrying amount of deposit is
recognized as interest income. The lease prepayment is amortized on a straight line basis over the lease term as a lease rental expense.

h. Inventories

Inventories comprising
traded hardware and software are measured at the lower of cost (determined using first-in first-out principle) and net realizable value. Cost comprises cost of purchase and all directly attributable costs incurred in bringing the inventories to
their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

i. Construction contracts in progress

Construction contracts in progress represents the
gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognized to date less progress billing and recognized losses. Cost includes all expenditure related directly to
specific projects and an allocation of fixed and variable overheads incurred in the Groups contracts and activities based on normal operating capacity.



113



---

##### Table of Contents

Construction contract in progress is presented as part of trade and other receivable in statement of
financial position for all contracts in which costs incurred plus recognized profit exceed progress billings. If progress billings exceeds cost incurred plus recognized profits, then the difference is presented as deferred income / revenue in the
statement of financial position.

j. Impairment

Financial assets

A financial asset is assessed at each reporting date to determine
whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset is considered to be impaired and impairment losses are recognized, if objective evidence indicates that one or more events
such as a loss event, the significant financial difficulty of the issuer, a breach of contract, the disappearance of an active market, which have had a negative effect on the estimated future cash flows of that asset. The remaining financial assets
are assessed collectively in groups that share similar credit risk characteristics.

Financial assets measured at amortized cost

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount,
and the present value of the estimated future cash flows discounted at the original effective interest rate.

Available-for-sale financial
assets

Significant or prolonged decline in the fair value of the security below its cost and the disappearance of an active trading market
for the security are objective evidence that the security is impaired. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. The cumulative loss that was recognized in the equity is
transferred to the consolidated income statement upon impairment. Such impairment loss is recognized in the consolidated income statement.

Loans and receivables

Impairment loss
in respect of loans and receivables measured at amortized cost are calculated as the difference between their carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Such
impairment loss is recognized in the consolidated income statement.

Reversal of impairment loss

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial
assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly
in other comprehensive income and presented within equity.

Non-financial assets

The carrying amounts of the Groups non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill, the recoverable amount is estimated each year at December 31.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the
cash-generating unit).

The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to
cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets for the purpose of impairment testing are allocated to the cash generating units on a reasonable and consistent basis.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment
losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other
assets in the unit or group of units on a pro rata basis.



114



---

##### Table of Contents

Reversal of impairment loss

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized directly in other comprehensive income and presented within equity.

k. Employee benefits

Employee benefits
are accrued in the period in which the associated services are rendered by employees of the Group, as detailed below:

(a) Defined
contribution plan (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. The
Group does not have any legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. Obligation for
contributions to the plan is recognized as an employee benefit expense in profit or loss when incurred.

(b) Defined benefit plans
(Gratuity)

In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan (the Gratuity
Plan) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the
Group. The Companys net obligation in respect of the gratuity plan is calculated by estimating the amount of future benefits that the employees have earned in return for their service in the current and prior periods; that benefit is
discounted to determine its present value. Any unrecognized past service cost and the fair value of plan assets are deducted. The discount rate is the yield at the reporting date on risk free government bonds that have maturity dates approximating
the terms of the Companys obligations. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of
any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.

The Group recognizes all actuarial gains and losses arising from defined benefit plans directly in other comprehensive income and presented within equity. The Company has an employees gratuity fund
managed by the Life Insurance Corporation of India (LIC).

(c) Short term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is
recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably.

(d) Compensated leave of absence

The employees of the Group are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued absence and utilize it in future periods or receive cash compensation at
retirement or termination of employment for the unutilized accrued compensated absence. The Group recognizes an obligation for compensated absences in the period in which the employee renders the services. The Group provides for the expected cost of
compensated absence as the additional amount that the Group expects to pay as a result of the unused entitlement that has accumulated based on actuarial valuations at the balance sheet date, carried out by an independent actuary.



115



---

##### Table of Contents

l. Share-based payment transactions

The grant date fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled
to the options. The expense is recorded for each separately vesting portion of the award as if the award was, in substance, multiple awards. The increase in equity recognized in connection with a share based payment transaction is presented as a
separate component in equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest. In respect of options whose terms and conditions are modified, the Group includes the incremental fair value of
the options in the measurement of the amounts recognized for services received from the employees. The incremental fair value is the difference between the fair value of the modified option and that of the original option both estimated as at the
date of the modification. If the modification occurs during the vesting period, the incremental fair value granted is included in the measurement of the amount recognized for services received over the period from the modification date until the
date when the modified equity instruments vest, in addition to the amount based on the grant date fair value of the original equity instruments, which is recognized over the remainder of the original vesting period. If the modification occurs after
vesting date, the incremental fair value granted is recognized immediately, or over the vesting period if the employee is required to complete an additional period of service before becoming unconditionally entitled to those modified equity
instruments.

m. Provisions

Provisions are recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost
of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established,
the Group recognizes any impairment loss on the assets associated with that contract.

n. Revenue

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume
rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is
no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Transfers of risks and rewards vary depending on the individual terms of the contract of sale.

Revenue from services rendered is recognized in the consolidated income statement in proportion to the stage of completion of the transaction at the
reporting date.

The revenue recognition in respect of the various streams of revenue is described below:

(i) Enterprise services

Enterprise
services revenue broadly consist revenue from Network services and IT services.

(c) Revenue from Network Services: These primarily
include connectivity services including installation of a connectivity link, and to a lesser extent, sale of hardware and software (purchased from third party vendors). In certain cases, these elements are sold as a package consisting all or some of
the elements. In these cases the Group applies the recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction with different revenue allocations for each component.
These multiple element arrangements are recognized as separable elements because each element constitutes a separate earnings process, each element has a fair value that is reliable, verifiable and objectively determinable, and the undelivered
element is not essential to functionality of the delivered elements. In this arrangement involving delivery of multiple elements, the units of accounting are determined based on whether the delivered items have a value to the customer on a
stand-alone basis, whether there is objective and reliable evidence of fair value of the undelivered elements and if the arrangement includes a general right of return relative to the delivered item, whether delivery or performance of the
undelivered item(s) is considered probable and substantially in the control of the Group. The arrangement consideration is allocated to the units of accounting based on their relative fair values. Revenue on delivered items is recognized when the
revenue recognition criteria applicable to that unit of accounting are met.



116



---

##### Table of Contents

The Group provides connectivity for a fixed period of time at a fixed rate regardless of usage. Connectivity
is the last element that is provided in the case of a bundled contract. The connectivity charges are the same when sold alone or as part of a package. The revenue attributable to connectivity services is recognized ratably over the period of the
contract.

In circumstances where there is multi element arrangement that includes hardware or software sales and last mile connectivity
services, revenue from sale of hardware/software is recognized only upon completion of the services relating to last mile connectivity. Installation consists of commissioning of the last mile connectivity to the customer premises either through the
Groups wireless mode of delivery or through the carrier exchange. When the customer has such last mile connectivity, the Group does not charge any installation fee. Due to the short duration, the revenue attributable to the installation of the
link is recognized on completion of the installation work. All revenues are shown exclusive of sales tax and service tax.

The Company
provides NLD (National Long Distance) and ILD (International Long Distance) services through companys network. The Company carries international voice traffic using the back-bone and delivers voice traffic to Direct Inter-connect Operators.
Revenue is recognized based upon metered call units of voice traffic terminated on the Companys network.

(d) Revenue from IT
services: Web hosting service revenues primarily include co-location services. In certain cases, the Group also sells related hardware/software to its web hosting customers. This hardware as well as software are purchased from outside vendors
and are freely traded in the market. The Group treats each element as a separate component of the arrangement which have separate earnings process. The value of the hosting service is determined based on fair value from similar services provided
separately by the Group. When hardware and/or software is also included with hosting services and sold as a package, the revenue is allocated to the respective element based on their relative fair values. Revenue from hosting services is recognized
over the period during which the service is provided.

The Company also deals in hardware and software. These are standard products that are
freely traded in and purchased from the market, have standard specifications and are not otherwise customized for the specific needs of a customer. The software sold by the Group is off-the-shelf software, such as antivirus utilities and firewalls.
The fair value for the hardware and software is available from the market. The revenue attributable to hardware/software is recognized on delivery. Trading transactions relating to standard hardware and software and involving arrangement of
purchases from suppliers and sales to customers are reported on gross basis or on net basis, by carrying out a fact-specific evaluation of such transactions.

The Company generates revenue from construction of data centers. Revenue from such contracts includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive
payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognized in profit or loss in proportion to
the stage of completion of the contract. Contract expenses are recognized as incurred unless they create an asset related to future contract activity. The stage of completion is assessed by reference to the cost incurred until date to the total
estimated costs. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognized
immediately in profit or loss.

The Group remotely manages the Information Technology infrastructure of global enterprises from India. The
contracts are on time and material basis. Revenue in relation to time is measured as the agreed rate per unit of time multiplied by the units of time expended. The element of revenue related to materials is measured in accordance with
the terms of the contract. The revenue from on-demand storage / cloud offering is recognized based on the class of offering and usage of services.

(ii) Commercial and consumer services

This stream of revenue includes revenues from
internet access services and online portal services

(b) Internet access services : It include Internet access at homes and businesses
through dial-up or cable operator and internet access through a network of cybercafés. It also includes revenues from Voice over Internet Protocol (VoIP) or Internet telephony.

Dial-up Internet access is sold to customers either for a specified number of hours or for an unlimited usage within a specified period of time.
Customers purchase user accounts or top-ups that enable them to access the Internet for a specified quantum of usage or for a specified period of time all within a contracted period. The amount received from customers on the
sale of these user accounts or top-ups are not refundable. The revenue from sale of user accounts or top-ups is measured based on usage (where access is for a specified quantum of usage) or based on the time of usage (where access is for a specified
period of time) by the customer. Any unused hours at the end of the contracted period are recognized as revenue.



117



---

##### Table of Contents

VoIP services are mainly provided through Internet Telephony Booths at e-ports (formerly iways)
cybercafés and to a smaller extent through Cable TV operators, (CTOs). The user purchases the packs that enable them to use the Internet telephone facility through CTOs and revenue is recognized on the basis of usage by the customer. The
customers use Internet telephony facilities at the iway cybercafés and make the payment to the extent of usage of the facility.

Internet access at homes and businesses through cable networks, a franchised network of cable operators in India. Customers buy user accounts
for a specified usage or volume of data transfer or for a specified period of time all within a contracted period. Revenues are recognized on actual usage by customer (where access is for a specified quantum of usage) and based on time (where access
is for a specified period of time). Any unused hours at the end of the contracted period are recognized as revenue.

In the case of franchised
cybercafé operators, the Group enters into an agreement with the franchisee that establishes the rights and obligations of each party and grants each franchisee a non-exclusive license to operate the cybercafé using the Groups
logo, brand and trade names. The cybercafés are owned and operated by the franchisees. The franchisee procures the retail space, invests in furniture, interior decor, PCs, and point of sale signage and employs and trains the franchisee staff.
The franchisee is responsible for the maintenance of the premises and interface with customers. The Group provides the complete backend support, including bandwidth, the authentication/usage engine and the billing and collection system.

In the case of franchised cable network operators and franchised cybercafé operators, the Group enters into a standard arrangement with
franchisees that provides for the payment to the Company, of an initial non-refundable franchisee fee in consideration for establishing the franchisee relationship and providing certain initial services. The fee covers the following upfront services
rendered by the Group:



| |  |  | conducting a market survey and deciding on the best location for the cybercafé or cable head end;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | obtaining the regulatory approvals for clearance of the site for wireless transmission at the allotted frequency range;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | installing the wiring from the receiver unit to the individual PCs in the cybercafé or the transmitting equipment in the cable head end;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | assisting in obtaining facilities, including computers and interiors for the cybercafés; and
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | providing the operations manual with instructions and guidelines for running the cybercafé or distributing Internet access through cable
network.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

The initial franchisee fee revenue is recognized as revenue when all of the obligations required of the Group have
been substantially accomplished or provided. Internet access revenue and Internet telephony revenues are recognized based on usage by the customer.

After the commencement of the franchisee operations, the Company renders subsequent services to the franchised cybercafés in form of providing bandwidth for establishing connectivity through supply
of Sify cybercafé cards (typically called as user accounts or top ups), providing backend support, the authentication/usage engine and the billing and collection system. The cybercafé cards enable the users to
access the internet for a specified quantum of usage within a contracted period. As revenue from these subsequent services constitute continuing services, the revenue from such services are recognised based on the usage as the access is for a
specified quantum of usage within a specified time. Any unused hours at the end of the contracted period are recognised as revenue.

The
Company, along with provisioning of bandwidth on a recurring basis, renders other services on an integrated basis including backend support, authentication / usage engine and the billing and collection system to the franchisees. In such services,
the Company, through application software, helps the franchisee to keep online track of the usage of Sify cybercafé cards by the customers and also helps in authenticating the customer log-ins at different Cyber cafes. Such services to the
franchisees are billed and recorded as deferred revenue when the customer purchases the card and revenue is recognised over the period of provisioning of such services (i.e when the bandwidth is used by the customers).

(b) Online portal services: The Group enters into contracts with customers to serve advertisements in its portal and the Group is paid on the
basis of impressions, click-throughs or leads and in each case the revenue is recognized based on actual impressions/click-throughs/leads delivered. Revenue from advertisements displayed on portals is recognized ratably over the period of contract



118



---

##### Table of Contents

In the case of electronic commerce transactions, there are no performance obligations or minimum guarantees.
The Group acts in the capacity of an agent rather than as the principal for these transactions, and the revenue recognized on a net basis is the amount of the commission earned by the Group.

In the case of value-added services that are rendered using Sifys mobile telephone short code 54545, revenue is recognized upon delivery of the content/ring tones to the end subscriber and
confirmation by the mobile phone service provider.

(iii) Software services

The Group provides e-learning software development services to facilitate web-based learning in various organizations. The contracts executed by the Company are not similar i.e. the efforts required to
execute these contracts at each stage of development process differ from customer to customer and the contract is executed based on specific requirements regarding content/information of the customer. Thus the e-learning packages are specifically
designed for the customer and accordingly, are accounted for as customized programmes. These services include information presentation, structured content delivery, content digitization and simulation based training. These services are generally
provided on a fixed price basis. Revenue under such contracts is recognized when the outcome of the transaction can be estimated reliably by reference to the stage of completion of transaction at the reporting date. The stage of completion being
determined based on the actual time spent to the total estimated time. The revenue from Application Services such as online assessment, document management services, web development, mailing solutions and supply chain software are recognized over
the period of the contract.

(iv) Deferred income

Deferred income represents billing in excess of revenue recognized.

o. Export entitlements

Income in respect of import duty credit entitlement arising from export of services under the Served from India Scheme of the
Government of India is recognized in the year of exports, provided there is no significant uncertainty as to the amount of entitlement and availment of the credit.

p. Finance income and expense

Finance income comprises interest income on funds invested
(including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value through profit or loss . Interest income is recognized as it accrues
in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date when the Groups right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance expense comprises interest expense on loans and borrowings, bank charges, unwinding of the discount on provision, losses on disposal
of available-for-sale financial assets, fair value losses on financial assets at fair value through profit or loss that are recognized in statement of income.

q. Borrowing costs

Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in which they are incurred. To the extent the Group borrows funds generally and uses
them for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowings costs eligible for capitalization by applying a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined
based on the weighted average of borrowing costs applicable to the borrowings of the Group which are outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing costs that
the Group capitalizes during a period does not exceed the amount of borrowing costs incurred during that period.

r. Income taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it
relates to items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date.



119



---

##### Table of Contents

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the
foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill, as the same is not deductible for tax purposes. Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to
offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that
future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized.

Deferred taxation arising on investments in subsidiaries and associates is recognized except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred taxation arising on the temporary differences arising out of undistributed earnings of the equity method
accounted investee is recorded based on the managments intention. If the intention is to realize the undistributed earnings through sale, deferred tax is measured at the capital gains tax rates that are expected to be applied to temporary
differences when they reverse. However, when the intention is to realize the undistributed earnings through dividend, the Groups share of the income and expenses of the equity method accounted investee is recorded in the statement of income,
after considering any taxes on dividend payable by the equity method accounted investee and no deferred tax is set up in the Groups books as the tax liability is not with the group.

s. Earnings / (loss) per share

The Group presents basic and diluted earnings / (loss) per
share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Where ordinary shares are issued
but not fully paid, they are treated in the calculation of basic earnings per share as a fraction of an ordinary share to the extent that they were entitled to participate in dividends during the period relative to a fully paid ordinary share.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes share options
granted to employees. To the extent that partly paid shares are not entitled to participate in dividends during the period they are treated as the equivalent of warrants or options in the calculation of diluted earnings per share.

t. Recent accounting pronouncements



|(i) | In October 2010, the IASB issued an amendment to IFRS 7 DisclosuresTransfers of financial assets. The purpose of the amendment is to
enhance the existing disclosures in IFRS 7 when an asset is transferred but is not derecognized and introduce new disclosures for assets that are derecognized but the entity continues to have a continuing exposure to the asset after the sale. The
amendment is effective for fiscal years beginning on or after July 1, 2011. Earlier application is permitted.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | In December, 2011, the IASB issued an amendment to IFRS 7 Disclosuresoffsetting financial assets and financial liabilities. The
amended standard requires additional disclosures where financial assets and financial liabilities are offset in the balance sheet. These disclosures would provide users with information that is useful in (a) evaluating the effect or potential
effect of netting arrangements on an entitys financial position and (b) analyzing and comparing financial statements prepared in accordance with IFRSs and U.S. GAAP. The amendment is effective retrospectively for fiscal years beginning on
or after January 1, 2013. Earlier application is permitted.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



120



---

##### Table of Contents

|(iii) | IFRS 9 Financial Instruments:In November 2009, the International Accounting Standards Board issued IFRS 9, Financial Instruments: Recognition and
Measurement, to reduce the complexity of the current rules on financial instruments as mandated in IAS 39. The effective date for IFRS 9 is annual periods beginning on or after January 1, 2015 with early adoption permitted. IFRS 9 has fewer
classification and measurement categories as compared to IAS 39 and has eliminated the categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement of segregating embedded derivatives
and tainting rules pertaining to held to maturity investments. For an investment in an equity instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present
all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss. IFRS 9, was further amended in October 2010, and such amendment introduced
requirements on accounting for financial liabilities. This amendment addresses the issue of volatility in the profit or loss due to changes in the fair value of an entitys own debt. It requires the entity, which chooses to measure a liability
at fair value, to present the portion of the fair value change attributable to the entitys own credit risk in the other comprehensive income. The company is required to adopt IFRS 9 by accounting year commencing April 1,
2015.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iv) | IFRS 10, Consolidated Financial Statements, IFRS 11, Joint Arrangements and IFRS 12, Disclosure of Interests in Other Entities:In May 2011, the
International Accounting Standards Board issued IFRS 10, IFRS 11 and IFRS 12. The effective date for IFRS 10, IFRS 11 and IFRS 12 is annual periods beginning on or after January 1, 2013 with early adoption permitted.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IFRS 10 Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in
whether an entity should be included within the consolidated financial statements of the parent company. IFRS 10 replaces the consolidation requirements in SIC-12 Consolidation of Special Purpose Entities and IAS 27 Consolidated and Separate
Financial Statements. The standard provides additional guidance for the determination of control in cases of ambiguity such as franchisor franchisee relationship, de facto agent, silos and potential voting rights.

IFRS 11 Joint Arrangements determines the nature of an arrangement by focusing on the rights and obligations of the arrangement, rather
than its legal form. IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities-Non-monetary Contributions by Venturers. IFRS 11 addresses only forms of joint arrangements (joint operations and joint ventures) where
there is joint control whereas IAS 31 had identified three forms of joint ventures, namely jointly controlled operations, jointly controlled assets and jointly controlled entities. The standard addresses inconsistencies in the reporting of joint
arrangements by requiring a single method to account for interests in jointly controlled entities, which is the equity method.

IFRS 12 Disclosure of Interests in Other Entities is a new and comprehensive standard on disclosure requirements for all forms of
interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. One major requirement of IFRS 12 is that an entity needs to disclose the significant judgments and assumptions it
has made in determining:

(c) whether it has control, joint control or significant influence over another entity; and

(d) the type of joint control when the joint arrangement is structured through a separate vehicle.

IFRS 12 also expands the disclosure requirements for subsidiaries with non-controlling interest, joint arrangements and associates that
are individually material. IFRS 12 introduces the term structured entity by replacing Special Purpose entities and requires enhanced disclosures by way of nature and extent of, and changes in, the risks associated with its interests in
both its consolidated and unconsolidated structured entities.



|(v) | IFRS 13 Fair Value Measurement: In May 2011, the International Accounting Standards Board issued IFRS 13, Fair Value Measurement to provide specific
guidance on fair value measurement and requires enhanced disclosures for all assets and liabilities measured at fair value, and not restricted to financial assets and liabilities. The standard introduces a precise definition of fair value and a
consistent measure for fair valuation across assets and liabilities, with a few specified exceptions. The effective date for IFRS 13 is annual periods beginning on or after January 1, 2013 with early adoption permitted. The company is required
to adopt IFRS 13 by accounting year commencing April 1, 2013.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(vi) | IAS 1 (Amended) Presentation of Financial Statements: In June 2011, the International Accounting Standard Board published amendments to IAS 1 Presentation
of Financial Statements. The amendments to IAS 1, Presentation of Financial Statements, require companies preparing financial statements in accordance with IFRS to group items within other comprehensive income that may be reclassified to the profit
or loss separately from those items which would not be recyclable in the profit or loss section of the income statement. It also requires the tax associated with items presented before tax to be shown separately for each of the two groups of other
comprehensive income items (without changing the option to present items of other comprehensive income either before tax or net of tax).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The amendments also reaffirm existing requirements that items in other comprehensive income and profit or loss should be presented as either a single statement or two consecutive statements. This
amendment is applicable to annual periods beginning on or after July 1, 2012, with early adoption permitted. The company is required to adopt IAS 1 (Amended) by accounting year commencing April 1, 2013.



121



---

##### Table of Contents

|(vii) | IAS 19 (Amended) Employee Benefits: In June 2011, International Accounting Standards Board issued IAS 19 (Amended), Employee Benefits. The effective date
for adoption of IAS 19 (Amended) is annual periods beginning on or after January 1, 2013, though early adoption is permitted.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IAS 19 (Amended) has eliminated an option to defer the recognition of gains and losses through re-measurements and requires such gain or loss to be recognized through other comprehensive income in the
year of occurrence to reduce volatility. The amended standard requires immediate recognition of effects of any plan amendments. Further it also requires assets in profit or loss to be restricted to government bond yields or corporate bond yields,
considered for valuation of Projected Benefit Obligation, irrespective of actual portfolio allocations. The actual return from the portfolio in excess of or less than such yields is recognized through other comprehensive income.

These amendments enhance the disclosure requirements for defined benefit plans by requiring information about the characteristics of
defined benefit plans and risks that entities are exposed to through participation in those plans. The amendments need to be adopted retrospectively. The company is required to adopt IAS 19 (Amended) by accounting year commencing April 1, 2013.



|(viii) | In December, 2011, the IASB issued an amendment to IAS 32 Offsetting financial assets and financial liabilities. The purpose of the
amendment is to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. This includes clarifying the meaning of currently has a legally enforceable right to set-off and also the
application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. The amendment is effective retrospectively for fiscal years beginning on
or after January 1, 2014. Earlier application is permitted. We are currently evaluating the impact these amendments will have on our consolidated financial statements.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The company is currently evaluating the requirements of above pronouncements and has not yet determined the impact on the consolidated
financial statements.

4. Determination of fair values

A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for
measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Property, plant and equipment

The
fair value of property, plant and equipment recognized as a result of a business combination is an estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arms
length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approach using quoted market prices for similar
items when available and replacements costs when appropriate.

(ii) Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business
less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

(iii) Intangible assets

The fair value of intangible assets acquired in the business
combinations is based on discounted cash flows expected to be derived from the use and eventual sale of assets (terminal value).

(iv)
Investments in equity and debt securities

The fair value of available-for-sale financial assets is determined by reference to their quoted
price at the reporting date. When the fair value of the financial asset cannot be measured reliably, it is measured at cost.



122



---

##### Table of Contents

(v) Trade and other receivables

The fair value of trade and other receivables, excluding construction contracts in progress, is estimated as the present value of future cash flows, discounted at the market rate of interest at the
reporting date. However in respect of such financial instruments, fair value generally approximates the carrying amount due to the short term nature of such assets. This fair value is determined for disclosure purposes or when acquired in a business
combination.

(vi) Derivatives

The fair value of forward exchange contracts is based on their quoted price, if available. If a quoted price is not available, the fair value is estimated
by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk free interest rate (based on government bonds). The fair value of foreign currency option
contracts is determined based on the appropriate valuation techniques, considering the terms of the contract. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and
the counter party when appropriate.

(vii) Non derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.

(viii) Share-based payment transactions

The fair value of employee stock options is
measured using the Black-Scholes method. Measurement inputs include share price on grant date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly
available information), expected term of the instrument (based on historical experience and general option holder behavior), expected dividends, and the risk free interest rate (based on government bonds).



123



---

##### Table of Contents

5. Property, plant and equipment

The following table presents the changes in property, plant and equipment during the year ended March 31, 2012



|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|----------------------------- |  | ------------------ | --------- |  | ------------------------ |  | ------- | --------------------------------- |  |  | ------------------ |  |  | ----------------- | --------- |  | ------------------------ |  | --------- | --------- |  |  | ------------------ |  |  |  | ------ |  |  |  | --------- |  |  |  | --------- | 
|                              |  | Cost               |           |  | Accumulated depreciation |  |         | Carryingamount asat
March31, 2012 | 
|Particulars                   |  | As atApril 01,2011 |           |  | Additions                |  |         | Disposals                         |  |  | As atMarch 31,2012 |  |  | As
atApril 1,2011 |           |  | Depreciationfor the year |  |           | Deletions |  |  | As atMarch 31,2012 |  | 
|Building                      |  |                    | 777,419   |  |                          |  |        |                                   |  |  |                   |  |  |                   | 777,419   |  |                          |  | 204,826   |           |  |  | 27,841             |  |  |  |       |  |  |  | 232,667   |  |  |  | 544,752   | 
|Plant and machinery           |  |                    | 5,433,359 |  |                          |  | 350,204 |                                   |  |  | 51,639             |  |  |                   | 5,731,924 |  |                          |  | 3,335,610 |           |  |  | 504,532            |  |  |  | 51,494 |  |  |  | 3,788,648 |  |  |  | 1,943,276 | 
|Computer equipments           |  |                    | 563,776   |  |                          |  | 66,303  |                                   |  |  | 474                |  |  |                   | 629,605   |  |                          |  | 478,705   |           |  |  | 31,711             |  |  |  | 415    |  |  |  | 510,001   |  |  |  | 119,604   | 
|Office equipment              |  |                    | 234,125   |  |                          |  | 3,304   |                                   |  |  | 82                 |  |  |                   | 237,347   |  |                          |  | 129,932   |           |  |  | 21,133             |  |  |  | 82     |  |  |  | 150,983   |  |  |  | 86,364    | 
|Furniture and fittings        |  |                    | 713,359   |  |                          |  | 27,985  |                                   |  |  | 1,350              |  |  |                   | 739,994   |  |                          |  | 503,102   |           |  |  | 62,034             |  |  |  | 1,205  |  |  |  | 563,931   |  |  |  | 176,063   | 
|Vehicles                      |  |                    | 2,929     |  |                          |  | 2,907   |                                   |  |  | 1,089              |  |  |                   | 4,747     |  |                          |  | 2,929     |           |  |  | 807                |  |  |  | 1,089  |  |  |  | 2,647     |  |  |  | 2,100     | 
|Total                         |  |                    | 7,724,967 |  |                          |  | 450,703 |                                   |  |  | 54,634             |  |  |                   | 8,121,036 |  |                          |  | 4,655,104 |           |  |  | 648,058            |  |  |  | 54,285 |  |  |  | 5,248,877 |  |  |  | 2,872,159 | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|Add: Construction in progress |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  | 988,128   | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|Total                         |  |                    | 7,724,967 |  |                          |  | 450,703 |                                   |  |  | 54,634             |  |  |                   | 8,121,036 |  |                          |  | 4,655,104 |           |  |  | 648,058            |  |  |  | 54,285 |  |  |  | 5,248,877 |  |  |  | 3,860,287 | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 

The following table presents the changes in property, plant and equipment during the year ended March 31, 2011



|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|----------------------------- |  | ------------------ | --------- |  | ------------------------ |  | ------- | --------------------------------- |  |  | ------------------ |  |  | ----------------- | --------- |  | ------------------------ |  | --------- | --------- |  |  | ------------------ |  |  |  | ------ |  |  |  | --------- |  |  |  | --------- | 
|                              |  | Cost               |           |  | Accumulated depreciation |  |         | Carryingamount asat
March31, 2011 | 
|Particulars                   |  | As atApril 01,2010 |           |  | Additions                |  |         | Disposals                         |  |  | As atMarch 31,2011 |  |  | As
atApril 1,2010 |           |  | Depreciationfor the year |  |           | Deletions |  |  | As atMarch 31,2011 |  | 
|Building                      |  |                    | 777,419   |  |                          |  |        |                                   |  |  |                   |  |  |                   | 777,419   |  |                          |  | 177,072   |           |  |  | 27,754             |  |  |  |       |  |  |  | 204,826   |  |  |  | 572,593   | 
|Plant and machinery           |  |                    | 5,302,696 |  |                          |  | 199,591 |                                   |  |  | 68,928             |  |  |                   | 5,433,359 |  |                          |  | 2,929,688 |           |  |  | 474,168            |  |  |  | 68,246 |  |  |  | 3,335,610 |  |  |  | 2,097,749 | 
|Computer equipments           |  |                    | 517,904   |  |                          |  | 46,736  |                                   |  |  | 864                |  |  |                   | 563,776   |  |                          |  | 429,631   |           |  |  | 49,854             |  |  |  | 780    |  |  |  | 478,705   |  |  |  | 85,071    | 
|Office equipment              |  |                    | 228,418   |  |                          |  | 6,214   |                                   |  |  | 507                |  |  |                   | 234,125   |  |                          |  | 107,252   |           |  |  | 23,181             |  |  |  | 501    |  |  |  | 129,932   |  |  |  | 104,193   | 
|Furniture and fittings        |  |                    | 706,148   |  |                          |  | 15,731  |                                   |  |  | 8,520              |  |  |                   | 713,359   |  |                          |  | 445,437   |           |  |  | 64,442             |  |  |  | 6,777  |  |  |  | 503,102   |  |  |  | 210,257   | 
|Vehicles                      |  |                    | 6,191     |  |                          |  |        |                                   |  |  | 3,262              |  |  |                   | 2,929     |  |                          |  | 6,191     |           |  |  |                   |  |  |  | 3,262  |  |  |  | 2,929     |  |  |  |          | 
|Total                         |  |                    | 7,538,776 |  |                          |  | 268,272 |                                   |  |  | 82,081             |  |  |                   | 7,724,967 |  |                          |  | 4,095,271 |           |  |  | 639,399            |  |  |  | 79,566 |  |  |  | 4,655,104 |  |  |  | 3,069,863 | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|Add: Construction in progress |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  | 690,610   | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 
|Total                         |  |                    | 7,538,776 |  |                          |  | 268,272 |                                   |  |  | 82,081             |  |  |                   | 7,724,967 |  |                          |  | 4,095,271 |           |  |  | 639,399            |  |  |  | 79,566 |  |  |  | 4,655,104 |  |  |  | 3,760,473 | 
|                              |  |                    |           |  |                          |  |         |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |        |  |  |  |           |  |  |  |           | 



124



---

##### Table of Contents

The following table presents the changes in property, plant and equipment during the year ended
March 31, 2010



|                              |  |                    |           |  |                          |  |           |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |         |  |  |  |           |  |  |  |           | 
|----------------------------- |  | ------------------ | --------- |  | ------------------------ |  | --------- | --------------------------------- |  |  | ------------------ |  |  | ----------------- | --------- |  | ------------------------ |  | --------- | --------- |  |  | ------------------ |  |  |  | ------- |  |  |  | --------- |  |  |  | --------- | 
|                              |  | Cost               |           |  | Accumulated depreciation |  |           | Carryingamount asat
March31, 2010 | 
|Particulars                   |  | As atApril 01,2009 |           |  | Additions                |  |           | Disposals                         |  |  | As atMarch 31,2010 |  |  | As
atApril 1,2009 |           |  | Depreciationfor the year |  |           | Deletions |  |  | As atMarch 31,2010 |  | 
|Building                      |  |                    | 769,663   |  |                          |  | 7,756     |                                   |  |  |                   |  |  |                   | 777,419   |  |                          |  | 148,401   |           |  |  | 28,671             |  |  |  |        |  |  |  | 177,072   |  |  |  | 600,347   | 
|Plant and machinery           |  |                    | 4,733,122 |  |                          |  | 827,043   |                                   |  |  | 257,469            |  |  |                   | 5,302,696 |  |                          |  | 2,765,920 |           |  |  | 420,314            |  |  |  | 256,546 |  |  |  | 2,929,688 |  |  |  | 2,373,008 | 
|Computer equipments           |  |                    | 497,223   |  |                          |  | 26,462    |                                   |  |  | 5,781              |  |  |                   | 517,904   |  |                          |  | 367,972   |           |  |  | 66,709             |  |  |  | 5,050   |  |  |  | 429,631   |  |  |  | 88,273    | 
|Office equipment              |  |                    | 162,132   |  |                          |  | 68,106    |                                   |  |  | 1,820              |  |  |                   | 228,418   |  |                          |  | 96,955    |           |  |  | 12,070             |  |  |  | 1,773   |  |  |  | 107,252   |  |  |  | 121,166   | 
|Furniture and fittings        |  |                    | 628,279   |  |                          |  | 101,188   |                                   |  |  | 23,319             |  |  |                   | 706,148   |  |                          |  | 389,771   |           |  |  | 77,608             |  |  |  | 21,942  |  |  |  | 445,437   |  |  |  | 260,711   | 
|Vehicles                      |  |                    | 8,269     |  |                          |  |          |                                   |  |  | 2,078              |  |  |                   | 6,191     |  |                          |  | 6,420     |           |  |  | 1,360              |  |  |  | 1,589   |  |  |  | 6,191     |  |  |  |          | 
|Total                         |  |                    | 6,798,688 |  |                          |  | 1,030,555 |                                   |  |  | 290,467            |  |  |                   | 7,538,776 |  |                          |  | 3,775,439 |           |  |  | 606,732            |  |  |  | 286,900 |  |  |  | 4,095,271 |  |  |  | 3,443,505 | 
|                              |  |                    |           |  |                          |  |           |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |         |  |  |  |           |  |  |  |           | 
|Add: Construction in progress |  |                    |           |  |                          |  |           |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |         |  |  |  |           |  |  |  | 8,517     | 
|                              |  |                    |           |  |                          |  |           |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |         |  |  |  |           |  |  |  |           | 
|Total                         |  |                    | 6,798,688 |  |                          |  | 1,030,555 |                                   |  |  | 290,467            |  |  |                   | 7,538,776 |  |                          |  | 3,775,439 |           |  |  | 606,732            |  |  |  | 286,900 |  |  |  | 4,095,271 |  |  |  | 3,452,022 | 
|                              |  |                    |           |  |                          |  |           |                                   |  |  |                    |  |  |                   |           |  |                          |  |           |           |  |  |                    |  |  |  |         |  |  |  |           |  |  |  |           | 

Change in estimated useful life

On the basis of a comprehensive evaluation during the year ended March 31, 2008, the Group had revised the estimated useful lives of its networking equipment (included under plant and machinery) and
computers. As a result, the expected useful life of its networking equipment has been increased from 5 to 8 years and the expected useful life of computers has been decreased from 5 to 3 years. The effects of such changes on the depreciation expense
for the years ended March 31, 2010, 2011, 2012 and 2013 are as follows:



|                                              |  |      |        |  |      |  |         |      |  |  |        |  |  |      |        |  |  |  |         | 
|--------------------------------------------- |  | ---- | ------ |  | ---- |  | ------- | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------- | 
|                                              |  | 2010 |        |  | 2011 |  |         | 2012 |  |  | 2013   |  |  | 2014 |       
|Decrease / (increase) in depreciation expense |  |      | 61,498 |  |      |  | (17,674 | )    |  |  | 12,108 |  |  |      | 91,511 |  |  |  | 134,919 | 

Leased assets

The Groups leased assets include certain buildings, plant and machinery acquired under finance leases. As at March 31, 2012 the net carrying amount of buildings, plant and machinery and
vehicles acquired under finance leases is Rs.234,608 (March 31, 2011: Rs.244,926), Rs.226,594 (March 31, 2011: Rs.217,625) and Rs.2,100 (March 31, 2011 : Nil) respectively. During the year, the Group acquired leased assets of Rs.60,149 (March 31,
2011 : Rs 38,111).

In case prepayments are made towards buildings accounted for as finance leases, such prepayments are capitalized as
Leasehold Buildings (included in buildings) on the commencement of the lease term under the head Property, plant and equipment and depreciated in accordance with the depreciation policy for similar owned assets.

Capital Commitments

As of
March 31, 2012 and March 31, 2011, the Company was committed to spend approximately Rs.717,266 (net of advances Rs.493,774) and Rs.521,562 (net of advances Rs.691,338) respectively, under agreements to purchase property, plant and
equipment.

Construction in progress

Amounts paid towards acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of property, plant and equipment that are not ready to be put into use are disclosed
under construction-in-progress. As of March 31, 2012, Construction work in progress includes Rs.685,027 (March 31, 2011 : Rs.682,825) paid towards acquisition of building under construction on a leasehold land belonging to Pace Info Com Park
Private Limited by way of acquisition of the entire shareholding of its holding company M/s Hermit Projects Private Limited. Also refer note 37.

Capitalisation of expenses

The Company has capitalized expenses amounting to Rs.18,540
(March 31, 2011: Nil) which are directly attributable to the construction of building.



125



---

##### Table of Contents

Security

As at March 31,2012 property, plant and equipment with a carrying amount of Rs.2,408,857 (March 31, 2011: Rs.2,615,097) are subject to a registered charge to secure bank borrowings.

6. Intangible assets

Intangible assets
comprise the following:



|                        |  |                |         |  |                |  |         | 
|----------------------- |  | -------------- | ------- |  | -------------- |  | ------- | 
|                        |  | March 31, 2012 |         |  | March 31, 2011 | 
|Goodwill                |  |                | 14,595  |  |                |  | 14,595  | 
|Other intangible assets |  |                | 91,132  |  |                |  | 90,031  | 
|                        |  |                |         |  |                |  |         | 
|                        |  |                | 105,727 |  |                |  | 104,626 | 
|                        |  |                |         |  |                |  |         | 

(i) Goodwill

The following table presents the changes in goodwill during the years ended March 31, 2012 and 2011



|                                           |  |                |        |  |                |  |        | 
|------------------------------------------ |  | -------------- | ------ |  | -------------- |  | ------ | 
|                                           |  | March 31, 2012 |        |  | March 31, 2011 | 
|Balance at the beginning of the year       |  |                | 14,595 |  |                |  | 14,595 | 
|Effect of movement in exchange rates       |  |                |       |  |                |  |       | 
|Impairment loss recognized during the year |  |                |       |  |                |  |       | 
|                                           |  |                |        |  |                |  |        | 
|Net carrying amount of goodwill            |  |                | 14,595 |  |                |  | 14,595 | 
|                                           |  |                |        |  |                |  |        | 

The amount of goodwill as at March 31, 2012 and March 31, 2011 has been allocated to the Commercial and
Consumer segment.

Impairment testing for cash-generating units containing goodwill

In May 2006, the Group acquired travel business for a consideration of US$ 2.5 million in cash along with an option to purchase 125,000 shares of
Sify Technologies Limited and certain earn out payments aggregating to USD 0.5 million (Rs. 22,444). The assets acquired consist of system software, customer contracts and goodwill which collectively were considered as a cash generating unit
(CGU) by management. The said business operates from India and United States.

During the year ended March 31, 2010, triggered by certain
adverse market conditions such as decrease in revenue and increase in the cost of services, and other technological matters, the Group tested the carrying value of the above business for impairment. The recoverable amount of these intangibles
including goodwill were determined based on the higher of the value in use (using discounted cash flow approach) and fair value less cost to sell. Fair value less cost to sell, being the higher of the two was determined as the recoverable amount of
the CGU. Based on this assessment, the carrying value of the CGU was higher than its recoverable amount and as a result of the above, the group has recorded an impairment of the above intangibles including goodwill amounting to Rs 47,269 during the
year ended March 31, 2010 and adjusted the carrying value of these intangibles accordingly.

During the year ended March 31, 2011,
due to further decrease in revenue and continued losses in its travel business, the Group has tested the carrying value of the remaining intangibles and the recoverable amount of these intangibles were determined as Nil. Hence an impairment charge
was recorded for Rs 1,857, equal to the carrying value of the remaining intangibles as on the date of impairment testing.

The above
impairment charges relate to Commercial and Consumer segment.



126



---

##### Table of Contents

(ii) Other intangibles

The following table presents the changes in intangible assets during the years ended March 31, 2012, 2011 and 2010.



|                               |  |                   |        |  |                       |  |        |                            |  |  |          |  |  |             |         |  |       |  |        |  |  |  |         | 
|------------------------------ |  | ----------------- | ------ |  | --------------------- |  | ------ | -------------------------- |  |  | -------- |  |  | ----------- | ------- |  | ----- |  | ------ |  |  |  | ------- | 
|                               |  | Technicalknow-how |        |  | Portalsand webcontent |  |        | Customerrelatedintangibles |  |  | Software |  |  | Licensefees |         |  | Total | 
|(A) Cost                       |  |                   |        |  |                       |  |        |                            |  |  |          |  |  |             |         |  |       |  |        |  |  |  |         | 
|Balance as at March 31, 2009   |  |                   | 82,753 |  |                       |  | 52,730 |                            |  |  | 200,570  |  |  |             | 319,215 |  |       |  | 50,000 |  |  |  | 705,268 | 
|Acquisitions during the year   |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 51,468  |  |       |  |       |  |  |  | 51,468  | 
|Disposals during the year      |  |                   |       |  |                       |  | 52,730 |                            |  |  |         |  |  |             |        |  |       |  |       |  |  |  | 52,730  | 
|Balance as at March 31, 2010   |  |                   | 82,753 |  |                       |  |       |                            |  |  | 200,570  |  |  |             | 370,683 |  |       |  | 50,000 |  |  |  | 704,006 | 
|Acquisitions during the year   |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 23,397  |  |       |  |       |  |  |  | 23,397  | 
|Disposals during the year      |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             |        |  |       |  |       |  |  |  |        | 
|Balance as at March 31, 2011   |  |                   | 82,753 |  |                       |  |       |                            |  |  | 200,570  |  |  |             | 394,080 |  |       |  | 50,000 |  |  |  | 727,403 | 
|Acquisitions during the year   |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 44,603  |  |       |  |       |  |  |  | 44,603  | 
|Disposals during the year      |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             |        |  |       |  |       |  |  |  |        | 
|Balance as at March 31, 2012   |  |                   | 82,753 |  |                       |  |       |                            |  |  | 200,570  |  |  |             | 438,683 |  |       |  | 50,000 |  |  |  | 772,006 | 
|                               |  |                   |        |  |                       | 
|(B) Amortization               |  |                   |        |  |                       |  |        |                            |  |  |          |  |  |             |         |  |       |  |        |  |  |  |         | 
|Balance as at March 31, 2009   |  |                   | 82,753 |  |                       |  | 52,730 |                            |  |  | 169,847  |  |  |             | 256,621 |  |       |  | 5,906  |  |  |  | 567,857 | 
|Amortization for the year      |  |                   |       |  |                       |  |       |                            |  |  | 6,144    |  |  |             | 41,421  |  |       |  | 2,500  |  |  |  | 50,065  | 
|Impairment loss on intangibles |  |                   |       |  |                       |  |       |                            |  |  | 22,148   |  |  |             | 1,737   |  |       |  |       |  |  |  | 23,885  | 
|Disposals during the year      |  |                   |       |  |                       |  | 52,730 |                            |  |  |         |  |  |             |        |  |       |  |       |  |  |  | 52,730  | 
|Balance as at March 31, 2010   |  |                   | 82,753 |  |                       |  |       |                            |  |  | 198,139  |  |  |             | 299,779 |  |       |  | 8,406  |  |  |  | 589,077 | 
|Amortization for the year      |  |                   |       |  |                       |  |       |                            |  |  | 837      |  |  |             | 43,101  |  |       |  | 2,500  |  |  |  | 46,438  | 
|Impairment loss on intangibles |  |                   |       |  |                       |  |       |                            |  |  | 1,594    |  |  |             | 263     |  |       |  |       |  |  |  | 1,857   | 
|Balance as at March 31,2011    |  |                   | 82,573 |  |                       |  |       |                            |  |  | 200,570  |  |  |             | 343,143 |  |       |  | 10,906 |  |  |  | 637,372 | 
|Amortization for the year      |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 41,002  |  |       |  | 2,500  |  |  |  | 43,502  | 
|Impairment loss on intangibles |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             |        |  |       |  |       |  |  |  |        | 
|Balance as at March 31,2012    |  |                   | 82,573 |  |                       |  |       |                            |  |  | 200,570  |  |  |             | 384,145 |  |       |  | 13,406 |  |  |  | 680,874 | 
|                               |  |                   |        |  |                       | 
|(C) Carrying amounts           |  |                   |        |  |                       |  |        |                            |  |  |          |  |  |             |         |  |       |  |        |  |  |  |         | 
|As at March 31, 2010           |  |                   |       |  |                       |  |       |                            |  |  | 2,431    |  |  |             | 70,904  |  |       |  | 41,594 |  |  |  | 114,929 | 
|As at March 31, 2011           |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 50,937  |  |       |  | 39,094 |  |  |  | 90,031  | 
|As at March 31, 2012           |  |                   |       |  |                       |  |       |                            |  |  |         |  |  |             | 54,538  |  |       |  | 36,594 |  |  |  | 91,132  | 

Capital commitments

As of March 31, 2012, the Company was committed to spend approximately Rs.4,243 (net of advances Rs.539,889) (March 31, 2011: Rs.65,813 (net of advances Rs.393,849) respectively, under agreements to
purchase intangible assets.

Capitalized borrowing costs

During the years ended March 31, 2012, 2011 and 2010, the Company capitalized interest cost of Rs.13,541, Rs.35,852and Rs.24,553 respectively. The rate of capitalization of interest cost for the year
ended March 31, 2012, 2011 and 2010 was approximately 13.79%, 10.44%and 12.81% respectively.



127



---

##### Table of Contents

7. Investment in equity accounted investees

In March 2006, MF Global Overseas Limited (MFG), a group incorporated in United Kingdom acquired 70.15% of equity share capital of MF Global Sify Securities Private Limited (MF Global), formerly Man
Financial-Sify Securities India Private Limited (MF Global) from Refco Group Inc., USA (Refco). As at March 31, 2012, 29.85% of MF Global equity shares is held by the Company. The remaining 70.15% is owned by MFG, an unrelated
third party. MFG is a subsidiary of MF Global Limited, Bermuda. A summary of key financial information of MF Global and its subsidiaries which is not adjusted for the percentage ownership held by the Group is presented below:



|                                           |  |                |           |  |                |  |           | 
|------------------------------------------ |  | -------------- | --------- |  | -------------- |  | --------- | 
|Balance sheet                              |  | March 31, 2012 |           |  | March 31, 2011 | 
|Total assets                               |  |                | 3,506,913 |  |                |  | 4,546,919 | 
|                                           |  |                |           |  |                |  |           | 
|Total liabilities                          |  |                | 1,052,325 |  |                |  | 2,193,943 | 
|Shareholders equity                       |  |                | 2,454,588 |  |                |  | 2,352,976 | 
|                                           |  |                |           |  |                |  |           | 
|Total Liabilities and shareholders equity |  |                | 3,506,913 |  |                |  | 4,546,919 | 
|                                           |  |                |           |  |                |  |           | 



|                        |  |                    |           |  |                |  |           |                |  |  |           | 
|----------------------- |  | ------------------ | --------- |  | -------------- |  | --------- | -------------- |  |  | --------- | 
|Statement of operations |  | For the year ended |          
|                        |  | March 31, 2012     |           |  | March 31, 2011 |  |           | March 31, 2010 | 
|Revenues                |  |                    | 1,169,577 |  |                |  | 1,818,283 |                |  |  | 1,612,545 | 
|Net profit              |  |                    | 92,622    |  |                |  | 241,840   |                |  |  | 307,543   | 

During October 2010, Sify Technologies Ltd, the minority shareholder of MF Global holding 29.85 percent of the
outstanding shares of the MF Global, requested MF Globals Board of Directors to reconsider certain costs charged to the MF Global by MF Global Holdings Ltd and its affiliated and associated group companies, who hold 70.15 percent of the
outstanding shares of the MF Global. These charges are currently recorded in the financial statements of the MF Global for year ended March 31, 2008 aggregating to Rs.43,478,911 and March 31,2009 aggregating to Rs.15,374,528. The
resolution of this matter between the shareholders of MF Global remains uncertain and any financial adjustment that may arise is not presently known and accordingly no adjustment related to this matter has been provided for in MF Globals
consolidated financial statements. Any financial adjustment that may arise on resolution of the said matter would be expected to be handled prospectively and therefore would be reported in the period in which it is resolved. Consequently, no
adjustment related to the said matter was considered by Sify for equity method of accounting for MF Global. The auditors of MF Global have included an emphasis of matter with an explanatory paragraph in their audit report issued on the consolidated
financial statements of MF Global for the three years ended March 31, 2012 in connection with such recorded cross charges. The effect of such recorded cross charge is not material to the financial statements of Sify.

On October 31, 2011, MF Global Holding Limited, USA, sought bankruptcy protection through a chapter 11 filing in the U.S. Bankruptcy Court in New
York. Consequent to this, MFG also filed for bankruptcy proceedings in the United Kingdom and 3 individual administrators were appointed as Joint administrators (the Joint administrators) for MFG which holds the shares in the Joint
Venture Company.

The Company was informed by the Joint Administrators that they were in the process of seeking bids for the stakes held by
MFG in the Joint Venture Company. The Company believes that the auction process is in violation of the share holders agreement entered between MFG and the Company.

Hence, the Company filed a petition under section 9 of the Arbitration and Conciliation Act 1996 in Bombay High Court, seeking interim relief by restraining the Joint Administrators and MFG from
proceeding with the proposed auction in respect of the sale of shares held by MFG in the Joint Venture Company in violation of share holders agreement dated November 25, 2005. A hearing on the petition was held on December 16, 2011. The
Honble High Court granted an ad-interim injunction restraining MFG Overseas Limited through its Joint Administrators from disposing off its shares in MF Global in violation of the Shareholder Agreement. The petition was adjourned for further
proceedings. In parallel, the Company without prejudice to its legal rights under the petition was in discussion with the Joint Administrators of MFG for an early amicable settlement in this regard.

On March 23, 2012, the Board of Directors of the Company, approved to realize the value of the investment by sale to prospective buyers.



128



---

##### Table of Contents

On March 27, 2012, the Company entered into an agreement relating to sale and purchase of shares in MF
Global Sify Securities India Private Limited by and among Sify, MF Global Sify Securities Pvt Ltd., MF Global Overseas Limited, the joint administrators of MF Global Overseas and entities affiliated with the Phillip Capital Group, whereby the
Company agreed to sell its entire 29.85% interest in MF Global to Phillip Capital Group.

The consummation of the transaction was subject to
certain closing conditions, including regulatory and statutory approvals from the Government of India and the stock exchanges in India.

Additionally, in connection with the execution of the Agreement, on March 27, 2012, the Company, MF Global Sify Securities Private Limited, MF
Global Overseas Limited and the Joint Administrators entered into a settlement and release agreement pursuant to which the Company and MF Global Overseas Limited agreed to settle, effective upon the closing of the transactions contemplated by the
Agreement, their pending dispute in the Bombay High Court, India regarding certain matters, including the termination of shareholders agreement governing their respective interests in MF Global.

Hence, effective March 23, 2012, the above investment was classified as held for sale and measured accordingly as per IFRS 5. The above investment
does not form part of any of the operating segments of the Company.

Subsequently, on August 2, 2012, in pursuance of the Agreement dated
March 27, 2012 and after obtaining all the statutory and regulatory approvals, the Company completed the sale of its entire stake and the rights therein in MF Global for a cash consideration of Rs.1,390,200 (USD 25 million) to Phillip Capital
Group, Singapore and MF Global Management Employees Trust, India. Consequently, with effect from such date, MF Global ceased to be an associate of the Company. Further, as per the settlement and release agreement, the Company has
initiated steps to withdraw the arbitration proceedings filed against MFG and others in the Bombay High court, India and any other existing disputes also stands resolved. Consequently, no financial adjustments would arise in future in the
Consolidated financial statements of the Company on account of disputes relating to cross charges.

8. Cash and cash equivalents

Cash and cash equivalents as per consolidated statement of financial position, as at March 31, 2012 amounted to Rs.742,235 (March 31,
2011: Rs.458,559). This excludes cash-restricted of Rs.150,533 (March 31, 2011: Rs.84,538), representing deposits held under lien against working capital facilities availed and bank guarantees given by the Group towards future performance
obligations.

(a) Restricted cash



|                                                                                                  |  |                |         |  |                |  |        |                |  |  |         | 
|------------------------------------------------------------------------------------------------- |  | -------------- | ------- |  | -------------- |  | ------ | -------------- |  |  | ------- | 
|                                                                                                  |  | March 31, 2012 |         |  | March 31, 2011 |  |        | March 31, 2010 | 
|Non current                                                                                       |  |                |         |  |                |  |        |                |  |  |         | 
|Against future performance obligation                                                             |  |                |        |  |                |  |       |                |  |  |        | 
|Current                                                                                           |  |                |         |  |                |  |        |                |  |  |         | 
|Bank deposits held under lien against borrowings / guarantees from banks / Government authorities |  |                | 150,533 |  |                |  | 84,538 |                |  |  | 360,909 | 
|                                                                                                  |  |                |         |  |                |  |        |                |  |  |         | 
|Total restricted cash                                                                             |  |                | 150,533 |  |                |  | 84,538 |                |  |  | 360,909 | 
|                                                                                                  |  |                |         |  |                |  |        |                |  |  |         | 

(b) Non restricted cash



|                                                          |  |  |          |   |  |  |          |   |  |  |            |  
|--------------------------------------------------------- |  |  | -------- | - |  |  | -------- | - |  |  | ---------- | -
|Current                                                   |  |  |          |   |  |  |          |   |  |  |            |  
|                                                          |  |  |          |   |  |  |          |   |  |  |            |  
|Cash and bank balances                                    |  |  | 742,235  |   |  |  | 458,559  |   |  |  | 517,789    |  
|                                                          |  |  |          |   |  |  |          |   |  |  |            |  
|Total cash (a+b)                                          |  |  | 892,768  |   |  |  | 543,097  |   |  |  | 878,698    |  
|                                                          |  |  |          |   |  |  |          |   |  |  |            |  
|Bank overdraft used for cash management purposes          |  |  | (798,180 | ) |  |  | (678,901 | ) |  |  | (1,060,284 | )
|Less: Non current restricted cash                         |  |  |         |   |  |  |         |   |  |  |           |  
|                                                          |  |  |          |   |  |  |          |   |  |  |            |  
|Cash and cash equivalents for the statement of cash flows |  |  | 94,588   |   |  |  | (135,804 | ) |  |  | (181,586   | )
|                                                          |  |  |          |   |  |  |          |   |  |  |            |  

9. Lease prepayments



|                            |  |                |         |  |                |  |        | 
|--------------------------- |  | -------------- | ------- |  | -------------- |  | ------ | 
|                            |  | March 31, 2012 |         |  | March 31, 2011 | 
|Towards land and buildings* |  |                | 364,190 |  |                |  | 63,068 | 
|                            |  |                |         |  |                |  |        | 
|                            |  |                | 364,190 |  |                |  | 63,068 | 
|                            |  |                |         |  |                |  |        | 



|* | Includes Rs.306,199 (March 31, 2011: Nil) paid for acquiring leasehold rights of land for construction of Data center in Noida, India. Also refer note 37.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



129



---

##### Table of Contents

The prepayment towards land is amortized over the period of the lease on a straight line basis. In respect
of buildings under operating lease, prepayments are amortized over the lease term on a straight line basis.

10. Other assets



|                                                |  |                |           |  |                |  |         | 
|----------------------------------------------- |  | -------------- | --------- |  | -------------- |  | ------- | 
|                                                |  | March 31, 2012 |           |  | March 31, 2011 | 
|Non current                                     |  |                |           |  |                |  |         | 
|Other deposits and receivables (see note below) |  |                | 1,073,479 |  |                |  | 672,843 | 
|                                                |  |                |           |  |                |  |         | 
|                                                |  |                | 1,073,479 |  |                |  | 672,843 | 
|                                                |  |                |           |  |                |  |         | 
|Current                                         |  |                |           |  |                |  |         | 
|Net investment in leases                        |  |                |          |  |                |  |        | 
|                                                |  |                |           |  |                |  |         | 
|                                                |  |                |          |  |                |  |        | 
|                                                |  |                |           |  |                |  |         | 
|Financial assets included in other assets       |  |                | 252,386   |  |                |  | 212,969 | 
|                                                |  |                |           |  |                |  |         | 



|(a) | Includes Rs.539,888 (March 31 2011: Rs. 459,872) paid to Emirates Integrated Telecommunications Company PJSC in relation to supply of bandwidth capacity from the Europe
India Gateway (undersea cable network) and borrowing cost capitalized thereon.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11. Deferred tax assets and liabilities

The tax effects of significant temporary differences that resulted in deferred tax assets and a description of the items that created
these differences is given below



|                                                   |  |                        |         |   |                |  |         |  
|-------------------------------------------------- |  | ---------------------- | ------- | - | -------------- |  | ------- | -
|Recognized deferred tax assets / (liabilities)     |  | Assets / (liabilities) |        
|                                                   |  | March 31, 2012         |         |   | March 31, 2011 | 
|Deferred tax assets                                |  |                        |         |   |                |  |         |  
|Carry forward capital losses                       |  |                        | 97,409  |   |                |  | 90,892  |  
|                                                   |  |                        |         |   |                |  |         |  
|                                                   |  |                        | 97,409  |   |                |  | 90,892  |  
|                                                   |  |                       
|Deferred tax liabilities                           |  |                        |         |   |                |  |         |  
|Property, plant and equipment                      |  |                        |        |   |                |  |        |  
|Intangible assets                                  |  |                        | (1,386  | ) |                |  | (83     | )
|Investment in equity accounted investees           |  |                        | (96,023 | ) |                |  | (90,809 | )
|                                                   |  |                        |         |   |                |  |         |  
|                                                   |  |                        | (97,409 | ) |                |  | (90,892 | )
|                                                   |  |                        |         |   |                |  |         |  
|Net deferred tax asset recognized in balance sheet |  |                        |        |   |                |  |        |  
|                                                   |  |                        |         |   |                |  |         |  

In assessing the realizability of the deferred income tax assets, management considers whether some portion or all of the
deferred income tax assets will not be realized. The ultimate realization of the deferred income tax assets and tax loss carry forwards is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategy in making this assessment. Based on the level of historical taxable income and projections of
future taxable income over the periods in which the deferred tax assets are deductible, management believes that the Company will realize the benefits of those recognized deductible differences. The amount of deferred tax assets considered
realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.



130



---

##### Table of Contents

Movement in temporary differences during the year



|                                         |  |                          |         |   |                             |  |        |                    |  |  |                           |   |  |                             |         |   |                    |  |        |                           |  |  |      |   |  |  |         |  
|---------------------------------------- |  | ------------------------ | ------- | - | --------------------------- |  | ------ | ------------------ |  |  | ------------------------- | - |  | --------------------------- | ------- | - | ------------------ |  | ------ | ------------------------- |  |  | ---- | - |  |  | ------- | -
|                                         |  | Balanceas atApril 1,2010 |         |   | Recognizedinincomestatement |  |        | RecognizedinEquity |  |  | Balanceas atMarch 31,2011 |   |  | Recognizedinincomestatement |         |   | RecognizedinEquity |  |        | Balanceas atMarch 31,2012 | 
|Property, plant and equipment            |  |                          | (76     | ) |                             |  | 76     |                    |  |  |                          |   |  |                             |        |   |                    |  | (1,060 | )                         |  |  |     |   |  |  | (1,060  | )
|Intangible assets                        |  |                          | (189    | ) |                             |  | 106    |                    |  |  |                          |   |  |                             | (83     | ) |                    |  | (244   | )                         |  |  |     |   |  |  | (327    | )
|Tax loss carry forwards                  |  |                          | 82,869  |   |                             |  | 8,875  |                    |  |  | (852                      | ) |  |                             | 90,892  |   |                    |  | 7,174  |                           |  |  | (657 | ) |  |  | 97,409  |  
|Investment in equity accounted investees |  |                          | (82,604 | ) |                             |  | (9,057 | )                  |  |  | 852                       |   |  |                             | (90,809 | ) |                    |  | (5,870 | )                         |  |  | 657  |   |  |  | (96,022 | )
|                                         |  |                          |         |   |                             |  |        |                    |  |  |                           |   |  |                             |         |   |                    |  |        |                           |  |  |      |   |  |  |         |  
|                                         |  |                          |        |   |                             |  |       |                    |  |  |                          |   |  |                             |        |   |                    |  |       |                           |  |  |     |   |  |  |        |  
|                                         |  |                          |         |   |                             |  |        |                    |  |  |                           |   |  |                             |         |   |                    |  |        |                           |  |  |      |   |  |  |         |  

Unrecognized deferred tax assets / (liabilities)



|                                 |  |                      |           |  |                      |  |           | 
|-------------------------------- |  | -------------------- | --------- |  | -------------------- |  | --------- | 
|                                 |  | As at March 31, 2012 |           |  | As at March 31, 2011 | 
|Deductible temporary differences |  |                      | 178,091   |  |                      |  | 157,928   | 
|Unrecognized tax losses          |  |                      | 3,463,628 |  |                      |  | 3,084,218 | 
|                                 |  |                      | 3,641,719 |  |                      |  | 3,242,146 | 

Considering the probability of availability of future taxable profits in the period in which tax losses expire, deferred
tax assets have not been recognized in respect of tax losses carried forward by the Group. The above tax losses expire at various dates until 2025.

Deferred tax liabilities as at March 31, 2012 and March 31, 2011 have not been recognized on undistributed profits of its subsidiaries since the group expects to realize the same in a tax free
manner.

Sec.79 of the Indian Income Tax Act denies carry forward of losses incurred in earlier years in case of change in the beneficial
interest in the shares outstanding by more than 51%. As a result of the private placement of shares during the year ended March 31, 2011, there was a change in the registered shareholders by more than 51%. The above provision is not applicable
to companies in which public are substantially interested. Sec. 2(18) of the Indian Income Tax Act, among other things, defines a company listed in a recognized Stock Exchange in India as a Company in which public are substantially Interested. Based
on the non-discrimination clause available in the IndiaUnited States of America tax treaty, when the capital of the company is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Country, the
company shall not be subjected to more burdensome position than the similar enterprises of the Contracting Country. Based on the above clause, the Company being listed in US Stock Exchange should not be discriminated for being not listed in India
and be treated on par with a Company listed in India. Hence, the Company believes that it is out of the purview of Sec.79 of the Indian Income Tax Act. Further as disclosed in Item 7 of this Annual Report, there has been no change in the
beneficial ownership of Shares by more than 51% compared to earlier years and the Board of Directors of the Company have continued to be the same. Hence based on the advice, the Company believes that it can carry forward and set-off the above losses
incurred by it in earlier years.

Income tax expense recognized in profit or loss



|                                                  |  |                |        |   |                |  |        |                |  |  |         |  
|------------------------------------------------- |  | -------------- | ------ | - | -------------- |  | ------ | -------------- |  |  | ------- | -
|                                                  |  | March 31, 2012 |        |   | March 31, 2011 |  |        | March 31, 2010 | 
|Current tax expense / (benefit)                   |  |                |        |   |                |  |        |                |  |  |         |  
|Current period                                    |  |                |       |   |                |  |       |                |  |  | (90,003 | )
|                                                  |  |                |       |   |                |  |       |                |  |  | (90,003 | )
|                                                  |  |                |       
|Deferred tax expense                              |  |                |        |   |                |  |        |                |  |  |         |  
|Origination and reversal of temporary differences |  |                | 7,174  |   |                |  | 8,875  |                |  |  | 22,895  |  
|Recognition of previously unrecognized tax losses |  |                | (7,174 | ) |                |  | (8,875 | )              |  |  | (14,371 | )
|Reversal of previously recognized tax losses      |  |                |       |   |                |  |       |                |  |  |        |  
|                                                  |  |                |       |   |                |  |       |                |  |  | 8,524   |  
|                                                  |  |                |        |   |                |  |        |                |  |  |         |  
|Total income tax expense / (benefit)              |  |                |       |   |                |  |       |                |  |  | (81,479 | )
|                                                  |  |                |        |   |                |  |        |                |  |  |         |  



131



---

##### Table of Contents

Income tax directly recognized in other comprehensive income



|                                                             |  |               |   |  |               |  |   |               |  |  |   | 
|------------------------------------------------------------ |  | ------------- | - |  | ------------- |  | - | ------------- |  |  | - | 
|                                                             |  | March 31,2012 |   |  | March 31,2011 |  |   | March 31,2010 | 
|Actuarial (gains) or losses                                  |  |               |  |  |               |  |  |               |  |  |  | 
|Tax effect of changes in the fair value of other investments |  |               |  |  |               |  |  |               |  |  |  | 
|Tax effect on share of profit of associate recognized in OCI |  |               |  |  |               |  |  |               |  |  |  | 
|Tax effect on foreign currency translation differences       |  |               |  |  |               |  |  |               |  |  |  | 
|                                                             |  |               |   |  |               |  |   |               |  |  |   | 
|Income tax benefit / (expense) recognized directly in equity |  |               |  |  |               |  |  |               |  |  |  | 
|                                                             |  |               |   |  |               |  |   |               |  |  |   | 

Reconciliation of effective tax rate

A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before taxes is summarized below:



|                                                                                                           |  |                           |          |   |                           |  |          |                           |  |  |         |  
|---------------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ------------------------- |  | -------- | ------------------------- |  |  | ------- | -
|                                                                                                           |  | Year endedMarch 31, 
2012 |          |   | Year endedMarch 31, 
2011 |  |          | Year endedMarch 31, 
2010 | 
|Profit / (loss) before income taxes                                                                        |  |                           | (383,337 | ) |                           |  | (519,492 | )                         |  |  | (54,666 | )
|Enacted tax rates in India                                                                                 |  |                           | 32.45    | % |                           |  | 33.22    | %                         |  |  | 33.99   | %
|Computed expected tax expense / (benefit)                                                                  |  |                           | (124,373 | ) |                           |  | (172,575 | )                         |  |  | (18,581 | )
|Effect of:                                                                                                 |  |                           |          |   |                           |  |          |                           |  |  |         |  
|Share based payment expense not deductible for tax purposes                                                |  |                           | 10,082   |   |                           |  | 2,697    |                           |  |  | 8,188   |  
|Unrecognized deferred tax assets on losses incurred during the year (net of temporary differences, if any) |  |                           | 123,148  |   |                           |  | 194,140  |                           |  |  | 41,370  |  
|Unrecognized deferred tax asset on temporary differences                                                   |  |                           |         |   |                           |  |         |                           |  |  |        |  
|Share of profit of equity accounted investee taxed at a lower rate                                         |  |                           | (2,952   | ) |                           |  | (9,217   | )                         |  |  | (12,203 | )
|Recognition of previously unrecognized tax losses                                                          |  |                           | (5,905   | ) |                           |  | (15,045  | )                         |  |  | (18,774 | )
|Reversal of tax expense consequent to merger (Refer note 40)                                               |  |                           |         |   |                           |  |         |                           |  |  | (81,479 | )
|Others                                                                                                     |  |                           |         |   |                           |  |         |                           |  |  |        |  
|                                                                                                           |  |                           |          |   |                           |  |          |                           |  |  |         |  
|                                                                                                           |  |                           |         |   |                           |  |         |                           |  |  | (81,479 | )
|                                                                                                           |  |                           |          |   |                           |  |          |                           |  |  |         |  

12. Inventories

Inventories comprise:



|                       |  |                |        |  |                |  |        | 
|---------------------- |  | -------------- | ------ |  | -------------- |  | ------ | 
|                       |  | March 31, 2012 |        |  | March 31, 2011 | 
|Communication hardware |  |                | 8,328  |  |                |  | 2,824  | 
|Application software   |  |                | 11,931 |  |                |  | 12,813 | 
|                       |  |                |        |  |                |  |        | 
|                       |  |                | 20,259 |  |                |  | 15,637 | 
|                       |  |                |        |  |                |  |        | 

The entire carrying amount of inventories as at March 31, 2012 and 2011 are secured in connection with bank
borrowings.

13. Trade and other receivables

Trade and other receivables comprise:



|                                          |  |                |           |  |                |  |           | 
|----------------------------------------- |  | -------------- | --------- |  | -------------- |  | --------- | 
|                                          |  | March 31, 2012 |           |  | March 31, 2011 | 
|(i) Trade receivables, net                |  |                | 2,411,946 |  |                |  | 1,839,966 | 
|(ii) Other receivables including deposits |  |                | 851,335   |  |                |  | 1,251,690 | 
|(iii) Construction contract in progress   |  |                | 71,942    |  |                |  | 94,257    | 
|                                          |  |                |           |  |                |  |           | 
|                                          |  |                | 3,335,223 |  |                |  | 3,185,913 | 
|                                          |  |                |           |  |                |  |           | 



132



---

##### Table of Contents

|(i) | Trade receivables as of March 31, 2012 and March 31, 2011 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. The Groups exposure to credit
and currency risks and impairment losses related to trade and other receivables, excluding construction work in progress is disclosed in note 39. Trade receivables consist of:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                         |  |                |           |   |                |  |           |  
|---------------------------------------- |  | -------------- | --------- | - | -------------- |  | --------- | -
|                                         |  | March 31, 2012 |           |   | March 31, 2011 | 
|Trade receivables from related parties   |  |                |          |   |                |  |          |  
|Other trade receivables                  |  |                | 2,605,188 |   |                |  | 2,055,974 |  
|                                         |  |                |           |   |                |  |           |  
|                                         |  |                | 2,605,188 |   |                |  | 2,055,974 |  
|Less: Allowance for doubtful receivables |  |                | (193,242  | ) |                |  | (216,008  | )
|                                         |  |                |           |   |                |  |           |  
|Balance at the end of the year           |  |                | 2,411,946 |   |                |  | 1,839,966 |  
|                                         |  |                |           |   |                |  |           |  

The activity in the allowance for doubtful accounts receivable is given below:



|                                     |  |                    |          |   |                |  |          |  
|------------------------------------ |  | ------------------ | -------- | - | -------------- |  | -------- | -
|                                     |  | For the year ended |         
|                                     |  | March 31, 2012     |          |   | March 31, 2011 | 
|Balance at the beginning of the year |  |                    | 216,008  |   |                |  | 170,706  |  
|Add : Additional provision, net      |  |                    | 95,405   |   |                |  | 161,922  |  
|Less : Bad debts written off         |  |                    | (118,171 | ) |                |  | (116,620 | )
|                                     |  |                    |          |   |                |  |          |  
|Balance at the end of the year       |  |                    | 193,242  |   |                |  | 216,008  |  
|                                     |  |                    |          |   |                |  |          |  



|(ii) | Other receivables comprises of the following items:
|---- | ---------------------------------------------------



|                                                           |  |                |         |  |                |  |           | 
|---------------------------------------------------------- |  | -------------- | ------- |  | -------------- |  | --------- | 
|                                                           |  | March 31, 2012 |         |  | March 31, 2011 | 
|Advances and other deposits (Refer Note (a) and (c) below) |  |                | 407,934 |  |                |  | 684,016   | 
|Withholding taxes (Refer Note (b) below)                   |  |                | 439,502 |  |                |  | 560,456   | 
|Employee advances                                          |  |                | 3,899   |  |                |  | 7,218     | 
|                                                           |  |                |         |  |                |  |           | 
|                                                           |  |                | 851,335 |  |                |  | 1,251,690 | 
|                                                           |  |                |         |  |                |  |           | 
|Financial assets included in other receivables             |  |                | 122,214 |  |                |  | 354,115   | 
|                                                           |  |                |         |  |                |  |           | 

Notes:



| | a) | Advances and other deposits primarily comprises of receivables in the form of deposits, service tax and other advances given in the ordinary course of business.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | 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

Prepayments for current assets comprise of the following:



|                                      |  |                |         |  |                |  |         | 
|------------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | 
|                                      |  | March 31, 2012 |         |  | March 31, 2011 | 
|Prepayments for purchase of bandwidth |  |                | 90,399  |  |                |  | 71,256  | 
|Prepayments related to insurance      |  |                | 1,432   |  |                |  | 7,026   | 
|Prepayments-others                    |  |                | 97,449  |  |                |  | 106,845 | 
|Lease prepayments                     |  |                | 8,753   |  |                |  | 5,064   | 
|                                      |  |                |         |  |                |  |         | 
|                                      |  |                | 198,033 |  |                |  | 190,191 | 
|                                      |  |                |         |  |                |  |         | 



133



---

##### Table of Contents

15. Other investments

Other Investments comprise investment in unquoted equity instruments classified as available for sale financial assets which are carried at cost. The details of such investments are given below:



|                                                                                |  |                |     |  |                |  |  |  |     | 
|------------------------------------------------------------------------------- |  | -------------- | --- |  | -------------- |  |  |  | --- | 
|                                                                                |  | March 31, 2012 |     |  | March 31, 2011 | 
|Investment in equity shares of Vashi Railway Station Commercial Complex Limited |  |                | 150 |  |                |  |  |  | 150 | 
|Investment in equity shares of Sify Empower India Foundation                    |  |                | 10  |  |                |  |  |  | 10  | 
|                                                                                |  |                |     |  |                |  |  |  |     | 
|                                                                                |  |                | 160 |  |                |  |  |  | 160 | 
|                                                                                |  |                |     |  |                |  |  |  |     | 





134



---

##### Table of Contents

16. Share capital and share premium

No of shares



|                                         |  |                      |             |  |      |  |             |      |  |  |            | 
|---------------------------------------- |  | -------------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ---------- | 
|                                         |  | Year ended March 31, |            
|                                         |  | 2012                 |             |  | 2011 |  |             | 2010 | 
|Issued as at April 01                    |  |                      | 178,351,498 |  |      |  | 53,351,498  |      |  |  | 42,820,082 | 
|Issued for cash*                         |  |                      |            |  |      |  | 125,000,000 |      |  |  |           | 
|Issued for consideration other than cash |  |                      |            |  |      |  |            |      |  |  | 10,530,000 | 
|Exercise of share options                |  |                      | 162,091     |  |      |  |            |      |  |  | 1,416      | 
|                                         |  |                      |             |  |      |  |             |      |  |  |            | 
|Issued as at March 31                    |  |                      | 178,513,589 |  |      |  | 178,351,498 |      |  |  | 53,351,498 | 
|                                         |  |                      |             |  |      |  |             |      |  |  |            | 



|* | Paid up Rs.6.25 (March 31, 2011: Rs.2.50) per share
|- | ---------------------------------------------------

As at March 31, 2012 the authorized share capital comprises 180,000,000 ordinary shares (as of March 31, 2011, the number of authorized shares was 180,000,000) of Rs.10 each. The holders of
ordinary shares are entitled to receive dividends from time to time and are entitled to vote at meetings of the Group. All shares rank equally with regard to Groups residual assets.

During the year ended March 31, 2010 the company has issued 10,530,000 ordinary shares of Rs.10 each to the erstwhile shareholders of Sify Communication Limited as per the scheme of amalgamation.
Refer note 40.

Further during the year ended March 31, 2010, 1,416 ordinary shares have been issued consequent to exercise of options
under the Associate stock option plan.

During the year ended March 31, 2011, on August 4, 2010, the Board of Directors of the
company approved the issuance, in a private placement, of upto an aggregate of 125,000,000 of the companys equity shares, par value Rs.10 per share (Equity shares), for an aggregate purchase price of approxiamately US$
86 million, to a group of investors affiliated with the companys promoter group, including entities affiliated with Mr Raju Vegesna, the companys Chief Executive officer and Managing Director and Mr Ananda Raju Vegesna, Executive
and brother of Mr Raju Vegesna (the Offering). The companys shareholders approved the terms of the Offering at the Companys Annual General Meeting held on September 27, 2010. On October 22 2010, the company entered
into a Subscription Agreement with Mr Ananda Raju Vegesna, acting as representative (the Representative) of the purchasers in connection with the offering. The company issued 125,000,000 equity shares to the Representative on
October 30, 2010. Also refer note 42.

Further during the year ended March 31, 2012, 162,091 ordinary shares have been issued
consequent to exercise of options under the Associate stock option plan.

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

Share based payment reserve

Share based payment reserve represents the stock compensation expense recognized in the statement of changes in equity.

Fair value reserve

The fair value
reserve comprises the cumulative net change in the fair value of available-for-sale securities until the investments are derecognized or impaired.

Recognized actuarial gain / loss

Recognized actuarial gain / loss represent the cumulative
actuarial gain / loss recognized in other comprehensive income and presented within equity.



135



---

##### Table of Contents

17. Finance lease obligations

The Group leases routers and other equipments under finance lease arrangements. The following is a schedule of future minimum finance lease commitments as at March 31, 2012:



|                           |  |                            |         |  |                |  |         |                                  |  |  |                            |  |  |          |         |  |                                  |  |         |   |  |  |         | 
|-------------------------- |  | -------------------------- | ------- |  | -------------- |  | ------- | -------------------------------- |  |  | -------------------------- |  |  | -------- | ------- |  | -------------------------------- |  | ------- | - |  |  | ------- | 
|                           |  | March 31, 2012             |         |  | March 31, 2011 | 
|                           |  | Futureminimumleasepayments |         |  | Interest       |  |         | Presentvalueminimumleasepayments |  |  | Futureminimumleasepayments |  |  | Interest |         |  | Presentvalueminimumleasepayments | 
|Less than one year         |  |                            | 91,924  |  |                |  | (16,139 | )                                |  |  | 75,785                     |  |  |          | 77,975  |  |                                  |  | (17,468 | ) |  |  | 60,507  | 
|Between one and five years |  |                            | 113,752 |  |                |  | (12,611 | )                                |  |  | 101,141                    |  |  |          | 144,357 |  |                                  |  | (16,611 | ) |  |  | 127,746 | 
|                           |  |                            |         |  |                |  |         |                                  |  |  |                            |  |  |          |         |  |                                  |  |         |   |  |  |         | 
|Total                      |  |                            | 205,676 |  |                |  | (28,750 | )                                |  |  | 176,926                    |  |  |          | 222,332 |  |                                  |  | (34,079 | ) |  |  | 188,253 | 
|                           |  |                            |         |  |                |  |         |                                  |  |  |                            |  |  |          |         |  |                                  |  |         |   |  |  |         | 

18. Employee benefits



|                     |  |                |        |  |                |  |        | 
|-------------------- |  | -------------- | ------ |  | -------------- |  | ------ | 
|                     |  | March 31, 2012 |        |  | March 31, 2011 | 
|Gratuity payable     |  |                | 19,515 |  |                |  | 19,116 | 
|Compensated absences |  |                | 30,551 |  |                |  | 28,672 | 
|                     |  |                |        |  |                |  |        | 
|                     |  |                | 50,066 |  |                |  | 47,788 | 
|                     |  |                |        |  |                |  |        | 

Gratuity cost

The components of gratuity costs recognized in the consolidated income statement for the years ending March 31, 2012, March 31, 2011 and March 31, 2010 consist of the following:



|                              |  |                |        |   |                |  |        |                |  |  |        |  
|----------------------------- |  | -------------- | ------ | - | -------------- |  | ------ | -------------- |  |  | ------ | -
|                              |  | March 31, 2012 |        |   | March 31, 2011 |  |        | March 31, 2010 | 
|Service cost                  |  |                | 15,892 |   |                |  | 22,275 |                |  |  | 14,498 |  
|Interest cost                 |  |                | 4,449  |   |                |  | 3,786  |                |  |  | 4,501  |  
|Expected return on plan asset |  |                | (3,214 | ) |                |  | (2,875 | )              |  |  | (2,963 | )
|                              |  |                |        |   |                |  |        |                |  |  |        |  
|                              |  |                | 17,127 |   |                |  | 23,186 |                |  |  | 16,036 |  
|                              |  |                |        |   |                |  |        |                |  |  |        |  

Details of employee benefit obligation and plan asset are as follows:



|                                                                     |  |                |         |   |                |  |         |  
|-------------------------------------------------------------------- |  | -------------- | ------- | - | -------------- |  | ------- | -
|                                                                     |  | March 31, 2012 |         |   | March 31, 2011 | 
|Present value of projected benefit obligation at the end of the year |  |                | 62,610  |   |                |  | 59,571  |  
|Funded status of the plans                                           |  |                | (43,095 | ) |                |  | (40,455 | )
|                                                                     |  |                |         |   |                |  |         |  
|Recognized (asset) / liability                                       |  |                | 19,515  |   |                |  | 19,116  |  
|                                                                     |  |                |         |   |                |  |         |  

The following table set out the status of the gratuity plan:



|                                                          |  |                |        |   |                |  |        |                |  |  |        |  
|--------------------------------------------------------- |  | -------------- | ------ | - | -------------- |  | ------ | -------------- |  |  | ------ | -
|Change in defined benefit obligation                      |  | March 31, 2012 |        |   | March 31, 2011 |  |        | March 31, 2010 | 
|Projected benefit obligation at the beginning of the year |  |                | 59,571 |   |                |  | 51,046 |                |  |  | 43,389 |  
|Service cost                                              |  |                | 15,892 |   |                |  | 22,275 |                |  |  | 14,498 |  
|Interest cost                                             |  |                | 4,449  |   |                |  | 3,786  |                |  |  | 4,501  |  
|Actuarial (gain) / loss                                   |  |                | (9,372 | ) |                |  | (8,358 | )              |  |  | (5,957 | )
|Benefits paid                                             |  |                | (7,930 | ) |                |  | (9,178 | )              |  |  | (5,385 | )
|                                                          |  |                |        |   |                |  |        |                |  |  |        |  
|Projected benefit obligation at the end of the year       |  |                | 62,610 |   |                |  | 59,571 |                |  |  | 51,046 |  
|                                                          |  |                |        |   |                |  |        |                |  |  |        |  



136



---

##### Table of Contents

|                                                       |  |                |        |   |                |  |        |                |  |  |        |  
|------------------------------------------------------ |  | -------------- | ------ | - | -------------- |  | ------ | -------------- |  |  | ------ | -
|Change in plan assets                                  |  | March 31, 2012 |        |   | March 31, 2011 |  |        | March 31, 2010 | 
|Fair value of plan assets at the beginning of the year |  |                | 40,455 |   |                |  | 34,293 |                |  |  | 28,307 |  
|Expected return on plan assets                         |  |                | 3,214  |   |                |  | 2,875  |                |  |  | 2,965  |  
|Actuarial gain / (loss)                                |  |                |       |   |                |  |       |                |  |  | (449   | )
|Employer contributions                                 |  |                | 7,356  |   |                |  | 12,465 |                |  |  | 8,855  |  
|Benefits paid                                          |  |                | (7,930 | ) |                |  | (9,178 | )              |  |  | (5,385 | )
|                                                       |  |                |        |   |                |  |        |                |  |  |        |  
|Fair value of plan assets at the end of the year       |  |                | 43,095 |   |                |  | 40,455 |                |  |  | 34,293 |  
|                                                       |  |                |        |   |                |  |        |                |  |  |        |  
|Actual return on plan assets                           |  |                | 3,214  |   |                |  | 2,875  |                |  |  | 2,513  |  

Actuarial assumptions at end of the year:

The principal actuarial assumptions as on March 31, 2012, 2011 and 2010 were as follows:



|                                                 |  |                |      |       |                |  |      |                |  |  |       |      
|------------------------------------------------ |  | -------------- | ---- | ----- | -------------- |  | ---- | -------------- |  |  | ----- | -----
|                                                 |  | March 31, 2012 |      |       | March 31, 2011 |  |      | March 31, 2010 | 
|Discount rate                                    |  |                | 8.60 | % P.a |                |  | 8.00 | % P.a          |  |  | 8.15  | % P.a
|Long-term rate of compensation increase          |  |                | 8.00 | % P.a |                |  | 8.00 | % P.a          |  |  | 8.00  | % P.a
|Expected long term rate of return on plan assets |  |                | 8.00 | % P.a |                |  | 8.00 | % P.a          |  |  | 8.00  | % P.a
|Average future working life time                 |  |                | 8.40 | years |                |  | 8.60 | years          |  |  | 11.06 | years

Discount rate: The discount rate is based on prevailing market yields of Indian Government securities as at the
end of the year for the estimated term of the obligations.

Long term rate of compensation increase:The estimates of future
salary increases considered take into account inflation, seniority, promotion and other factors.

Expected long term rate of return on plan
assets:This is based on the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Assumptions regarding future mortality are based on published statistics and mortality tables.

The Group assesses these assumptions with the projected long-term plans of growth and prevalent industry standards.

Historical information



|                                          |  |                |       |  |                |  |       | 
|----------------------------------------- |  | -------------- | ----- |  | -------------- |  | ----- | 
|                                          |  | March 31, 2012 |       |  | March 31, 2011 | 
|Experience adjustment on plan liabilities |  |                | 5,044 |  |                |  | 8,064 | 
|Experience adjustment on plan assets      |  |                |      |  |                |  |      | 

Contributions: The Group expects to contribute Rs.15,000 (March 31 2011: Rs.15,000) to its gratuity fund during
the year ending March 31, 2012.

Plan assets:The Gratuity plans weighted-average asset allocation at March 31, 2012
and March 31, 2011, by asset category is as follows:



|                          |  |                |     |   |                |  |     |  
|------------------------- |  | -------------- | --- | - | -------------- |  | --- | -
|                          |  | March 31, 2012 |     |   | March 31, 2011 | 
|Funds managed by insurers |  |                | 100 | % |                |  | 100 | %

Actuarial gains and losses recognized in other comprehensive income

The amount of actuarial gains and losses recognized in other comprehensive income for the years ending March 31, 2012, 2011 and 2010 are as follows:



|                        |  |                |       |  |                |  |       |                |  |  |       | 
|----------------------- |  | -------------- | ----- |  | -------------- |  | ----- | -------------- |  |  | ----- | 
|                        |  | March 31, 2012 |       |  | March 31, 2011 |  |       | March 31, 2010 | 
|Actuarial gain / (loss) |  |                | 9,372 |  |                |  | 8,358 |                |  |  | 5,508 | 
|                        |  |                |       |  |                |  |       |                |  |  |       | 
|                        |  |                | 9,372 |  |                |  | 8,358 |                |  |  | 5,508 | 
|                        |  |                |       |  |                |  |       |                |  |  |       | 



137



---

##### Table of Contents

Contributions to defined contribution plans

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. The Group contributed Rs.57,144, Rs.53,923 and Rs. 55,229 for the years ended March 31, 2012, 2011
and 2010.

19. Other liabilities



|                                                    |  |                |         |  |                |  |         | 
|--------------------------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | 
|                                                    |  | March 31, 2012 |         |  | March 31, 2011 | 
|Franchisee deposits and other liabilities           |  |                | 211,504 |  |                |  | 163,245 | 
|                                                    |  |                |         |  |                |  |         | 
|                                                    |  |                | 211,504 |  |                |  | 163,245 | 
|                                                    |  |                |         |  |                |  |         | 
|Financial liabilities included in other liabilities |  |                | 187,236 |  |                |  | 163,245 | 

Internet access services at home and through a network of cybercafés is provided through a franchised network of
cable operators in India and cybercafé operators. The Group enters into an agreement with the franchisee that establishes the rights and obligations of each party and grants each franchisee a non-exclusive license to operate the
cybercafé using the Groups logo, brand and trade names. The agreement provides for payment to the Company, of an initial security deposit in consideration for establishing the franchisee relationship and providing certain initial
services.

20. Borrowings



|                                                      |  |                |         |  |                |  |           | 
|----------------------------------------------------- |  | -------------- | ------- |  | -------------- |  | --------- | 
|                                                      |  | March 31, 2012 |         |  | March 31, 2011 | 
|Current                                               |  |                |         |  |                |  |           | 
|Term bank loans (Refer note 1 below)                  |  |                | 110,000 |  |                |  | 216,000   | 
|Other working capital facilities (Refer note 2 below) |  |                | 265,906 |  |                |  | 679,542   | 
|Borrowings from others (Refer note 3 below)           |  |                | 167,125 |  |                |  | 140,260   | 
|                                                      |  |                |         |  |                |  |           | 
|                                                      |  |                | 543,031 |  |                |  | 1,035,802 | 
|                                                      |  |                |         |  |                |  |           | 
|Non current                                           |  |                |         |  |                |  |           | 
|Term bank loans (Refer note 1 below)                  |  |                |        |  |                |  | 113,880   | 
|Borrowings from others (Refer note 3 below)           |  |                | 186,312 |  |                |  | 148,728   | 
|                                                      |  |                |         |  |                |  |           | 
|                                                      |  |                | 186,312 |  |                |  | 262,608   | 
|                                                      |  |                |         |  |                |  |           | 

The Group has borrowings which include:



| | 1. | Term bank loans bear interest ranging from 15.50% to 16.50% p.a. The term loans are secured by way of pari-passu first charge over the unencumbered movable fixed assets
acquired out of such term loans availed by the Company. Further these loans are collaterally secured by way of equitable mortgage over the office premises and also by way of pari passu second charge on the entire current assets of the Company.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Working capital facilities include Letter of credit discounted, buyers credit and foreign currency demand loan. These are secured by pari-passu charge on current
assets of the Company and moveable assets of the company, both present and future. Further, these facilities are additionally secured by equitable mortgage over the land and building of M/s Pace Info Com Park Private Limited, subsidiary company and
also by guarantee issued by the said subsidiary. Foreign currency demand loan bear an interest of Libor +650 bps. Other working capital borrowings bear interest ranging from 13.50% to 16.50% p.a. Such facilities are renewable every year.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Borrowings from others are secured against relevant assets and software. These loans carry an interest rate ranging from 12% p.a to 15% p.a.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------



138



---

##### Table of Contents

21. Trade and other payables



|                                                           |  |                |           |  |                |  |           | 
|---------------------------------------------------------- |  | -------------- | --------- |  | -------------- |  | --------- | 
|                                                           |  | March 31, 2012 |           |  | March 31, 2011 | 
|Trade payables                                             |  |                | 1,219,368 |  |                |  | 814,777   | 
|Advance from customers                                     |  |                | 50,939    |  |                |  | 86,073    | 
|Accrued expenses                                           |  |                | 1,021,810 |  |                |  | 808,399   | 
|Other payables                                             |  |                | 90,235    |  |                |  | 74,139    | 
|                                                           |  |                |           |  |                |  |           | 
|                                                           |  |                | 2,382,352 |  |                |  | 1,783,388 | 
|                                                           |  |                |           |  |                |  |           | 
|Financial liabilities included in trade and other payables |  |                | 2,325,447 |  |                |  | 1,725,907 | 
|                                                           |  |                |           |  |                |  |           | 

22. Deferred income

Deferred income includes the following amounts of unearned income:



|                                |  |                |         |  |                |  |         | 
|------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | 
|                                |  | March 31, 2012 |         |  | March 31, 2011 | 
|Enterprise services             |  |                | 296,509 |  |                |  | 339,549 | 
|Commercial and consumer segment |  |                | 36,118  |  |                |  | 28,966  | 
|Software services               |  |                | 51,166  |  |                |  | 44,079  | 
|                                |  |                |         |  |                |  |         | 
|                                |  |                | 383,793 |  |                |  | 412,594 | 
|                                |  |                |         |  |                |  |         | 

23. Revenue



|                             |  |                |           |  |                |  |           |                |  |  |           | 
|---------------------------- |  | -------------- | --------- |  | -------------- |  | --------- | -------------- |  |  | --------- | 
|                             |  | Year ended     |          
|                             |  | March 31, 2012 |           |  | March 31, 2011 |  |           | March 31, 2010 | 
|Rendering of services        |  |                |           |  |                |  |           |                |  |  |           | 
|Service revenue*             |  |                | 5,920,142 |  |                |  | 5,460,236 |                |  |  | 5,356,852 | 
|Initial franchise fee        |  |                | 6,395     |  |                |  | 10,992    |                |  |  | 11,369    | 
|Installation service revenue |  |                | 883,126   |  |                |  | 812,341   |                |  |  | 288,919   | 
|                             |  |                |           |  |                |  |           |                |  |  |           | 
|                             |  |                | 6,809,663 |  |                |  | 6,283,569 |                |  |  | 5,657,140 | 
|                             |  |                |           |  |                |  |           |                |  |  |           | 
|Sale of products             |  |                | 889,286   |  |                |  | 603,060   |                |  |  | 1,053,048 | 
|                             |  |                |           |  |                |  |           |                |  |  |           | 
|                             |  |                | 7,698,949 |  |                |  | 6,886,629 |                |  |  | 6,710,188 | 
|                             |  |                |           |  |                |  |           |                |  |  |           | 



|* | Including revenue arising from construction contracts (refer note 24)
|- | ---------------------------------------------------------------------

24. Construction contracts in progress



|                                                                                                                                      |  |                |         |  |                |  |         |                |  |  |        | 
|------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | -------------- |  |  | ------ | 
|                                                                                                                                      |  | Year ended     |        
|                                                                                                                                      |  | March 31, 2012 |         |  | March 31, 2011 |  |         | March 31, 2010 | 
|Contract revenue recognized for the year                                                                                              |  |                | 207,942 |  |                |  | 268,064 |                |  |  | 86,214 | 
|Aggregate amounts of costs incurred and recognized profits (less recognized losses) upto the reporting date for contracts in
progress |  |                | 185,725 |  |                |  | 109,570 |                |  |  | 86,214 | 
|Advances received for contracts inprogress                                                                                            |  |                |        |  |                |  | 27,860  |                |  |  | 16,441 | 
|Amount of retentions                                                                                                                  |  |                | 12,602  |  |                |  |        |                |  |  |       | 
|Gross amount due from customers for contract work presented as an asset                                                               |  |                | 99,998  |  |                |  | 231,090 |                |  |  | 86,214 | 



139



---

##### Table of Contents

25. Cost of goods sold and services rendered

Cost of goods sold and services rendered information is presented before any depreciation or amortization that is direct and attributable to revenue sources. The Groups asset base deployed in the
business is not easily split into a component that is directly attributable to a business and a component that is common / indirect to all the businesses. Since a gross profit number without depreciation and amortization does not necessarily meet
the objective of such a disclosure, the Group has not disclosed gross profit numbers but disclosed all expenses, direct and indirect, in a homogenous group leading directly from revenue to operating income.

26. Other income



|                        |  |                |        |  |                |  |        |                |  |  |         | 
|----------------------- |  | -------------- | ------ |  | -------------- |  | ------ | -------------- |  |  | ------- | 
|                        |  | Year ended     |       
|                        |  | March 31, 2012 |        |  | March 31, 2011 |  |        | March 31, 2010 | 
|Duty credit entitlement |  |                |       |  |                |  | 38,006 |                |  |  | 82,486  | 
|Others                  |  |                | 37,377 |  |                |  | 34,687 |                |  |  | 49,303  | 
|                        |  |                |        |  |                |  |        |                |  |  |         | 
|                        |  |                | 37,377 |  |                |  | 72,693 |                |  |  | 131,789 | 
|                        |  |                |        |  |                |  |        |                |  |  |         | 

27. Income from legal settlement

During the year ended March 31, 2010, the Company received Rs 561,120 in connection with settlement of legal matters. This is pursuant to a legal suit filed by the company in the prior years. The
said receipt has been recorded as income from legal settlement in the consolidated statement of income during the year ended March 31, 2010.

28. Selling, general and administrative expenses



|                                   |  |                |           |  |                |  |           |                |  |  |           | 
|---------------------------------- |  | -------------- | --------- |  | -------------- |  | --------- | -------------- |  |  | --------- | 
|                                   |  | Year ended     |          
|                                   |  | March 31, 2012 |           |  | March 31, 2011 |  |           | March 31, 2010 | 
|Personnel expenses                 |  |                | 550,299   |  |                |  | 561,385   |                |  |  | 745,067   | 
|Marketing and promotion expenses   |  |                | 312,530   |  |                |  | 394,057   |                |  |  | 482,554   | 
|Administrative and other expenses* |  |                | 1,684,380 |  |                |  | 1,486,357 |                |  |  | 1,238,770 | 
|                                   |  |                |           |  |                |  |           |                |  |  |           | 
|                                   |  |                | 2,547,209 |  |                |  | 2,441,799 |                |  |  | 2,466,391 | 
|                                   |  |                |           |  |                |  |           |                |  |  |           | 



|* | Includes foreign exchange gain / (loss) of Rs.37,650, Rs.12,941 and Rs.9,397 for the years ended March 31, 2012, 2011 and 2010 respectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

29. Personnel expenses



|                                                             |  |                |           |  |                |  |           |                |  |  |           | 
|------------------------------------------------------------ |  | -------------- | --------- |  | -------------- |  | --------- | -------------- |  |  | --------- | 
|                                                             |  | Year ended     |          
|                                                             |  | March 31, 2012 |           |  | March 31, 2011 |  |           | March 31, 2010 | 
|Salaries and wages                                           |  |                | 1,314,023 |  |                |  | 1,211,183 |                |  |  | 1,269,638 | 
|Contribution to provident fund and other funds               |  |                | 77,840    |  |                |  | 77,164    |                |  |  | 77,197    | 
|Staff welfare expenses                                       |  |                | 17,426    |  |                |  | 22,296    |                |  |  | 27,499    | 
|Employee stock compensation expense                          |  |                | 31,385    |  |                |  | 10,201    |                |  |  | 30,589    | 
|                                                             |  |                |           |  |                |  |           |                |  |  |           | 
|                                                             |  |                | 1,440,674 |  |                |  | 1,320,844 |                |  |  | 1,404,923 | 
|                                                             |  |                |           |  |                |  |           |                |  |  |           | 
|Attributable to cost of goods sold and services rendered     |  |                | 890,375   |  |                |  | 759,459   |                |  |  | 659,856   | 
|Attributable to selling, general and administration expenses |  |                | 550,299   |  |                |  | 561,385   |                |  |  | 745,067   | 



140



---

##### Table of Contents

30. Share-based payments

Share based payments are designed as equity-settled plans. Under the equity settled plans, the Group had issued stock options under Associate Stock Option Plan (ASOP) 1999, ASOP 2000, ASOP 2002, ASOP 2005
and ASOP 2007. Each option entitles the holder to purchase one American Depository Share (ADS) at an exercise price determined by the Compensation committee on the date of the grant. There are no options outstanding in respect of ASOP 1999, ASOP
2000, ASOP 2002 and ASOP 2005 plans as at April 1, 2009. Our stock option plans are detailed as under:

(i) Associate Stock Option
Plan 2007

In September 2007, the Shareholders of the Group approved a new scheme for allotment of stock options to employees, the
Associate Stock Option Plan 2007. Consequent upon the introduction of ASOP 2007 plan, 797,600 unissued stock options pertaining to Associate Stock Option Plan 2005 are no longer available for issuance.

The options vest over a period of 4 years as follows:



|                                   |  |                                                                                                                             
|---------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|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.

The stock options can be exercised within a period of twelve months from the date of last vesting.

As the number of stock options and the price of those options were made known to each allottee, the Plan has been considered as a fixed price grant.
Stock option activity under the ASOP 2007 Plan is as follows:



|                                                                 |      |                  |          |      |                                    |  |        |                  |  |      |                                    |   |      |                  |        |      |                                    |  |           |   |  |  |        | 
|---------------------------------------------------------------- | ---- | ---------------- | -------- | ---- | ---------------------------------- |  | ------ | ---------------- |  | ---- | ---------------------------------- | - | ---- | ---------------- | ------ | ---- | ---------------------------------- |  | --------- | - |  |  | ------ | 
|No. of options granted, exercised and forfeited                  |      | Numberof options |          |      | Weightedaverageexerciseprice inRs. |  |        | Numberof options |  |      | Weightedaverageexerciseprice inRs. |   |      | Number ofoptions |        |      | Weightedaverageexerciseprice inRs. | 
|                                                                 | 2012 |                  |          | 2012 |                                    |  | 2011   |                  |  | 2011 |                                    |   | 2010 |                  |        | 2010 |                                   
|Outstanding at the beginning of the year                         |      |                  | 841,200  |      |                                    |  | 146.58 |                  |  |      | 1,078,800                          |   |      |                  | 149.21 |      |                                    |  | 1,211,900 |   |  |  | 152.51 | 
|Granted during the year                                          |      |                  |         |      |                                    |  |       |                  |  |      | 6,000                              |   |      |                  | 74.41  |      |                                    |  | 50,000    |   |  |  | 89.34  | 
|Replaced (Refer to notes below)                                  |      |                  |         |      |                                    |  |       |                  |  |      |                                   |   |      |                  |       |      |                                    |  |          |   |  |  |       | 
|Replacement options granted (Refer to notes below)               |      |                  |         |      |                                    |  |       |                  |  |      |                                   |   |      |                  |       |      |                                    |  |          |   |  |  |       | 
|Forfeited during the year                                        |      |                  | (27,995  | )    |                                    |  | 109.33 |                  |  |      | (81,801                            | ) |      |                  | 152.37 |      |                                    |  | (93,616   | ) |  |  | 153.58 | 
|Expired during the year                                          |      |                  | (49,946  | )    |                                    |  | 144.52 |                  |  |      | (161,799                           | ) |      |                  | 158.52 |      |                                    |  | (88,068   | ) |  |  | 158.01 | 
|Exercised during the year                                        |      |                  | (162,061 | )    |                                    |  | 131.99 |                  |  |      |                                   |   |      |                  |       |      |                                    |  | (1,416    | ) |  |  | 59.02  | 
|                                                                 |      |                  |          |      |                                    |  |        |                  |  |      |                                    |   |      |                  |        |      |                                    |  |           |   |  |  |        | 
|Outstanding at the end of the year                               |      |                  | 601,168  |      |                                    |  | 152.26 |                  |  |      | 841,200                            |   |      |                  | 146.58 |      |                                    |  | 1,078,800 |   |  |  | 149.21 | 
|                                                                 |      |                  |          |      |                                    |  |        |                  |  |      |                                    |   |      |                  |        |      |                                    |  |           |   |  |  |        | 
|Vested and Exercisable at the end of the year                    |      |                  | 579,140  |      |                                    |  | 153.59 |                  |  |      | 566,908                            |   |      |                  | 151.36 |      |                                    |  | 437,210   |   |  |  | 155.55 | 
|Weighted average grant date fair value of grants during the year |      |                  |         |      |                                    |  |       |                  |  |      |                                   |   |      |                  |       |      |                                    |  |          |   |  |  |       | 
|                                                                 |      |                  |          |      |                                    |  |        |                  |  |      |                                    |   |      |                  |        |      |                                    |  |           |   |  |  |        | 

The fair value of stock options granted has been measured using the Black Scholes model at the date of the grant. The
Black Scholes model includes assumptions regarding dividend yields, expected volatility, expected term (or option life) and risk free interest rates. In respect of the options granted, the expected term is estimated based on the vesting
term, contractual term as well as expected exercise behavior of the employees receiving the option. Expected volatility of the option is based on historical volatility, during a period equivalent to the option life, of the observed market prices of
the Companys publicly traded equity shares. Dividend yield of the options is based on the recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of the grant. These assumptions
reflect managements best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside the Companys control. As a result, if other assumptions had been used in the current period,
stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in the future periods, stock compensation expense could be materially impacted in future years.



141



---

##### Table of Contents

The estimated fair value of stock options is charged to income on a straight-line basis over the requisite
service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The fair value of
services received in return for share options granted under ASOP 2007 is based on the fair value of share options granted measured using Black Scholes model, with the following inputs:



|                                                |  |                         |   |  |                          |                 |                          |                
|----------------------------------------------- |  | ----------------------- | - |  | ------------------------ | --------------- | ------------------------ | ---------------
|No. of options granted, exercised and forfeited |  | Year endedMarch 31,2012 |   |  | Year endedMarch 31,
2011 |                 | Year endedMarch 31, 2010
|Weighted average share price                    |  |                         |  |  |                          | 82.68           |                          | 99.26          
|Weighted average exercise price                 |  |                         |  |  |                          | 74.41           |                          | 89.34          
|Expected volatility                             |  |                         |  |  |                          | 110.5% - 124.7% |                          | 115.8% - 136.7%
|Option life                                     |  |                         |  |  |                          | 3  4.5 years   |                          | 3  4.5 years  
|Expected dividends                              |  |                         |  |  |                          |                |                          |               
|Risk-free interest rate                         |  |                         |  |  |                          | 2.61%           |                          | 2.43% - 2.69%  

A summary of information about fixed price stock options outstanding as at March 31, 2012 is furnished below:



|          |  |                              |              |  |                                   |  |         |                                     |  |  |                                         |  |  |                                   |      |  |                                     |  |         |  |  |  |        | 
|--------- |  | ---------------------------- | ------------ |  | --------------------------------- |  | ------- | ----------------------------------- |  |  | --------------------------------------- |  |  | --------------------------------- | ---- |  | ----------------------------------- |  | ------- |  |  |  | ------ | 
|          |  | Range ofexercise pricein Rs. |              |  | Numberoutstanding atMarch 31,2012 |  |         | Weightedaverageexercise pricein Rs. |  |  | Weightedaverageremainingcontractuallife |  |  | Numberexercisable atMarch 31,2012 |      |  | Weightedaverageexercise pricein Rs. | 
|ASOP 2007 |  |                              | 51.51-188.32 |  |                                   |  | 601,168 |                                     |  |  | 152.26                                  |  |  |                                   | 1.00 |  |                                     |  | 579,140 |  |  |  | 153.39 | 

Modification

During the year ended March 31, 2008, the stock options issued under ASOP 2005 and ASOP 2007 had been out of money for most time of the vesting period. As a result, the Groups compensation
committee allowed certain employees in their approval dated January 22, 2008 to surrender their (a) unvested (b) vested and (c) unexercised stock options and obtain fresh options at a discount of 10% of the market price under
ASOP 2007 prevalent at the date of modification in lieu of the surrendered stock options. This modification resulted in the revision in the exercise price as well as the service period over which the stock options vest. Consequent upon modification,
497,200 stock options of ASOP 2005 plan and 123,900 stock options of ASOP 2007 plan were replaced with an allotment of equal number of fresh options to those who surrendered.

The incremental fair value of the stock options replaced was determined by reference to the difference between the fair value of the replaced stock options and the fair value of the cancelled stock
options at the date of grant of new stock options. The incremental fair value as a result of such modification in respect of modified options amounted to Rs.20,959 during the year ended March 31, 2008. In respect of modification that has
occurred during the vesting period, the incremental fair value granted is included in the measurement of the amount recognized, for services received over the period from the modification date until the date when the modified equity instruments
vest, in addition to the amount based on the grant date fair value of the original equity instruments, which is recognized over the remainder of the original vesting period. In respect of the modification that has occurred after vesting date, the
incremental fair value granted is recognized immediately or over the vesting period if the employee is required to complete an additional period of service before becoming unconditionally entitled to those modified equity instruments. The
incremental cost recognized in respect of such modified options amounted to Rs.17,967, Rs.2,954 and Rs.5,039 for the years ended March 31, 2012, 2011 and 2010 respectively.

The assumptions that were used in arriving at the incremental fair value are as summarized below:



|                     |  |                  |  |                  
|-------------------- |  | ---------------- |  | -----------------
|Assumptions          |  | Pre modification |  | Post modification
|Current market price |  | 174.83           |  | 174.83           
|Exercise price       |  | 308.34-578.38    |  | 157.35           
|Expected term        |  | 3  4.5 years    |  | 3  4.5 years    
|Volatility           |  | 53.83% - 77.82%  |  | 53.01% - 77.82%  
|                     |  |                  |  |                  
|Dividend yield       |  | 0%               |  | 0%               
|Discount rate        |  | 2.5%             |  | 2.5%             
|                     |  |                  |  |                  



142



---

##### Table of Contents

31. Financial income and expense



|                                                                                       |  |                |          |   |                |  |          |                |  |  |          |  
|-------------------------------------------------------------------------------------- |  | -------------- | -------- | - | -------------- |  | -------- | -------------- |  |  | -------- | -
|                                                                                       |  | Year ended     |         
|                                                                                       |  | March 31, 2012 |          |   | March 31, 2011 |  |          | March 31, 2010 | 
|Interest income on bank deposits                                                       |  |                | 16,468   |   |                |  | 21,360   |                |  |  | 19,489   |  
|Others                                                                                 |  |                | 42,845   |   |                |  | 24,338   |                |  |  | 8,505    |  
|Finance income                                                                         |  |                | 59,313   |   |                |  | 45,698   |                |  |  | 27,994   |  
|Interest expense on lease obligations                                                  |  |                | 20,089   |   |                |  | 20,117   |                |  |  | 16,476   |  
|Bank charges (including letter of credit, bill discounting and buyers credit charges) |  |                | 129,133  |   |                |  | 96,721   |                |  |  | 100,241  |  
|Interest expense on borrowings                                                         |  |                | 157,510  |   |                |  | 141,784  |                |  |  | 177,156  |  
|Finance expense                                                                        |  |                | (306,732 | ) |                |  | (258,622 | )              |  |  | (293,873 | )
|                                                                                       |  |                |          |   |                |  |          |                |  |  |          |  
|Net finance income / (expense) recognized in profit or loss                            |  |                | (247,419 | ) |                |  | (212,924 | )              |  |  | (265,879 | )
|                                                                                       |  |                |          |   |                |  |          |                |  |  |          |  

32. Earnings / (loss) per share

The calculation of basic earnings / (loss) per share for the years ended March 31, 2012, 2011 and 2010 is based on the earnings / (loss) attributable to ordinary shareholders of Rs. (383,337), Rs.
(519,492) and Rs.17,027 respectively and a weighted average number of shares outstanding of 103,313,278, 63,317,251, and 50,840,358 respectively, calculated as follows:



|                                            |  |                |             |   |                |  |            |                |  |  |            | 
|------------------------------------------- |  | -------------- | ----------- | - | -------------- |  | ---------- | -------------- |  |  | ---------- | 
|                                            |  | Year ended     |            
|                                            |  | March 31, 2012 |             |   | March 31, 2011 |  |            | March 31, 2010 | 
|Net profit / (loss )  as reported          |  |                | (383,337    | ) |                |  | (519,492   | )              |  |  | 17,027     | 
|                                            |  |                |            
|Weighted average number of shares  basic   |  |                | 103,313,278 |   |                |  | 63,317,251 |                |  |  | 50,840,358 | 
|Basic earnings / (loss) per share           |  |                | (3.71       | ) |                |  | (8.20      | )              |  |  | 0.33       | 
|                                            |  |                |            
|Weighted average number of shares  diluted |  |                | 103,313,278 |   |                |  | 63,317,251 |                |  |  | 50,853,293 | 
|Diluted earnings / (loss) per share         |  |                | (3.71       | ) |                |  | (8.20      | )              |  |  | 0.33       | 

Weighted average number of ordinary shares basic



|                                                                                  |  |                      |             |  |      |  |            |      |  |  |            | 
|--------------------------------------------------------------------------------- |  | -------------------- | ----------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                                                  |  | Year ended March 31, |            
|                                                                                  |  | 2012                 |             |  | 2011 |  |            | 2010 | 
|Issued fully paid ordinary shares at April 01                                     |  |                      | 53,351,498  |  |      |  | 53,351,498 |      |  |  | 42,820,082 | 
|Effect of shares issued on exercise of stock options                              |  |                      | 98,392      |  |      |  |           |      |  |  | 166        | 
|Effect of partly paid shares (Note 1)                                             |  |                      | 49,863,388  |  |      |  | 9,965,753  |      |  |  |           | 
|Effect of shares issued consequent to amalgamation of Sify Communications Limited |  |                      |            |  |      |  |           |      |  |  | 8,020,110  | 
|                                                                                  |  |                      |             |  |      |  |            |      |  |  |            | 
|Weighted average number of equity shares and equivalent shares outstanding        |  |                      | 103,313,278 |  |      |  | 63,317,251 |      |  |  | 50,840,358 | 
|                                                                                  |  |                      |             |  |      |  |            |      |  |  |            | 

Weighted average number of ordinary shares diluted



|                                                               |  |                      |             |  |      |  |            |      |  |  |            | 
|-------------------------------------------------------------- |  | -------------------- | ----------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                               |  | Year ended March 31, |            
|                                                               |  | 2012                 |             |  | 2011 |  |            | 2010 | 
|Weighted average number of ordinary shares (basic)             |  |                      | 103,313,278 |  |      |  | 63,317,251 |      |  |  | 50,840,358 | 
|Effect of stock options                                        |  |                      |            |  |      |  |           |      |  |  | 12,935     | 
|                                                               |  |                      |             |  |      |  |            |      |  |  |            | 
|Weighted average number of equity shares outstanding (diluted) |  |                      | 103,313,278 |  |      |  | 63,317,251 |      |  |  | 50,853,293 | 
|                                                               |  |                      |             |  |      |  |            |      |  |  |            | 



143



---

##### Table of Contents

As the Company incurred a net loss attributable to ordinary shareholders for the years ended March 31,
2012 and 2011, 601,168 and 841,200 ordinary shares arising out of potential exercise of outstanding stock options as at March 31, 2012 and 2011 respectively were not included in the computation of diluted earnings per share, as their effect was
anti-dilutive.



|Note 1: | During the year ended March 31, 2011, 125,000,000 ordinary shares were issued to the existing promoter group on a private placement basis. As of March 31,
2012, these shares were partly paid up to the extent of Rs.6.25 (March 31, 2011 : Rs.2.50) per share. Refer note 16 to the consolidated financial statements.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

33. Operating leases

The Group leases office buildings and other equipment under operating
lease arrangements that are renewable on a periodic basis at the option of both the lessor and the lessee. Some of the leases include rent escalation clauses. Rental expenses under these leases were Rs.339,139, Rs.326,507 and Rs.329,332 for the
years ended March 31, 2012, 2011and 2010 respectively. The schedule of future minimum rental payments in respect of operating leases is set out below:

As at March 31, 2012



|                                            |  |       |           |  |                 |  |         |           |  |  |                  |  |  |  |           | 
|------------------------------------------- |  | ----- | --------- |  | --------------- |  | ------- | --------- |  |  | ---------------- |  |  |  | --------- | 
|Lease obligations                           |  | Total |           |  | Lessthan 1 year |  |         | 1-5 years |  |  | More than 5years | 
|Non-cancellable operating lease obligations |  |       | 1,778,901 |  |                 |  | 109,762 |           |  |  | 479,262          |  |  |  | 1,189,877 | 

As at March 31, 2011



|                                            |  |       |           |  |                 |  |         |           |  |  |                  |  |  |  |           | 
|------------------------------------------- |  | ----- | --------- |  | --------------- |  | ------- | --------- |  |  | ---------------- |  |  |  | --------- | 
|Lease obligations                           |  | Total |           |  | Lessthan 1 year |  |         | 1-5 years |  |  | More than 5years | 
|Non-cancellable operating lease obligations |  |       | 1,884,543 |  |                 |  | 105,693 |           |  |  | 588,973          |  |  |  | 1,189,877 | 

34. Segment reporting

The primary operating segments of the Group are:



| | Enterprise Services; such as Network Services and IT Services, providing Internet, connectivity, Voice ILD/NLD, Hosting , security and consulting, managed service
solutions;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Commercial and Consumer services ; primarily comprising of Internet access services, from homes and through cybercafés, connectivity to SMBs , SOHOs and Online
portal services and content offerings; and
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Software services, such as application services and development of e-learning software.
|- | ---------------------------------------------------------------------------------------

The Chief Operating Decision Maker (CODM), i.e, The Board of Directors and the senior management, evaluate the Groups performance and allocate resources to various strategic business
units that are identified based on the products and services that they offer and on the basis of the market served. The measure of profit / loss reviewed by the CODM is Earnings/loss before interest, taxes, depreciation and amortization
also referred to as segment operating income / loss. Revenue in relation to segments is categorized based on items that are individually identifiable to that segment. Bandwidth costs, which form a significant part of the total expenses,
is allocated primarily to Network Services and then routed through as part of a cost transfer mechanism to Commercial and Consumer segment. Manpower costs of Technology resources rendering services to support Infrastructure operations, Managed
services and Application services, are identified to an operating segment specifically. The Group believes that the resulting allocations are reasonable.

Certain expenses, such as depreciation, technology infrastructure and administrative overheads, which form a significant component of total expenses, are not allocable to specific segments as the
underlying services are used interchangeably. Management believes that it is not practical to provide segment disclosure of these expenses and, accordingly, they are separately disclosed as unallocated and adjusted only against the total
income of the Group.

A significant part of the fixed assets used in the Groups business are not identifiable to any of the reportable
segments and can be used interchangeably between segments. As a result the measures of segment assets and liabilities are not regularly reviewed by the CODM and hence disclosures relating to segment assets and liabilities have not been provided.



144



---

##### Table of Contents

The Groups operating segment information for the years ended March 31, 2012, 2011 and 2010, are
presented below:

Year ended March 31, 2012



|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|-------------------------------------------- |  | ------------------ | ---------- | - | ------------------------------ |  | -------- | ---------------- |  |  | -------- | - |  |  | ---------- | -
|                                             |  | Enterpriseservices |            |   | Commercialand ConsumerServices |  |          | SoftwareServices |  |  | Total    |  
|Segment revenue                              |  |                    | 6,675,853  |   |                                |  | 390,045  |                  |  |  | 633,051  |   |  |  | 7,698,949  |  
|Allocated segment expenses                   |  |                    | (5,169,236 | ) |                                |  | (473,210 | )                |  |  | (587,949 | ) |  |  | (6,230,395 | )
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Segment operating income / (loss)            |  |                    | 1,506,617  |   |                                |  | (83,165  | )                |  |  | 45,102   |   |  |  | 1,468,554  |  
|Unallocated expenses:                        |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Selling, general and administrative expenses |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (977,587   | )
|Depreciation and amortization                |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (691,560   | )
|Other income / (expense), net                |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 37,377     |  
|Finance income                               |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 59,313     |  
|Finance expenses                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (306,732   | )
|Share of profit of equity accounted investee |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 27,298     |  
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Profit / (loss) before tax                   |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (383,337   | )
|Income tax (expense) / benefit               |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |           |  
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Profit / (loss) for the year                 |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (383,337   | )
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  

Year ended March 31, 2011 (As adjusted)



|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|-------------------------------------------- |  | ------------------ | ---------- | - | ------------------------------ |  | -------- | ---------------- |  |  | -------- | - |  |  | ---------- | -
|                                             |  | Enterpriseservices |            |   | Commercialand ConsumerServices |  |          | SoftwareServices |  |  | Total    |  
|Segment revenue                              |  |                    | 5,752,879  |   |                                |  | 526,366  |                  |  |  | 607,384  |   |  |  | 6,886,629  |  
|Allocated segment expenses                   |  |                    | (4,403,435 | ) |                                |  | (724,283 | )                |  |  | (506,936 | ) |  |  | (5,634,654 | )
|Impairment loss onintangibles                |  |                    |           |   |                                |  | (1,857   | )                |  |  |         |   |  |  | (1,857     | )
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Segment operating income / (loss)            |  |                    | 1,349,444  |   |                                |  | (199,774 | )                |  |  | 100,448  |   |  |  | 1,250,118  |  
|Unallocated expenses:                        |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Cost of goods sold                           |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (36,222    | )
|Selling, general and administrative expenses |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (980,353   | )
|Depreciation and amortization                |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (685,836   | )
|Other income / (expense), net                |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 72,693     |  
|Finance income                               |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 45,698     |  
|Finance expenses                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (258,622   | )
|Share of profit of equity accounted investee |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | 73,032     |  
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Profit / (loss) before tax                   |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (519,492   | )
|Income tax (expense) / benefit               |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |           |  
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  
|Profit / (loss) for the year                 |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  | (519,492   | )
|                                             |  |                    |            |   |                                |  |          |                  |  |  |          |   |  |  |            |  

Year ended March 31, 2010 (As adjusted)



|                                                  |  |                    |            |   |                                |  |            |                  |  |  |          |   |  |  |            |  
|------------------------------------------------- |  | ------------------ | ---------- | - | ------------------------------ |  | ---------- | ---------------- |  |  | -------- | - |  |  | ---------- | -
|                                                  |  | Enterpriseservices |            |   | Commercialand ConsumerServices |  |            | SoftwareServices |  |  | Total    |  
|Segment revenue                                   |  |                    | 5,268,530  |   |                                |  | 844,771    |                  |  |  | 596,887  |   |  |  | 6,710,188  |  
|Allocated segment expenses                        |  |                    | (3,996,925 | ) |                                |  | (1,080,236 | )                |  |  | (519,069 | ) |  |  | (5,596,230 | )
|Impairment loss on intangibles including goodwill |  |                    |           |   |                                |  | (47,269    | )                |  |  |         |   |  |  | (47,269    | )
|                                                  |  |                    |            |   |                                |  |            |                  |  |  |          |   |  |  |            |  
|Segment operating income / (loss)                 |  |                    | 1,271,605  |   |                                |  | (282,734   | )                |  |  | 77,818   |   |  |  | 1,066,689  |  
|Unallocated expenses:                             |  |                    |            |   |                                |  |            |                  |  |  |          |   |  |  |            |  
|Cost of goods sold                                |  |                    |            |   |                                |  |            |                  |  |  |          |   |  |  | (45,853    | )
|Selling, general and administrative expenses      |  |                    |            |   |                                |  |            |                  |  |  |          |   |  |  | (936,870   | )



145



---

##### Table of Contents

|                                             |  |  |  |  |  |  |  |  |          |  
|-------------------------------------------- |  |  |  |  |  |  |  |  | -------- | -
|Depreciation and amortization                |  |  |  |  |  |  |  |  | (656,797 | )
|Other income / (expense), net                |  |  |  |  |  |  |  |  | 131,789  |  
|Income from legal settlement                 |  |  |  |  |  |  |  |  | 561,120  |  
|Finance income                               |  |  |  |  |  |  |  |  | 27,994   |  
|Finance expenses                             |  |  |  |  |  |  |  |  | (293,873 | )
|Share of profit of equity accounted investee |  |  |  |  |  |  |  |  | 91,135   |  
|                                             |  |  |  |  |  |  |  |  |          |  
|Profit / (loss) before tax                   |  |  |  |  |  |  |  |  | (54,666  | )
|Income tax (expense) / benefit               |  |  |  |  |  |  |  |  | 81,479   |  
|                                             |  |  |  |  |  |  |  |  |          |  
|Profit / (loss) for the year                 |  |  |  |  |  |  |  |  | 26,813   |  
|                                             |  |  |  |  |  |  |  |  |          |  

Year Reconciliations



|                              |  |                    |           |  |                                           |  |           |                 |  |  |         |  |  |  |           | 
|----------------------------- |  | ------------------ | --------- |  | ----------------------------------------- |  | --------- | --------------- |  |  | ------- |  |  |  | --------- | 
|                              |  | Cost of goods sold |           |  | Selling, generalandadministrativeexpenses |  |           | Financeexpenses |  |  | Total   | 
|Year ended March 31, 2012     |  |                    |           |  |                                           |  |           |                 |  |  |         |  |  |  |           | 
|Allocated segment expenses    |  |                    | 4,660,773 |  |                                           |  | 1,569,622 |                 |  |  |        |  |  |  | 6,230,395 | 
|Unallocated segment expenses  |  |                    |          |  |                                           |  | 977,587   |                 |  |  | 306,732 |  |  |  |           | 
|Total as per income statement |  |                    | 4,660,773 |  |                                           |  | 2,547,209 |                 |  |  | 306,732 |  |  |  |           | 
|                              |  |                    |           | 
|Year ended March 31, 2011     |  |                    |           |  |                                           |  |           |                 |  |  |         |  |  |  |           | 
|Allocated segment expenses    |  |                    | 4,173,208 |  |                                           |  | 1,461,446 |                 |  |  |        |  |  |  | 5,634,654 | 
|Unallocated segment expenses  |  |                    | 36,222    |  |                                           |  | 980,353   |                 |  |  | 258,622 |  |  |  |           | 
|Total as per income statement |  |                    | 4,209,430 |  |                                           |  | 2,441,799 |                 |  |  | 258,622 |  |  |  |           | 
|                              |  |                    |           | 
|Year ended March 31, 2010     |  |                    |           |  |                                           |  |           |                 |  |  |         |  |  |  |           | 
|Allocated segment expenses    |  |                    | 4,050,685 |  |                                           |  | 1,545,545 |                 |  |  |        |  |  |  | 5,596,230 | 
|Unallocated segment expenses  |  |                    | 45,853    |  |                                           |  | 936,870   |                 |  |  | 293,873 |  |  |  |           | 
|Total as per income statement |  |                    | 4,096,538 |  |                                           |  | 2,482,415 |                 |  |  | 293,873 |  |  |  |           | 

Reorganization of business segments

We have been historically operating with three segments of business viz Corporate network/data services, Internet access services (including Online portal services and content offerings) and others
(e-Learning and Infrastructure Management services). The Industry in which these segments compete has witnessed newer competitions, business models resulting in dynamic market changes. In order to leverage the versatility and the organizational
capability, the Chief Operations Decision Maker (CODM) has evaluated options of integrating certain services to address customers across segments, achieve better marketability, flexibility and scale. Based on the management decision, certain
changes to the business structure are made effective April 1, 2011. Consequently Application services have been realigned out of Corporate Data/Networking (revised segmentEnterprise Services) and have been reported
as a part of Software Services. Infrastructure Management Services have been realigned out of Other Services and have been reported as a part of Enterprise Services. The Corresponding revenues and costs have been
regrouped into the respective segments. Manpower cost of Technology division, comprising of Infrastructure, Managed Services and Software, is now identified as a specific operating cost to all relevant segment.

Consequently the revised operating segments are as below:

Enterprise Service:Connectivity and voice services will be offered as Network Services, while Data Center Hosting and Managed Services, along with System Integration, will comprise IT services.
They will service both domestic and International clients from large corporate and mid-market customers.

Commercial and Consumer Service:The scope of the Consumer business is being expanded to include SOHOs and SMBs apart from the cybercafés, Portals and broadband-to-home services, offering network, IT services and applications through the Cloud.



146



---

##### Table of Contents

Software Service:The application services and e-learning would from Software services. This business
line will offer applications through the Cloud, primarily targeted at enterprise and international customers.

These reorganization of
operating segments did not have any effect on reported consolidated operating income, income before income taxes, net income or per share amounts. The following table provides the amounts reclassified for all prior periods.

Revenue reclassifications

For the
year ended March 31, 2011



|                                  |  |                                  |                    |   |              |  |                                 |                |  |  |                   |   |  |  |           | 
|--------------------------------- |  | -------------------------------- | ------------------ | - | ------------ |  | ------------------------------- | -------------- |  |  | ----------------- | - |  |  | --------- | 
|Previous operating segments       |  | Corporate network /data services |                    |   | Consumer one |  |                                 | Other services |  |  | Total             |  
|As previously reported            |  |                                  | 5,671,909          |   |              |  | 526,366                         |                |  |  | 688,354           |   |  |  | 6,886,629 | 
|Revenue from Managed services     |  |                                  | 411,085            |   |              |  |                                |                |  |  | (411,085          | ) |  |  |          | 
|Revenue from application services |  |                                  | (330,115           | ) |              |  |                                |                |  |  | 330,115           |   |  |  |          | 
|Revised operating segments        |  |                                  | 5,752,879          |   |              |  | 526,366                         |                |  |  | 607,384           |   |  |  | 6,886,629 | 
|                                  |  |                                  | Enterpriseservices |   |              |  | Commercial andconsumer services |                |  |  | Software services |   |  |  |           | 

For the year ended March 31, 2010



|                                  |  |                                  |                    |   |              |  |                                 |                |  |  |                   |   |  |  |           | 
|--------------------------------- |  | -------------------------------- | ------------------ | - | ------------ |  | ------------------------------- | -------------- |  |  | ----------------- | - |  |  | --------- | 
|Previous operating segments       |  | Corporate network /data services |                    |   | Consumer one |  |                                 | Other services |  |  | Total             |  
|As previously reported            |  |                                  | 5,335,268          |   |              |  | 844,771                         |                |  |  | 530,149           |   |  |  | 6,710,188 | 
|Revenue from Managed services     |  |                                  | 289,146            |   |              |  |                                |                |  |  | (289,146          | ) |  |  |          | 
|Revenue from application services |  |                                  | (355,884           | ) |              |  |                                |                |  |  | 355,884           |   |  |  |          | 
|Revised Revenue                   |  |                                  | 5,268,530          |   |              |  | 844,771                         |                |  |  | 596,887           |   |  |  | 6,710,188 | 
|Revised operating segments        |  |                                  | Enterpriseservices |   |              |  | Commercial andconsumer services |                |  |  | Software services |   |  |  |           | 

Operating and unallocated cost reclassifications:

For the year ended March 31, 2011



|                            |  |                                  |                    |   |              |  |                                 |                |  |  |                               |   |  |  |           |  
|--------------------------- |  | -------------------------------- | ------------------ | - | ------------ |  | ------------------------------- | -------------- |  |  | ----------------------------- | - |  |  | --------- | -
|Previous operating segments |  | Corporate network /data services |                    |   | Consumer one |  |                                 | Other services |  |  | Unallocatedexpensesand income |  
|As previously reported      |  |                                  | 4,026,865          |   |              |  | 639,463                         |                |  |  | 536,176                       |   |  |  | 2,201,760 |  
|Cost of goods sold          |  |                                  | 309,580            |   |              |  | 45,094                          |                |  |  | 134,129                       |   |  |  | (488,802  | )
|Finance expenses            |  |                                  | (52,916            | ) |              |  | (2,210                          | )              |  |  | (1,527                        | ) |  |  | 56,653    |  
|Operating expenses          |  |                                  | 119,906            |   |              |  | 41,936                          |                |  |  | (161,842                      | ) |  |  |          |  
|Revised Costs               |  |                                  | 4,403,435          |   |              |  | 724,283                         |                |  |  | 506,936                       |   |  |  | 1,769,610 |  
|Revised operating segments  |  |                                  | Enterpriseservices |   |              |  | Commercial andconsumer services |                |  |  | Software services             |   |  |  |           |  



147



---

##### Table of Contents

For the year ended March 31, 2010



|                            |  |                                  |                    |   |              |  |                                 |                |  |  |                               |   |  |  |           |  
|--------------------------- |  | -------------------------------- | ------------------ | - | ------------ |  | ------------------------------- | -------------- |  |  | ----------------------------- | - |  |  | --------- | -
|Previous operating segments |  | Corporate network /data services |                    |   | Consumer one |  |                                 | Other services |  |  | Unallocatedexpensesand income |  
|As previously reported      |  |                                  | 3,929,727          |   |              |  | 898,397                         |                |  |  | 406,063                       |   |  |  | 1,483,398 |  
|Cost of goods sold          |  |                                  | 293,922            |   |              |  | 41,137                          |                |  |  | 96,895                        |   |  |  | (431,954  | )
|Finance expenses            |  |                                  | (66,656            | ) |              |  | (2,557                          | )              |  |  | (698                          | ) |  |  | 69,911    |  
|Operating expenses          |  |                                  | (160,068           | ) |              |  | 143,259                         |                |  |  | 16,809                        |   |  |  |          |  
|Revised Costs               |  |                                  | 3,996,925          |   |              |  | 1,080,236                       |                |  |  | 519,069                       |   |  |  | 1,121,355 |  
|Revised operating segments  |  |                                  | Enterpriseservices |   |              |  | Commercial andconsumer services |                |  |  | Software services             |   |  |  |           |  

Geographic segments

The Group has two geographic segments India and rest of the world. Revenues from the geographic segments based on domicile of the customer are as follows:



|                          |  |       |           |  |                  |  |           |       |  |  |           | 
|------------------------- |  | ----- | --------- |  | ---------------- |  | --------- | ----- |  |  | --------- | 
|Description               |  | India |           |  | Rest of theworld |  |           | Total | 
|Revenues                  |  |       |           |  |                  |  |           |       |  |  |           | 
|Year ended March 31, 2012 |  |       | 4,864,915 |  |                  |  | 2,834,034 |       |  |  | 7,698,949 | 
|Year ended March 31, 2011 |  |       | 4,495,801 |  |                  |  | 2,390,828 |       |  |  | 6,886,629 | 
|Year ended March 31, 2010 |  |       | 4,950,352 |  |                  |  | 1,759,836 |       |  |  | 6,710,188 | 

The Group does not disclose information relating to non-current assets located in India and rest of the world as the
necessary information is not available and the cost to develop it would be excessive.

The revenue from transactions with a single external
customer did not exceed more than 10% of the total revenue of the Company for each of the three years ended March 31, 2012.

35.
Contingencies



|a) | During the previous years, the Group had received assessment orders from the Income-tax Department of India for various financial years disallowing certain expenditure
like bandwidth charges and foreign currency payments for non-deduction of withholding taxes. The Company appealed against those order before Commissioner of Income Tax (Appeals) (CIT(A)) and received favourable orders. The department has filed
appeals before Income Tax Appellate Tribunal (ITAT) disputing CIT(A) orders. The group believes that the appeal by the department is not sustainable and consequently no loss contingency is necessary as at March 31, 2012. Income tax claims
against the company as at March 31, 2012 amounted to Rs.84,981 (March 31, 2011: Rs.84,981).
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | Contingencies due to certain service tax claims as at March 31, 2012 amounted to Rs.421,730 (March 31, 2011: Rs 243,610).
|-- | -------------------------------------------------------------------------------------------------------------------------



|c) | Additionally, the Group is also involved as a party to lawsuits, claims and proceedings, which arise in the ordinary course of business. The Group does not foresee any
material contingency out of the pending issues.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d) | The Group during the year ended March 31, 2009 entered into a contract with Emirates Integrated Telecom for the construction and supply of capacity from the Europe
India Gateway. As per the contract with Emirates, the Group is required to pay its share of decommissioning costs if any that may arise in the future. No provision has been made by the Group for such decommissioning costs as the amount of provision
cannot be measured reliably as at March 31, 2012.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



148



---

##### Table of Contents

|e) | Liability on customer letter of credit discounted amounted to Rs.87,793 (March 31, 2011: Nil).
|-- | ----------------------------------------------------------------------------------------------



|f) | In respect of contingencies arising on legal proceedings, refer Note 36.
|-- | ------------------------------------------------------------------------

36. Legal proceedings



|(a) | The Group and certain of its officers and directors are named as defendants in a securities class action lawsuit filed in the United States District Court for the
Southern District of New York. This action, which is captioned In re Satyam Infoway Ltd. Initial Public Offering Securities Litigation, also names several of the underwriters involved in Sifys initial public offering of American Depositary
Shares as defendants. This class action is brought on behalf of a purported class of purchasers of Sifys ADSs from the time of Sifys Initial Public Offering (IPO) in October 1999 through December 2000. The central allegation
in this action is that the underwriters in Sifys IPO solicited and received undisclosed commissions from, and entered into undisclosed arrangements with, certain investors who purchased Sifys ADSs in the IPO and the aftermarket. The
complaint also alleges that Sify violated the United States Federal Securities laws by failing to disclose in the IPO prospectus that the underwriters had engaged in these allegedly undisclosed arrangements. More than 300 issuers have been named in
similar lawsuits.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On April 2, 2009, the parties lodged with the Court a motion for preliminary approval of a
proposed settlement between all parties, including the Company and its former officers and directors. The proposed settlement provides the plaintiffs with $586 million in recoveries from all defendants. Under the proposed settlement, the Issuer
Defendants collectively would be responsible for $100 million, which would be paid by the Issuers insurers, on behalf of the Issuer Defendants and their officers and directors.

Accordingly, any direct financial impact of the proposed settlement is expected to be borne by the Sifys insurers. On June 12,
2009, the Federal District Court granted preliminary approval of the proposed settlement. On October 6, 2009, the District Court issued an order granting final approval of the settlement. Subsequent to the final approval of Settlement
agreement by the District court, there were several notices of appeal filed. Most were filed by the same parties that objected to the settlement in front of the District Court. These appeals were consolidated into a single appeal and
briefing schedule was held. On January 9, 2012, the class counsel and issuer defendants counsel entered into a Settlement Agreement, which agreement includes an agreement to dismiss the above appeal. Thus the above appeal has been
dismissed with prejudice confirming the Settlement agreement entered before the District Court.

The Company believes, the
maximum exposure under this settlement is approximately USD 338,983, an amount which its insurer will pay as per the Settlement Agreement on behalf of the Company.



|(b) | Proceedings before the Department of Telecommunications
|--- | -------------------------------------------------------



| | (ii) | License fees
| | ---- | ------------



| |  |  | On October 12, 2009 (as later clarified by the DoT), the Department of Telecommunications (DOT) raised a demand on Sify Technologies
for Rs.14 million after correcting the arithmetical error in the Assessment letter.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On February 26, 2010 DoT raised a demand on Sify Communications (erstwhile subsidiary merged with Sify Technologies Limited) for Rs.26 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

The above demands were made by the DoT on the premise that all amounts of income (whether direct or
indirect) including items such as other income, interest on deposits, gain on foreign exchange fluctuation, profit on sale of assets & provision written back, that are in anyway related to telecom operations of the Company or arise in
connection with the Telecom business of the Company, are to be considered as income for the purpose of calculation of the license fee. The Company replied suitably on the above demand notice.

Various service providers approached Telecom Disputes Settlement & Appellate Tribunal (TDSAT) to clarify what items
of income should be included in the calculation of license fee and what items of income should not be included in such calculation. TDSAT by its order clarified on the above. The TDSAT order was challenged by DoT in Surpreme Court of India and the
Supreme Court has set aside the TDSAT order. The service providers through their associations have filed a review petition in Supreme Court of India against the order. Sify believes that the above demands are not tenable under law nor fit into the
definition of Adjusted Gross Revenue as defined by DoT. The Company believes it has adequate defenses for these demands and are awaiting the outcome of the review petition.



149



---

##### Table of Contents

| | (ii) | In November 2009, the Company received a demand notice pertaining to the allocation of spectrum in the 3.3-3.4 GHz frequency, from DoT, demanding INR 345 million
(US $ 7.05 million) towards spectrum charges payable from the date of issue of allocation letter for 170 Base Stations. As per the notice, in case no payment is received within 15 days from the date of issue of the notice, then it would be
presumed that the Company is no longer interested for the frequency assignments in 3.3-3.4 GHz band.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Whilst the
Company received allotment letter for Spectrum in3.3 GHz band (3303.5/3353.5 MHz) (Total 12 MHz) the Company had neither started any operations in this frequency band nor had applied for any Operating License from DOT/ Wireless Planning
Commission (WPC). Sify believes that the obligation to make payment will arise only after obtaining the operating license from DOT/WPC. Sify also believes that it has adequate legal defences for these demands, as the Company has not yet
obtained any operative license, hence such demand is not tenable Nevertheless, the Company has as a commitment to hold and use the spectrum in the above band has paid INR 11.56 million towards 40 Base Stations and has surrendered the remaining
130 Base Stations. The Company believes that the ultimate outcome of these actions will not have a material adverse effect.



| | (c) | The Group is party to additional legal actions arising in the ordinary course of business. Based on the available information, as at March 31, 2012, Sify believes
that it has adequate legal defences for these actions and that the ultimate outcome of these actions will not have a material adverse effect. However in the event of adverse judgement in all these cases, the maximum financial exposure would be
Rs.129,041 (March 31, 2011: Rs 9,051).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37. Related parties

The related parties where control / significant influence exists are subsidiaries and associates. Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including any director whether executive or otherwise. Key management personnel includes the board of directors and other senior management executives. The other related parties are
those with whom the Group has had transaction during the years ended March 31, 2012, 2011 and 2010 are as follows:



|                                                                                                                                                    |  |                          |           |  |                         |  |       |               |  |  |       | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- |  | ----------------------- |  | ----- | ------------- |  |  | ----- | 
|Particulars                                                                                                                                         |  | Countryof 
incorporation |           |  | % of Ownership interest | 
|                                                                                                                                                    |  |                          |           |  | March 31, 2012          |  |       | March 31,2011 | 
|Holding Company                                                                                                                                     |  |                          |           |  |                         |  |       |               |  |  |       | 
|Infinity Satcom Universal Private Limited                                                                                                           |  |                          |           |  |                         |  |      |               |  |  |      | 
|Raju Vegesna Infotech & Industries Private Limited (Refer note 16 and note 42)                                                                      |  |                          |           |  |                         |  |      |               |  |  |      | 
|Ramanand Core Investment Company Private Limited                                                                                                    |  |                          |           |  |                         |  |      |               |  |  |      | 
|Subsidiaries                                                                                                                                        |  |                          |           |  |                         |  |       |               |  |  |       | 
|Sify International Inc.                                                                                                                             |  |                          | USA       |  |                         |  | 100   |               |  |  | 100   | 
|Sify Software Limited (Formerly Sify Networks Private Limited)                                                                                      |  |                          | India     |  |                         |  | 100   |               |  |  | 100   | 
|Sify Technologies (Singapore) Pte. Limited (Incorporated on December 7, 2009)                                                                       |  |                          | Singapore |  |                         |  | 100   |               |  |  | 100   | 
|Hermit Projects Private Limited (Acquired on November 28, 2011)                                                                                     |  |                          | India     |  |                         |  | 100   |               |  |  | 100   | 
|Pace Info Com Park Private Limited (Acquired on November 28, 2011)                                                                                  |  |                          | India     |  |                         |  | 100   |               |  |  | 100   | 
|Associates                                                                                                                                          |  |                          |           |  |                         |  |       |               |  |  |       | 
|MF Global-Sify Securities India Private Limited                                                                                                     |  |                          | India     |  |                         |  | 29.85 |               |  |  | 29.85 | 
|Others (Entities in which the Key Management Personnel have controlling interest / significant influence and relatives of Key
Management Personnel) |  |                          |           |  |                         |  |       |               |  |  |       | 
|Radhika Vegesna                                                                                                                                     |  |                          | India     |  |                         |  |      |               |  |  |      | 
|Server Engines LLC                                                                                                                                  |  |                          | USA       |  |                         |  |      |               |  |  |      | 
|Server Engines India Private Limited                                                                                                                |  |                          | India     |  |                         |  |      |               |  |  |      | 
|VALS Developers Private Limited                                                                                                                     |  |                          | India     |  |                         |  |      |               |  |  |      | 
|Raju Vegesna Developers Private Limited                                                                                                             |  |                          | India     |  |                         |  |      |               |  |  |      | 



150



---

##### Table of Contents

The following is a summary of the related party transactions for the year ended March 31, 2012:



|                                                        |  |                |           |  |            |  |   |        |  |  |                           |  |  |  |        | 
|------------------------------------------------------- |  | -------------- | --------- |  | ---------- |  | - | ------ |  |  | ------------------------- |  |  |  | ------ | 
|Transactions                                            |  | HoldingCompany |           |  | Associates |  |   | Others |  |  | KeyManagementPersonnel*** | 
|Consultancy services received                           |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 240    | 
|Sitting fees paid                                       |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 1,280  | 
|Salaries and other short term benefits                  |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 37,385 | 
|Contributions to defined contribution plans             |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 1,602  | 
|Share based payment transactions                        |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 1,041  | 
|Issue of shares on private placement basis**            |  |                | 1,500,000 |  |            |  |  |        |  |  |                          |  |  |  |       | 
|Advance lease rentals and refundable deposits refunded* |  |                |          |  |            |  |  |        |  |  | 2,175                     |  |  |  |       | 
|Refundable lease deposit paid****                       |  |                |          |  |            |  |  |        |  |  |                          |  |  |  |       | 
|Lease rentals paid****                                  |  |                | 150       |  |            |  |  |        |  |  | 3,129                     |  |  |  |       | 
|Amount of outstanding balances                          |  |                |           |  |            |  |   |        |  |  |                           |  |  |  |        | 
|Advance lease rentals and refundable deposits made****  |  |                |          |  |            |  |  |        |  |  | 2,558                     |  |  |  |       | 

The following is a summary of the related party transactions for the year ended March 31, 2011:



|                                                       |  |                |           |  |            |  |   |        |  |  |                           |  |  |  |        | 
|------------------------------------------------------ |  | -------------- | --------- |  | ---------- |  | - | ------ |  |  | ------------------------- |  |  |  | ------ | 
|Transactions                                           |  | HoldingCompany |           |  | Associates |  |   | Others |  |  | KeyManagementPersonnel*** | 
|Consultancy services received                          |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 240    | 
|Sitting fees paid                                      |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 1,200  | 
|Salaries and other short term benefits                 |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 40,328 | 
|Contributions to defined contribution plans            |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 1,913  | 
|Share based payment transactions                       |  |                |          |  |            |  |  |        |  |  |                          |  |  |  | 4,226  | 
|Issue of shares on private placement basis**           |  |                | 1,000,000 |  |            |  |  |        |  |  |                          |  |  |  |       | 
|Advance lease rentals and refundable deposits refunded |  |                |          |  |            |  |  |        |  |  | 282,825                   |  |  |  |       | 
|Refundable lease deposit paid****                      |  |                |          |  |            |  |  |        |  |  | 2,558                     |  |  |  |       | 
|Lease rentals paid****                                 |  |                |          |  |            |  |  |        |  |  | 2,558                     |  |  |  |       | 
|Amount of outstanding balances                         |  |                |           |  |            |  |   |        |  |  |                           |  |  |  |        | 
|Debtors                                                |  |                |          |  |            |  |  |        |  |  |                          |  |  |  |       | 
|Advance lease rentals and refundable deposits made**** |  |                |          |  |            |  |  |        |  |  | 2,558                     |  |  |  |       | 

The following is a summary of the related party transactions for the year ended March 31, 2010:



|                                                                                                           |  |            |   |  |        |  |         |                           |  |  |        | 
|---------------------------------------------------------------------------------------------------------- |  | ---------- | - |  | ------ |  | ------- | ------------------------- |  |  | ------ | 
|Transactions                                                                                               |  | Associates |   |  | Others |  |         | KeyManagementPersonnel*** | 
|Consultancy services received                                                                              |  |            |  |  |        |  |        |                           |  |  | 240    | 
|Sitting fees paid                                                                                          |  |            |  |  |        |  |        |                           |  |  | 1,240  | 
|Salaries and other short term benefits                                                                     |  |            |  |  |        |  |        |                           |  |  | 52,441 | 
|Contributions to defined contribution plans                                                                |  |            |  |  |        |  |        |                           |  |  | 2,427  | 
|Share based payment transactions                                                                           |  |            |  |  |        |  |        |                           |  |  | 9,486  | 
|Issuance of shares on amalgamation of erstwhile Sify Communications limited with Sify Technologies limited |  |            |  |  |        |  | 842,837 |                           |  |  |       | 
|Amount of outstanding balances                                                                             |  |            |   |  |        |  |         |                           |  |  |        | 
|Debtors                                                                                                    |  |            |  |  |        |  |        |                           |  |  |       | 
|Advance lease rentals and refundable deposits made*                                                        |  |            |  |  |        |  | 282,825 |                           |  |  |       | 



151



---

##### Table of Contents

|* | Represents deposits made to VALS Developers Private Limited (VALS).VALS was owned and controlled by Raju Vegesna Infotech & Industries Private
Limited, in which Mr. Raju Vegesna, our principal share holder and Chief Executive Officer, was holding 94.66% equity in his personal capacity. During the year ended March 31, 2009, Sify entered into an agreement for Sub Lease with
VALS Developers Private Limited to take on lease on long term basis the proposed building which is in the process of being constructed. The lease agreement, when final and executed, was expected to have an initial non-cancellable term of 5 years,
with a further option for Sify to renew or cancel the lease for the incremental five year terms. In terms of this Agreement for Sub Lease, Sify has paid a security deposit of Rs.125,700 and advance rental of Rs.157,125 to VALS. As per the terms of
the Sub Lease, 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. To give effect to the above arrangement, VALS had entered into a
Memorandum of Understanding on 16th June 2008 with M/s. Advance India Projects Limited (AIPL) and M/s. Pace Info com Private Limited (PACE), wherein PACE is an allottee of the land situated at B-07, Sector-132, Noida and VALS had through a
Special Purpose Vehicle Hermit Projects Private Limited (HERMIT) decided to acquire the shares of PACE including the land held by it. VALS has paid a sum of Rs.285,000 to AIPL at the time of signing the MoU.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year, on October 30, 2010, the Board of Directors have approved to cancel the MoU for lease arrangement and have decided
to acquire the property which is under construction from the third party directly. On 12th January 2011, through a Memorandum of Amendment, the company with the intention to acquire the said land, had substituted its name with that of VALS and
through such amendment VALS had agreed to assign all rights, responsibilities, obligations, title etc. in favour of the company, thus making the company eligible to acquire PACE through HERMIT and subsequently the land and also making liable to pay
the entire consideration of Rs.1,140,000. Hence the Company has paid VALS an amount of Rs.2,175 i.e., difference between the amount paid by the Company to VALS and the amount paid by VALS to AIPL.

During the year, the Company acquired the leasehold rights alongwith the building under construction through acquisition of entire shares
HERMIT which in turn holds the entire shares of PACE, the original allottee of the land.



|** | Also refer note 16 in relation to transactions relating to issue of equity shares on private placement basis to Raju Vegesna Infotech & Industries Private
Limited.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|*** | 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | The company has entered into a lease agreement with Ms Radhika Vegesna, Daughter of Mr. Ananda Raju Vegesna, Executive Director of the company, to lease the
premises owned by her for a period of three years effective June 1, 2010 on a rent of Rs.256 per month and payment of refundable security deposit of Rs.2,558. This arrangement will be automatically renewed for a further period of two blocks of
three years with all the terms remaining unchanged.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | During the year, the Company has entered into a lease agreement with M/s Raju Vegesna Infotech and Industries Private Limited, the holding Company, to lease the
premises owned by it for a period of three years effective February 1, 2012 on a rent of Rs.75 per month.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**** | During the year, the Company has entered into a lease agreement with M/s Raju Vegesna Developers Private Limited, a Company in which Mr Ananda Raju Vegesna, Executive
Director of the Company and Mr Raju Vegesna, Chairman and Managing director of the Company exercise significant influence, to lease the premises owned by it for a period of three years effective February 1, 2012 on a rent of Rs.30 per month.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



152



---

##### Table of Contents

38. Financial instruments

Financial instruments by category

The carrying value and fair value of financial
instruments by each category as at March 31, 2012 were as follows:



|                                |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|------------------------------- |  | ---- | -- |  | -------------------- |  | --------- | ------------------------------------------------------------- |  |  | ----------------- |  |  | ------------------------- | --- |  | ------------------ |  | --------- | --------------- |  |  | --------- |  |  |  | --------- | 
|Particulars                     |  | Note |    |  | Loans andreceivables |  |           | Financialassets /liabilitiesat
fairvaluethroughprofit andloss |  |  | Availablefor sale |  |  | Otherfinancialliabilities |     |  | Totalcarryingvalue |  |           | Total fairvalue | 
|Assets                          |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|Cash and cash equivalents       |  |      | 8  |  |                      |  | 892,768   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 892,768   |  |  |  | 892,768   | 
|Other assets                    |  |      | 10 |  |                      |  | 252,386   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 252,386   |  |  |  | 252,386   | 
|Trade receivables               |  |      | 13 |  |                      |  | 2,411,946 |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 2,411,946 |  |  |  | 2,411,946 | 
|Other receivables               |  |      | 13 |  |                      |  | 122,214   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 122,214   |  |  |  | 122,214   | 
|Derivative financial instrument |  |      |    |  |                      |  |          |                                                               |  |  | 2,891             |  |  |                           |    |  |                    |  |          |                 |  |  | 2,891     |  |  |  | 2,891     | 
|Other investments               |  |      | 15 |  |                      |  |          |                                                               |  |  |                  |  |  |                           | 160 |  |                    |  |          |                 |  |  | 160       |  |  |  | 160       | 
|Liabilities                     |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|Bank overdraft                  |  |      | 8  |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 798,180   |                 |  |  | 798,180   |  |  |  | 798,180   | 
|Finance lease liabilities       |  |      | 17 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 176,926   |                 |  |  | 176,926   |  |  |  | 176,926   | 
|Other liabilities               |  |      | 19 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 187,236   |                 |  |  | 187,236   |  |  |  | 187,236   | 
|Borrowings from banks           |  |      | 20 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 375,906   |                 |  |  | 375,906   |  |  |  | 375,906   | 
|Borrowings from others          |  |      | 20 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 353,435   |                 |  |  | 353,435   |  |  |  | 353,435   | 
|Trade and other payables        |  |      | 21 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 2,325,447 |                 |  |  | 2,325,447 |  |  |  | 2,325,447 | 

The carrying value and fair value of financial instruments by each category as at March 31, 2011 were as follows:



|                          |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|------------------------- |  | ---- | -- |  | -------------------- |  | --------- | ------------------------------------------------------------- |  |  | ----------------- |  |  | ------------------------- | --- |  | ------------------ |  | --------- | --------------- |  |  | --------- |  |  |  | --------- | 
|Particulars               |  | Note |    |  | Loans andreceivables |  |           | Financialassets /liabilitiesat
fairvaluethroughprofit andloss |  |  | Availablefor sale |  |  | Otherfinancialliabilities |     |  | Totalcarryingvalue |  |           | Total fairvalue | 
|Assets                    |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|Cash and cash equivalents |  |      | 8  |  |                      |  | 543,097   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 543,097   |  |  |  | 543,097   | 
|Other assets              |  |      | 10 |  |                      |  | 212,969   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 212,969   |  |  |  | 212,969   | 
|Trade receivables         |  |      | 13 |  |                      |  | 1,839,966 |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 1,839,966 |  |  |  | 1,839,966 | 
|Other receivables         |  |      | 13 |  |                      |  | 354,115   |                                                               |  |  |                  |  |  |                           |    |  |                    |  |          |                 |  |  | 354,115   |  |  |  | 354,115   | 
|Other investments         |  |      | 15 |  |                      |  |          |                                                               |  |  |                  |  |  |                           | 160 |  |                    |  |          |                 |  |  | 160       |  |  |  | 160       | 
|Liabilities               |  |      |    |  |                      |  |           |                                                               |  |  |                   |  |  |                           |     |  |                    |  |           |                 |  |  |           |  |  |  |           | 
|Bank overdraft            |  |      | 8  |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 678,091   |                 |  |  | 678,091   |  |  |  | 678,091   | 
|Finance lease liabilities |  |      | 17 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 188,253   |                 |  |  | 188,253   |  |  |  | 188,253   | 
|Other liabilities         |  |      | 19 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 163,245   |                 |  |  | 163,245   |  |  |  | 163,245   | 
|Borrowings from banks     |  |      | 20 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 1,009,422 |                 |  |  | 1,009,422 |  |  |  | 1,009,422 | 
|Borrowings from others    |  |      | 20 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 288,988   |                 |  |  | 288,988   |  |  |  | 288,988   | 
|Trade and other payables  |  |      | 21 |  |                      |  |          |                                                               |  |  |                  |  |  |                           |    |  |                    |  | 1,725,907 |                 |  |  | 1,725,907 |  |  |  | 1,725,907 | 

Details of financial assets pledged as collateral

The carrying amount of financial assets as March 31, 2012 and 2011 that the Group has provided as collateral for obtaining borrowings and other facilities from its bankers are as follows:



|                          |  |               |           |  |               |  |           | 
|------------------------- |  | ------------- | --------- |  | ------------- |  | --------- | 
|                          |  | March 31,2012 |           |  | March 31,2011 | 
|Cash and cash equivalents |  |               | 892,768   |  |               |  | 543,097   | 
|Other assets              |  |               | 252,386   |  |               |  | 212,969   | 
|Trade receivables         |  |               | 2,411,946 |  |               |  | 1,839,966 | 
|Other receivables         |  |               | 122,214   |  |               |  | 354,115   | 
|                          |  |               |           |  |               |  |           | 
|                          |  |               | 3,679,314 |  |               |  | 2,950,147 | 
|                          |  |               |           |  |               |  |           | 



153



---

##### Table of Contents

Derivative financial instruments

Foreign exchange forward contracts and options are purchased to mitigate the risk of changes in foreign exchange rates associated with certain payables, receivables and forecasted transactions denominated
in certain foreign currencies. These derivative contracts do not qualify for hedge accounting under IAS 39, and are initially recognized at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Gains
or losses arising from changes in the fair value of the derivative contracts are recognized immediately in profit or loss. The counterparties for these contracts are generally banks or financial institutions. The following table gives details in
respect of the notional amount of outstanding foreign exchange and option contracts as on March 31, 2012 and 2011:



|                       |  |                |       |  |                |  |   | 
|---------------------- |  | -------------- | ----- |  | -------------- |  | - | 
|                       |  | As of          |      
|                       |  | March 31, 2012 |       |  | March 31, 2011 | 
|Forward contracts      |  |                |       |  |                |  |   | 
|In U.S. Dollars (Sell) |  |                |      |  |                |  |  | 
|In U.S Dollars (Buy)   |  |                |      |  |                |  |  | 
|Option contracts       |  |                |       |  |                |  |   | 
|In U.S Dollars (Sell)  |  |                | 1,500 |  |                |  |  | 
|In U.S Dollars (Buy)   |  |                |      |  |                |  |  | 

The Company recognized a net gain on derivative financial instruments of Rs.2,891 for the year ended March 31, 2012
and a net gain of Rs.6,998 during the year ended March 31, 2010.

The forward exchange contracts and option contracts mature between one
and twelve months. The table below summarizes the notional amounts of derivative financial instruments into relevant maturity groupings based on the remaining period as at the end of the year:



|                                                      |  |                |        |  |                |  |   | 
|----------------------------------------------------- |  | -------------- | ------ |  | -------------- |  | - | 
|                                                      |  | As of          |       
|                                                      |  | March 31, 2012 |        |  | March 31, 2011 | 
|Sell:                                                 |  |                |        |  |                |  |   | 
|Not later than one month                              |  |                | 26,500 |  |                |  |  | 
|Later than one month and not later than three months  |  |                | 53,000 |  |                |  |  | 
|Later than three months and not later than six months |  |                |       |  |                |  |  | 
|Later than six months and not later than one year     |  |                |       |  |                |  |  | 
|                                                      |  |                |        |  |                |  |   | 
|                                                      |  |                | 79,500 |  |                |  |  | 
|                                                      |  |                |        |  |                |  |   | 
|                                                      | 
|                                                      |  | As of          |       
|                                                      |  | March 31, 2012 |        |  | March 31, 2011 | 
|Buy:                                                  |  |                |        |  |                |  |   | 
|Not later than one month                              |  |                |       |  |                |  |  | 
|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     |  |                |       |  |                |  |  | 
|                                                      |  |                |        |  |                |  |   | 
|                                                      |  |                |       |  |                |  |  | 
|                                                      |  |                |        |  |                |  |   | 

Interest, (expenses), gains and (losses) recognized on financial assets and liabilities

Recognized in profit or loss



|                                                 |  |                |          |   |                |  |          |                |  |  |          |  
|------------------------------------------------ |  | -------------- | -------- | - | -------------- |  | -------- | -------------- |  |  | -------- | -
|                                                 |  | Year ended     |         
|                                                 |  | March 31, 2012 |          |   | March 31, 2011 |  |          | March 31, 2010 | 
|Loans and receivables                            |  |                |          |   |                |  |          |                |  |  |          |  
|Interest income on bank deposits                 |  |                | 16,468   |   |                |  | 21,360   |                |  |  | 19,489   |  
|Interest income from other loans and receivables |  |                | 3,706    |   |                |  | 3,871    |                |  |  | 8,505    |  
|Impairment loss of trade receivables             |  |                | (193,232 | ) |                |  | (161,922 | )              |  |  | (121,987 | )
|Impairment loss on finance lease receivables     |  |                |         |   |                |  |         |                |  |  |         |  



154



---

##### Table of Contents

|                                                                  |  |  |          |   |  |  |          |   |  |  |          |  
|----------------------------------------------------------------- |  |  | -------- | - |  |  | -------- | - |  |  | -------- | -
|Financial assets at fair value through profit or loss             |  |  |          |   |  |  |          |   |  |  |          |  
|Net change in fair value of derivative financial instruments      |  |  | 2,891    |   |  |  |         |   |  |  | 6,998    |  
|                                                                  |  |  |         
|Other financial liabilities                                       |  |  |          |   |  |  |          |   |  |  |          |  
|Interest expenses on lease obligations                            |  |  | (20,089  | ) |  |  | (20,117  | ) |  |  | (16,476  | )
|Interest expenses on borrowings from banks, others and overdrafts |  |  | (157,510 | ) |  |  | (161,897 | ) |  |  | (177,156 | )

Recognized directly in other comprehensive income



|                                                                |  |                |   |  |                |  |   |                |  |  |   | 
|--------------------------------------------------------------- |  | -------------- | - |  | -------------- |  | - | -------------- |  |  | - | 
|                                                                |  | Year ended     |  
|                                                                |  | March 31, 2012 |   |  | March 31, 2011 |  |   | March 31, 2010 | 
|Net change in fair value of available-for-sale financial assets |  |                |  |  |                |  |  |                |  |  |  | 

39. Financial Risk Management

The Group has exposure to the following risks from its use of financial instruments:



| |  | Credit risk
|- |  | -----------



| |  | Liquidity risk
|- |  | --------------



| |  | Market risk
|- |  | -----------

The Board of
Directors has overall responsibility for the establishment and oversight of the Groups risk management framework. The Board of Directors have established a risk management policy to identify and analyze the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management systems are reviewed periodically to reflect changes in market conditions and the Groups activities. The Group Audit Committee oversees how
management monitors compliance with the Groups risk management policies and procedures, and reviews the risk management framework. The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes reviews
of risk management controls and procedures, the results of which are reported to the Audit Committee.

Credit risk: Credit risk is the
risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups trade receivables, treasury operations and other activities that are
in the nature of leases.

Trade and other receivables

The Groups exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management considers that the demographics of the Groups customer base, including
the default risk of the industry and country in which customers operate, has less of an influence on credit risk. The group is not exposed to concentration of credit risk to any one single customer since the services are provided to and products are
sold to customers who are spread over a vast spectrum. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of the customers to which the Company grants credit terms in the
normal course of the business.

Cash and cash equivalents and other investments

In the area of treasury operations, the Group is presently exposed to counter-party risks relating to short term and medium term deposits placed with
public-sector banks, and also to investments made in mutual funds.

Guarantees

The Groups policy is to provide financial guarantees only to subsidiaries.

The Chief
Financial Officer is responsible for monitoring the counterparty credit risk, and has been vested with the authority to seek Boards approval to hedge such risks in case of need.



155



---

##### Table of Contents

Exposure to credit risk

The gross carrying amount of financial assets, net of any impairment losses recognized represents the maximum credit exposure. The maximum exposure to credit risk as at March 31, 2012 and 2011 was as
follows:



|                                 |  |                |           |  |                |  |           | 
|-------------------------------- |  | -------------- | --------- |  | -------------- |  | --------- | 
|                                 |  | March 31, 2012 |           |  | March 31, 2011 | 
|Cash and cash equivalents        |  |                | 892,768   |  |                |  | 543,097   | 
|Other assets                     |  |                | 252,386   |  |                |  | 212,969   | 
|Trade receivables                |  |                | 2,411,946 |  |                |  | 1,839,966 | 
|Other receivables                |  |                | 122,214   |  |                |  | 354,115   | 
|Derivative financial instruments |  |                | 2,891     |  |                |  |          | 
|Other investments                |  |                | 160       |  |                |  | 160       | 
|                                 |  |                |           |  |                |  |           | 
|                                 |  |                | 3,682,365 |  |                |  | 2,950,307 | 

Financial assets that are past due but not impaired

There is no other class of financial assets that is past due but not impaired other than trade receivables. The age analysis of trade receivables have been considered from the date of invoice. The ageing
of trade receivables, net of allowances that are past due, is given below:



|                        |  |                |         |  |                |  |         | 
|----------------------- |  | -------------- | ------- |  | -------------- |  | ------- | 
|Period (in days)        |  | March 31, 2012 |         |  | March 31, 2011 | 
|Past due 181  270 days |  |                | 168,171 |  |                |  | 143,919 | 
|Past due 271  365 days |  |                | 173,385 |  |                |  | 50,796  | 
|More than 365 days      |  |                | 524,788 |  |                |  | 97,596  | 
|                        |  |                |         |  |                |  |         | 
|                        |  |                | 866,344 |  |                |  | 292,311 | 
|                        |  |                |         |  |                |  |         | 

See note 13 for the activity in the allowance for impairment of trade account receivables.

Financial assets that are not past due

Cash and cash equivalents, other assets, other receivables and finance lease receivables are neither past due nor impaired. Of the total trade receivables
that are not past due as at March 31, 2012 amounting to Rs.1,545,602 (March 31, 2011: Rs.1,329,698) impairment to the extent of Rs Nil (March 31, 2011: Rs Nil) has been recorded.

Details of collateral and other credit enhancements held



|                                                        |  |                |       |  |                |  |       | 
|------------------------------------------------------- |  | -------------- | ----- |  | -------------- |  | ----- | 
|                                                        |  | March 31, 2012 |       |  | March 31, 2011 | 
|Security deposits received for internet access services |  |                | 4,915 |  |                |  | 7,432 | 

Liquidity risks: Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial asset. The Groups approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the Groups reputation. Typically the Group ensures that it has sufficient cash on demand to meet expected operational
expenses, servicing of financial obligations. In addition, the Group has concluded arrangements with well reputed Banks, and has unused lines of credit that could be drawn upon should there be a need. The Company is also in the process of
negotiating additional facilities with Banks for funding its requirements.



156



---

##### Table of Contents

The following are the contractual maturities of financial liabilities, including estimated interest payments
and excluding the impact of netting agreements:

As at March 31, 2012



|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|------------------------------------ |  | -------------- | --------- |  | --------------------- |  | --------- | ----------- |  |  | --------- |  |  | --------- | ------- |  |  |  | ------ | 
|                                     |  | Carryingamount |           |  | Contractualcash flows |  |           | 0-12 months |  |  | 1-3 years |  |  | 3-5 years |        
|Non-derivative financial liabilities |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|Bank overdrafts                      |  |                | 798,180   |  |                       |  | 798,180   |             |  |  | 798,180   |  |  |           |        |  |  |  |       | 
|Finance lease liabilities            |  |                | 176,926   |  |                       |  | 205,675   |             |  |  | 91,923    |  |  |           | 99,521  |  |  |  | 14,231 | 
|Other liabilities                    |  |                | 187,236   |  |                       |  | 187,236   |             |  |  | 187,236   |  |  |           |        |  |  |  |       | 
|Borrowing from banks                 |  |                | 375,906   |  |                       |  | 381,269   |             |  |  | 381,269   |  |  |           |        |  |  |  |       | 
|Borrowings from others               |  |                | 353,435   |  |                       |  | 416,449   |             |  |  | 202,842   |  |  |           | 185,060 |  |  |  | 28,547 | 
|Trade and other payables             |  |                | 2,325,447 |  |                       |  | 2,325,447 |             |  |  | 2,325,447 |  |  |           |        |  |  |  |       | 
|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|                                     |  |                | 4,217,130 |  |                       |  | 4,314,256 |             |  |  | 3,986,897 |  |  |           | 284,581 |  |  |  | 42,778 | 
|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 

As at March 31, 2011



|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|------------------------------------ |  | -------------- | --------- |  | --------------------- |  | --------- | ----------- |  |  | --------- |  |  | --------- | ------- |  |  |  | ------ | 
|                                     |  | Carryingamount |           |  | Contractualcash flows |  |           | 0-12 months |  |  | 1-3 years |  |  | 3-5 years |        
|Non-derivative financial liabilities |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|Bank overdrafts                      |  |                | 678,901   |  |                       |  | 678,901   |             |  |  | 678,901   |  |  |           |        |  |  |  |       | 
|Finance lease liabilities            |  |                | 188,253   |  |                       |  | 247,355   |             |  |  | 65,148    |  |  |           | 123,922 |  |  |  | 58,284 | 
|Other liabilities                    |  |                | 163,245   |  |                       |  | 163,245   |             |  |  | 163,245   |  |  |           |        |  |  |  |       | 
|Borrowing from banks                 |  |                | 1,009,422 |  |                       |  | 1,044,455 |             |  |  | 930,067   |  |  |           | 114,388 |  |  |  |       | 
|Borrowings from others               |  |                | 288,988   |  |                       |  | 368,794   |             |  |  | 175,730   |  |  |           | 158,431 |  |  |  | 34,633 | 
|Trade and other payables             |  |                | 1,725,907 |  |                       |  | 1,725,907 |             |  |  | 1,725,907 |  |  |           |        |  |  |  |       | 
|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 
|                                     |  |                | 4,054,716 |  |                       |  | 4,228,657 |             |  |  | 3,738,998 |  |  |           | 396,741 |  |  |  | 92,917 | 
|                                     |  |                |           |  |                       |  |           |             |  |  |           |  |  |           |         |  |  |  |        | 

Market risk:Market risk is the risk of loss of future earnings or fair values or future cash flows that may
result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments.
Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. The Group is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate
risk and the market value of its investments. Thus the Groups exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Currency risk: The Groups exposure in USD, Euro and other foreign currency denominated transactions gives rise to Exchange Rate fluctuation
risk. Groups policy in this regard incorporates:



| |  | 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.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Groups exposure to foreign currency risk as at
March 31, 2012 was as follows:

All amounts in respective currencies as mentioned (in thousands)



|                                    |  |     |        |   |     |  |   |     |  |  |     |   |  |     |     |   |     |  |     |     |  |  |     |   |  |  |     |   |  |  |   | 
|----------------------------------- |  | --- | ------ | - | --- |  | - | --- |  |  | --- | - |  | --- | --- | - | --- |  | --- | --- |  |  | --- | - |  |  | --- | - |  |  | - | 
|                                    |  | USD |        |   | CAD |  |   | CHF |  |  | EUR |   |  | GBP |     |   | DHS |  |     | HKD |  |  | SGD |  
|Cash and cash equivalents           |  |     | 758    |   |     |  |  |     |  |  |    |   |  |     |    |   |     |  |    |     |  |  |    |   |  |  |    |   |  |  |   | 
|Trade receivables                   |  |     | 17,046 |   |     |  | 5 |     |  |  | 539 |   |  |     | 12  |   |     |  | 136 |     |  |  |    |   |  |  |    |   |  |  | 6 | 
|Trade payables                      |  |     | (9,031 | ) |     |  |  |     |  |  | (15 | ) |  |     | (52 | ) |     |  | (1  | )   |  |  | (59 | ) |  |  | (10 | ) |  |  |  | 
|Gross balance sheet exposure        |  |     | 8,773  |   |     |  | 5 |     |  |  | 524 |   |  |     | (40 | ) |     |  | 135 |     |  |  | (59 | ) |  |  | (10 | ) |  |  | 6 | 
|Forward exchange / option contracts |  |     | (1,500 | ) |     |  |  |     |  |  |    |   |  |     |    |   |     |  |    |     |  |  |    |   |  |  |    |   |  |  |  | 
|Net exposure                        |  |     | 7,273  |   |     |  | 5 |     |  |  | 524 |   |  |     | (40 | ) |     |  | 135 |     |  |  | (59 | ) |  |  | (10 | ) |  |  | 6 | 



157



---

##### Table of Contents

The Groups exposure to foreign currency risk as at March 31, 2011 was as follows:

All amounts in respective currencies as mentioned (in thousands)



|                                    |  |     |        |   |     |  |   |     |  |  |      |   |  |     |      |   |     |  |     |     |  |  |     |   |  |     |     |   |  |  |     |   |  |  |     |  
|----------------------------------- |  | --- | ------ | - | --- |  | - | --- |  |  | ---- | - |  | --- | ---- | - | --- |  | --- | --- |  |  | --- | - |  | --- | --- | - |  |  | --- | - |  |  | --- | -
|                                    |  | USD |        |   | CAD |  |   | CHF |  |  | Euro |   |  | GBP |      |   | DHS |  |     | HKD |  |  | AED |   |  | SGD |    
|Cash and cash equivalents           |  |     | 495    |   |     |  |  |     |  |  |     |   |  |     |     |   |     |  |    |     |  |  |    |   |  |     |    |   |  |  |     |   |  |  |     |  
|Trade receivables                   |  |     | 9,700  |   |     |  | 4 |     |  |  | 522  |   |  |     | 20   |   |     |  | 116 |     |  |  | 1   |   |  |     |    |   |  |  | 1   |   |  |  | 2   |  
|Trade payables                      |  |     | (5,688 | ) |     |  |  |     |  |  | (18  | ) |  |     | (301 | ) |     |  | (1  | )   |  |  | (32 | ) |  |     | (10 | ) |  |  | (25 | ) |  |  | (83 | )
|Gross balance sheet exposure        |  |     | 4,507  |   |     |  | 4 |     |  |  | 504  |   |  |     | (281 | ) |     |  | 115 |     |  |  | (31 | ) |  |     | (10 | ) |  |  | (24 | ) |  |  | (81 | )
|Forward exchange / option contracts |  |     |       |   |     |  |  |     |  |  |     |   |  |     |     |   |     |  |    |     |  |  |    |   |  |     |    |   |  |  |    |   |  |  |    |  
|Net exposure                        |  |     | 4,507  |   |     |  | 4 |     |  |  | 504  |   |  |     | (281 | ) |     |  | 115 |     |  |  | (31 | ) |  |     | (10 | ) |  |  | (24 | ) |  |  | (81 | )

Sensitivity analysis

A 10% strengthening of the rupee against the respective currencies as at March 31, 2012 and 2011 would have increased / (decreased) other comprehensive income and profit or loss by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2011.



|               |  |                          |   |  |                |  |        | 
|-------------- |  | ------------------------ | - |  | -------------- |  | ------ | 
|               |  | Othercomprehensiveincome |   |  | Profit or loss | 
|March 31, 2012 |  |                          |  |  |                |  | 40,782 | 
|March 31, 2011 |  |                          |  |  |                |  | 14,366 | 

A 10% weakening of the rupee against the above currencies as at March 31, 2012 and 2011 would have had the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate
Risk:Interest rate risk is the risk that an upward movement in interest rates would adversely affect the borrowing costs of the group.

Profile

At the reporting date the
interest rate profile of the Groups interest bearing financial instruments were as follows:



|                                             |  |                 |         |  |                |  |         | 
|-------------------------------------------- |  | --------------- | ------- |  | -------------- |  | ------- | 
|                                             |  | Carrying amount |        
|                                             |  | March 31, 2012  |         |  | March 31, 2011 | 
|Fixed rate instruments                       |  |                 |         |  |                |  |         | 
|Financial assets
- Fixed deposits with banks |  |                 | 400,629 |  |                |  | 84,765  | 
|                                             |  |                
|Financial liabilities                        |  |                 |         |  |                |  |         | 
|- Borrowings from banks                      |  |                 | 48,476  |  |                |  | 529,437 | 
|- Borrowings from others                     |  |                 | 353,435 |  |                |  | 288,988 | 
|                                             |  |                
|Variable rate instruments                    |  |                 |         |  |                |  |         | 
|Financial liabilities                        |  |                 |         |  |                |  |         | 
|- Borrowings from banks                      |  |                 | 327,430 |  |                |  | 326,000 | 
|- Bank overdrafts                            |  |                 | 798,180 |  |                |  | 678,901 | 

Fair value sensitivity for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging
instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.



158



---

##### Table of Contents

Cash flow sensitivity for variable rate instruments

An increase of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by the amounts shown
below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis has been performed on the same basis as 2011.



|               |  |        |   |  |                |  |         |  
|-------------- |  | ------ | - |  | -------------- |  | ------- | -
|               |  | Equity |   |  | Profit or loss | 
|March 31, 2012 |  |        |  |  |                |  | (11,256 | )
|March 31, 2011 |  |        |  |  |                |  | (10,049 | )

A decrease of 100 basis points in the interest rates at the reporting date would have had equal but opposite effect on
the amounts shown above, on the basis that all other variable remain constant.

40. Acquisition of non-controlling interest in subsidiary

The Board of Directors and shareholders of the Company at their meeting held on November 24, 2008 approved the merger of Sifys
subsidiary Sify Communications Limited, subject to approval by the Honorable High Court of Madras and other statutory authorities. Subsequently, the Company obtained the approval of Honorable High Court on June 26, 2009 which is binding on the
Company and its subsidiary Sify Communications Limited and as part of the merger, the Company issued 10,530,000 equity shares to Infinity Satcom Universal Pvt. Limited (a company promoted by the principal shareholders of Sify) and acquired the
remaining 26% equity interest of Sify Communications Limited. Although the merger was approved by the High Court on June 26, 2009, which is considered as the acquisition date for accounting purposes, for Income-tax purpose the effect of merger
is retrospectively applied from April 1, 2008. The acquisition of this non-controlling interest has been accounted as a transaction with equity holders in their capacity as equity holders and accordingly no goodwill has been recognized. As a
result of the acquisition of non-controlling interest, the following adjustments were incorporated in the consolidated financial statements for the year ended March 31, 2010:



| |  | As a consequence of the merger, the Company was eligible under the Indian Income-tax laws to consolidate the Income-tax returns of Sify and Sify
Communications Limited retrospectively from April 1, 2008. Accordingly, the taxable income reported by Sify Communications Limited for the period subsequent to April 1, 2008 has been off-set against the previously fully reserved business
losses of the Company. This resulted in the reversal of income tax liabilities aggregating to Rs.90,003 and a write off of deferred tax assets of Rs.8,524 during the year ended March 31, 2010.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Consequent to the approval of the merger by the Honorable High Court on June 26, 2009, the Company was obliged to issue 10,530,000 shares which
the Company has duly issued on July 16, 2009, and accordingly, the fair value of shares to be issued as at June 26, 2009 has been considered as the consideration for the acquisition of the non-controlling interest. The difference between
the fair value of the consideration paid and the face value of equity shares issued is recorded as share premium and the difference between the fair value of the consideration paid and the carrying amount of non-controlling interests is recorded as
an adjustment in equity and is included as part of share premium.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41. IPO listing

The Ministry of Finance of the Government of India (MoF) issued a press release dated March 31, 2006, making amendments
to the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme 1993 (the Scheme). The amendments included a statement that unlisted Companies which had accessed FCCBs,
ADR/GDRs in terms of guidelines of May 22, 1998 and are not making profit, be permitted to comply with listing condition on the domestic stock exchanges within three years of having started making profit. Further, the press release states that
no fresh issues of FCCBs, ADR/GDRs by such companies will be permitted without listing first in the domestic exchanges. Hence the Company would not be able to raise funds by issuing ADRs until such time the Company complies with the Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme 1993 and lists in the domestic stock exchanges as per the above press release.

42. Issue of shares on a private placement basis to the existing promoter group

On August 4, 2010, the Board of Directors of the company approved the issuance, in a private placement, of upto an aggregate of 125,000,000 of the companys equity shares, par value Rs.10 per
share (Equity shares), for an aggregate purchase price of Rs.4,000,000, to a group of investors affiliated with the companys promoter group, including entities affiliated with Mr Raju Vegesna, the companys Chief Executive
officer and Managing Director and Mr Ananda Raju Vegesna, Executive Director and brother of Mr Raju Vegesna (the Offering). The companys shareholders approved the terms of the Offering at the Companys Annual General Meeting
held on September 27, 2010.



159



---

##### Table of Contents

On October 22 2010, the company entered into a Subscription Agreement with Mr Ananda
Raju Vegesna, acting as representative (the Representative) of the purchasers in connection with the Offering. In pursuance of the Agreement, the company issued and allotted 125,000,000 equity shares to M/s Raju Vegesna Infotech and
Industries Private Limited (RVIIPL), a promoter group company. In accordance with Indian law, the purchase price is to be paid at such time as determined by Board of Directors of the company.

On August 14, 2011, the company received a letter from RVIIPL expressing its intention to transfer the above partly paid shares to
its wholly owned subsidiary M/s Ramanand Core Investment Company Private limited (RCICPL). The company, on August 26, 2011, registered such transfer of partly paid shares in the name of RCICPL.

On September 7, 2011, the parties entered into an amendment to the Subscription Agreement (the Amendment) extending the
validity of the agreement period to September 26, 2013. This Amendment provides the Board of Directors of the Company with additional time to call upon the purchasers to pay the balance money, in accordance with the terms of the Subscription
Agreement, at any time before September 26, 2013.

As on March 31, 2012, these shares are partly paid to the extent
of Rs.6.25 per share. Until the full purchase price is paid by the purchasers, the company retains a lien on the equity shares purchased in connection with the Offering. As of March 31, 2012, entities affiliated with our Chief Executive
Officer, Raju Vegesna, beneficially owned approximately 86.27% of our outstanding equity shares, which includes the 125,000,000 shares (partly paid with proportionate voting rights) issued in connection with the above Offering.



160



---

##### Table of Contents

MF Global Sify Securities India Private Limited

IFRS Consolidated Financial Statements

As at March 31, 2012 and 2011 and for the year ended March 31, 2012, 2011 and 2010



161



---

##### Table of Contents

Index



|                                                        |  |          |         | 
|------------------------------------------------------- |  | -------- | ------- | 
|Particulars                                             |  | Page No. |        
|Report of Independent Registered Public Accounting Firm |  |          | 163-164 | 
|Consolidated Statement of Balance Sheet                 |  |          | 165     | 
|Consolidated Statement of Income                        |  |          | 166     | 
|Consolidated Statement of Comprehensive Income          |  |          | 167     | 
|Consolidated Statement of Changes in Equity             |  |          | 168     | 
|Consolidated Statement of Cash Flow                     |  |          | 169     | 
|Notes to the Consolidated Financial Statements          |  |          | 170     | 



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of MF Global Sify Securities India Private Limited

In our opinion, the accompanying Consolidated Statement of Balance Sheet, and the related Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flow (collectively consolidated financial statements) present fairly, in all material respects, the financial position of MF Global Sify
Securities India Private Limited and its subsidiaries (collectively the Company) at March 31, 2012 and & March 31, 2011 and the results of their operations and their cash flows for the year ended March 31,
2012 & March 31, 2011 in conformity with International Financial Reporting Standards as issued by the International Accounting Standard Board. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our audits.

Without qualifying our opinion, we
draw your attention to



| | a) | Note 2.1 to the Consolidated Financial Statements which states that on October 31, 2011, MF Global Holdings Ltd (the ultimate parent company) filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. Such liquidation of the Ultimate Parent Company has negatively impacted the scale of operations of the Company. The shareholders of the Company have entered into
Share Purchase Agreement (SPA) with an international brokerage house for acquiring its respective stake in the Company for which necessary regulatory approvals have been received & formalities relating to completion of such acquisition are
pending. The revival of the scale of operations and resultant profitability of the Company is dependent upon successful completion of such acquisition of the Company.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | Note 8.1.2 to the Consolidated Financial Statements which states that brokerage aggregating to Rs. 12,019 (000) from Institutional Clients have neither been disputed
nor denied by the respective clients. However, these amounts have remained overdue as the Institutional clients are awaiting the clarity about the change of ownership of the Company.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Note 26 to the Consolidated Financial Statements, which describes the uncertainty related to the outcome of the ongoing discussions between the Companys
shareholders concerning the reconsideration of certain costs charged to the Company by MF Global Holdings Limited and its affiliated and associated group companies for the two years ended March 31, 2008 and March 31, 2009 which is being
carried as a liability in the accounts.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d) | Note 30.1 to the Consolidated Financial Statements which states that as on October 31, 2011, MF Global Holdings Ltd (the ultimate parent company) filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. Consequently, the Company has not obtained confirmation of outstanding balances with related parties as at March 31, 2012. The Company has confirmed that
there were no significant transactions with such parties after the date of filing such petitions and therefore the Consolidated Financial Statements have been prepared from the book balances which are subject to reconciliation / confirmations from
the respective parties.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We conducted our audit of these consolidated financial statements for the year ended March 31,
2012 and March 31, 2011 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the
management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

ASA & ASSOCIATES

Independent Registered Public Accounting Firm

Mumbai , India

July 30, 2012



163



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of MF Global Sify Securities India Private Limited

In our opinion, the accompanying consolidated statements of income, comprehensive income, changes in equity and cash flow for the period ended March 31, 2010 present fairly, in all material respects, of
MF Global Sify Securities India Private Limited and its subsidiaries (collectively the Company) the results of their operations and their cash flows for the period ended March 31, 2010, in conformity with International Financial
Reporting Standards as issued by the International Accounting Standard Board. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

Without qualifying our opinion, we draw your attention to Note 26 to the consolidated financial
statements, which describes the uncertainty related to the outcome of the ongoing discussions between the Companys shareholders concerning the reconsideration of certain costs charged to the Company by MF Global Holdings Limited and its
affiliated and associated group companies for the year ended March 31, 2009 and March 31, 2008.

We conducted our audit of these
consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by the management, and evaluating the overall consolidated financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

Price Waterhouse

Firm Registration No. 301112E

Place: Mumbai

Date: November 26, 2010



164



---

##### Table of Contents

MF Global Sify Securities India Private Limited

(All amounts in Indian Rupees thousands, except as otherwise stated)



CONSOLIDATED STATEMENT OF BALANCE SHEET



|                                                                                       |  |      |  |                |           |   |                |  |           |  
|-------------------------------------------------------------------------------------- |  | ---- |  | -------------- | --------- | - | -------------- |  | --------- | -
|                                                                                       |  |      |  | As at          |          
|                                                                                       |  | Note |  | March 31, 2012 |           |   | March 31, 2011 | 
|ASSETS                                                                                 |  |      |  |                |           |   |                |  |           |  
|Cash and bank balance                                                                  |  | 11   |  |                | 146,980   |   |                |  | 281,486   |  
|Cash-restricted                                                                        |  | 12   |  |                | 2,324,000 |   |                |  | 2,959,063 |  
|Interest bearing deposits with bank                                                    |  | 13   |  |                | 70,777    |   |                |  | 93,362    |  
|Receivable from broker-dealers and clearing organizations                              |  | 9    |  |                | 170,660   |   |                |  | 18,580    |  
|Receivable from customers
(net of provision of Rs. 86,300 and Rs. 60,600 respectively) |  | 8    |  |                | 340,998   |   |                |  | 447,770   |  
|Available-for-sale securities:                                                         |  |      |  |                |           |   |                |  |           |  
|Marketable, at market value                                                            |  | 14   |  |                | 41,005    |   |                |  | 133,644   |  
|Deposits with clearing organizations                                                   |  |      |  |                | 78,613    |   |                |  | 173,783   |  
|Interest accrued but not due                                                           |  |      |  |                | 57,301    |   |                |  | 67,124    |  
|Other assets                                                                           |  | 10   |  |                | 208,999   |   |                |  | 245,800   |  
|Intangible assets:                                                                     |  |      |  |                |           |   |                |  |           |  
|Computer software                                                                      |  | 5.1  |  |                | 7,886     |   |                |  | 19,271    |  
|Memberships in exchanges                                                               |  | 5.2  |  |                | 6,385     |   |                |  | 5,733     |  
|Property, plant and equipment                                                          |  | 6    |  |                | 11,021    |   |                |  | 21,827    |  
|Deferred tax asset (Net)                                                               |  | 7    |  |                | 42,288    |   |                |  | 79,476    |  
|                                                                                       |  |      |  |                |           |   |                |  |           |  
|Total assets                                                                           |  |      |  |                | 3,506,913 |   |                |  | 4,546,919 |  
|                                                                                       |  |      |  |                |           |   |                |  |           |  
|EQUITY                                                                                 |  |      |  |                |           |   |                |  |           |  
|Capital and reserves attributable to the Equity Holders                                |  |      |  |                |           |   |                |  |           |  
|Ordinary shares                                                                        |  | 15   |  |                | 518,942   |   |                |  | 518,942   |  
|Additional paid in capital                                                             |  |      |  |                | 28,968    |   |                |  | 28,968    |  
|Retained earnings                                                                      |  |      |  |                | 1,898,693 |   |                |  | 1,806,071 |  
|Currency translations                                                                  |  |      |  |                | 8,759     |   |                |  | (232      | )
|Fair value adjustments                                                                 |  |      |  |                | (774      | ) |                |  | (774      | )
|                                                                                       |  |      |  |                |           |   |                |  |           |  
|Total Equity                                                                           |  |      |  |                | 2,454,588 |   |                |  | 2,352,975 |  
|                                                                                       |  |      | 
|LIABILITIES                                                                            |  |      |  |                |           |   |                |  |           |  
|Payable to broker-dealers and clearing organizations                                   |  | 9    |  |                | 184,659   |   |                |  | 264,504   |  
|Payable to customers                                                                   |  |      |  |                | 684,802   |   |                |  | 1,272,571 |  
|Borrowings                                                                             |  | 17   |  |                |          |   |                |  | 53,000    |  
|Accounts payable, accrued expenses and other liabilities                               |  | 19   |  |                | 181,357   |   |                |  | 505,605   |  
|Employee benefit obligation                                                            |  | 18   |  |                | 1,507     |   |                |  | 98,264    |  
|                                                                                       |  |      |  |                |           |   |                |  |           |  
|Total Liabilities                                                                      |  |      |  |                | 1,052,325 |   |                |  | 2,193,944 |  
|                                                                                       |  |      |  |                |           |   |                |  |           |  
|Total liabilities and equity                                                           |  |      |  |                | 3,506,913 |   |                |  | 4,546,919 |  
|                                                                                       |  |      |  |                |           |   |                |  |           |  

The accompanying notes form an integral part of these consolidated financial statements

These financial statements have been approved by the Board of Directors on July 29, 2012

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



165



---

##### Table of Contents

MF Global Sify Securities India Private Limited

(All amounts in Indian Rupees thousands, except as otherwise stated)



CONSOLIDATED INCOME STATEMENT



|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|------------------------------------------------------ |  | ---- |  | -------------- | --------- |  | -------------- |  | --------- | -------------- |  |  | --------- | -
|                                                       |  |      |  | Year ended     |          
|                                                       |  | Note |  | March 31, 2012 |           |  | March 31, 2011 |  |           | March 31, 2010 | 
|INCOME                                                 |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Commissions                                            |  |      |  |                | 774,266   |  |                |  | 1,391,162 |                |  |  | 1,201,594 |  
|Depository and clearing fees                           |  |      |  |                | 30,123    |  |                |  | 33,919    |                |  |  | 35,488    |  
|Interest on fixed deposits held as margin              |  |      |  |                | 256,869   |  |                |  | 198,412   |                |  |  | 238,491   |  
|Other Income                                           |  | 23   |  |                | 108,319   |  |                |  | 194,790   |                |  |  | 136,972   |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Total Income                                           |  |      |  |                | 1,169,577 |  |                |  | 1,818,283 |                |  |  | 1,612,545 |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|EXPENSES                                               |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Employee compensation and benefits                     |  | 21   |  |                | 517,075   |  |                |  | 794,535   |                |  |  | 607,775   |  
|Exchange expenses and clearance fees                   |  |      |  |                | 152,642   |  |                |  | 220,153   |                |  |  | 165,769   |  
|Brokerage to other broker-dealers                      |  |      |  |                | 95,940    |  |                |  | 136,470   |                |  |  | 152,002   |  
|Communications and data processing                     |  |      |  |                | 28,373    |  |                |  | 30,100    |                |  |  | 28,168    |  
|Bank interest and guarantee commission                 |  |      |  |                | 2,651     |  |                |  | 1,751     |                |  |  | 7,616     |  
|Depreciation and amortization                          |  |      |  |                | 29,672    |  |                |  | 67,692    |                |  |  | 37,398    |  
|Occupancy                                              |  |      |  |                | 60,907    |  |                |  | 75,728    |                |  |  | 75,210    |  
|Write back of provision                                |  |      |  |                |          |  |                |  |          |                |  |  | (57,500   | )
|Provision for receivable from customers                |  | 22   |  |                | 25,700    |  |                |  | 38,300    |                |  |  |          |  
|Advertisement and business promotion                   |  |      |  |                | 31,370    |  |                |  | 60,339    |                |  |  | 45,593    |  
|Other expenses                                         |  | 20   |  |                | 70,330    |  |                |  | 85,628    |                |  |  | 82,111    |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Total Expenses                                         |  |      |  |                | 1,014,660 |  |                |  | 1,510,696 |                |  |  | 1,144,142 |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Profit before income tax                               |  |      |  |                | 154,917   |  |                |  | 307,587   |                |  |  | 468,403   |  
|Income tax expense                                     |  | 24   |  |                | 62,295    |  |                |  | 65,747    |                |  |  | 160,860   |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  
|Profit for the year attributable to the Equity holders |  |      |  |                | 92,622    |  |                |  | 241,840   |                |  |  | 307,543   |  
|                                                       |  |      |  |                |           |  |                |  |           |                |  |  |           |  

The accompanying notes form an integral part of these consolidated financial statements

These financial statements have been approved by the Board of Directors on July 29, 2012

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



166



---

##### Table of Contents

MF Global Sify Securities India Private Limited

(All amounts in Indian Rupees thousands, except as otherwise stated)



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



|                                         |  |                       |         |  |      |  |         |      |  |  |         |  
|---------------------------------------- |  | --------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | -
|                                         |  | Years ended March 31, |        
|                                         |  | 2012                  |         |  | 2011 |  |         | 2010 | 
|Net income for the year                  |  |                       | 92,622  |  |      |  | 241,840 |      |  |  | 307,543 |  
|                                         |  |                       |        
|Other comprehensive income               |  |                       |         |  |      |  |         |      |  |  |         |  
|Available for sale financial assets      |  |                       |         |  |      |  |         |      |  |  |         |  
|- Net change in fair value               |  |                       |        |  |      |  | (9,855  | )    |  |  | 1,527   |  
|                                         |  |                       |        
|Foreign currency translation differences |  |                       |         |  |      |  |         |      |  |  |         |  
|Currency translation differences         |  |                       | 8,991   |  |      |  | (1,185  | )    |  |  | (5,657  | )
|                                         |  |                       |         |  |      |  |         |      |  |  |         |  
|                                         |  |                       | 8,991   |  |      |  | (11,040 | )    |  |  | (4,130  | )
|                                         |  |                       |         |  |      |  |         |      |  |  |         |  
|Total comprehensive income for the year  |  |                       | 101,613 |  |      |  | 230,800 |      |  |  | 303,413 |  

The accompanying notes form an integral part of these consolidated financial statements

These financial statements have been approved by the Board of Directors on July 29, 2012

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



167



---

##### Table of Contents

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 
ordinaryshares |            |  | Parvalue |  |    | Share Capital |  |  | Additionalpaid
-incapital |  |  | Retainedearnings |        |  | Currencytransalation |  |           | Fair Valueadjustment |  |  | TotalEquity |  
|Balance as at April 1, 2009                                         |  |                           | 51,894,182 |  |          |  | 10 |               |  |  | 518,942                   |  |  |                  | 28,968 |  |                      |  | 1,256,688 |                      |  |  | 6,610       |   |  |  | 7,554  |   |  |  | 1,818,762 |  
|Currency translation differences                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  | (5,657      | ) |  |  |        |   |  |  | (5,657    | )
|Fair value gains, net of tax on available-for-sale financial assets |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  | 1,527  |   |  |  | 1,527     |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Net income directly recognised in equity                            |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |          |                      |  |  | (5,657      | ) |  |  | 1,527  |   |  |  | (4,130    | )
|Profit for the year                                                 |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 307,543   |                      |  |  |             |   |  |  |        |   |  |  | 307,543   |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Total recognised income and expense for the year                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 307,543   |                      |  |  | (5,657      | ) |  |  | 1,527  |   |  |  | 303,413   |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Balance as at March 31, 2010                                        |  |                           | 51,894,182 |  |          |  | 10 |               |  |  | 518,942                   |  |  |                  | 28,968 |  |                      |  | 1,564,231 |                      |  |  | 953         |   |  |  | 9,081  |   |  |  | 2,122,175 |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Currency translation differences                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  | (1,185      | ) |  |  |        |   |  |  | (1,185    | )
|Fair value gains, net of tax on available-for-sale financial assets |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  | (9,855 | ) |  |  | (9,855    | )
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Net income directly recognised in equity                            |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |          |                      |  |  | (1,185      | ) |  |  | (9,855 | ) |  |  | (11,040   | )
|Profit for the year                                                 |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 241,840   |                      |  |  |             |   |  |  |        |   |  |  | 241,840   |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Total recognised income and expense for the year                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 241,840   |                      |  |  | (1,185      | ) |  |  | (9,855 | ) |  |  | 230,800   |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Balance as at March 31, 2011                                        |  |                           | 51,894,182 |  |          |  | 10 |               |  |  | 518,942                   |  |  |                  | 28,968 |  |                      |  | 1,806,071 |                      |  |  | (232        | ) |  |  | (774   | ) |  |  | 2,352,975 |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Currency translation differences                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  | 8,991       |   |  |  |        |   |  |  | 8,991     |  
|Fair value gains, net of tax on available-for-sale financial assets |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |       |   |  |  |          |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Net income directly recognised in equity                            |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |          |                      |  |  | 8,991       |   |  |  |       |   |  |  | 8,991     |  
|Profit for the year                                                 |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 92,622    |                      |  |  |             |   |  |  |        |   |  |  | 92,622    |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Total recognised income and expense for the year                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  | 92,622    |                      |  |  | 8,991       |   |  |  |       |   |  |  | 101,613   |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  
|Balance as at March 31, 2012                                        |  |                           | 51,894,182 |  |          |  | 10 |               |  |  | 518,942                   |  |  |                  | 28,968 |  |                      |  | 1,898,693 |                      |  |  | 8,759       |   |  |  | (774   | ) |  |  | 2,454,588 |  
|                                                                    |  |                           |            |  |          |  |    |               |  |  |                           |  |  |                  |        |  |                      |  |           |                      |  |  |             |   |  |  |        |   |  |  |           |  

The accompanying notes form an integral part of these consolidated financial statements

These financial statements have been approved by the Board of Directors on July 29, 2012

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



168



---

##### Table of Contents

MF Global Sify Securities India Private Limited

(All amounts in Indian Rupees thousands, except as otherwise stated)



CONSOLIDATED STATEMENT OF CASH FLOW



|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|------------------------------------------------------------------------------- |  | -------------------- | -- |  | ---- |  | --------- | ---- |  |  | -------- | - |  |  | -------- | -
|                                                                                |  | Year ended March 31, |   
|                                                                                |  | Note                 |    |  | 2012 |  |           | 2011 |  |  | 2010     |  
|Cash flows from operating activities                                            |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Profit before income tax                                                        |  |                      |    |  |      |  | 154,917   |      |  |  | 307,587  |   |  |  | 468,403  |  
|Adjustments for                                                                 |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Depreciation and amortization                                                   |  |                      |    |  |      |  | 29,672    |      |  |  | 67,692   |   |  |  | 37,398   |  
|Profit on sale of Available-for-sale securities                                 |  |                      |    |  |      |  |          |      |  |  | (23,603  | ) |  |  |         |  
|Provision on receivable from customers                                          |  |                      | 8  |  |      |  | 25,700    |      |  |  | 38,300   |   |  |  | (57,700  | )
|Interest on fixed deposits with banks                                           |  |                      |    |  |      |  | (256,869  | )    |  |  | (198,412 | ) |  |  | (238,491 | )
|Loss(profit) on Sale of Property Plant & Equipment                              |  |                      | 6  |  |      |  | (39       | )    |  |  |         |   |  |  | 13       |  
|Interest and other financial costs                                              |  |                      |    |  |      |  | 956       |      |  |  |         |   |  |  |         |  
|Interest Income                                                                 |  |                      |    |  |      |  | (6,567    | )    |  |  | (16,278  | ) |  |  | (5,566   | )
|Dividend Income                                                                 |  |                      |    |  |      |  | (3,897    | )    |  |  | (1,616   | ) |  |  | (283     | )
|Others                                                                          |  |                      |    |  |      |  | (592      | )    |  |  | (9,582   | ) |  |  | 3,963    |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Movements in working capital                                                    |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Cash-restricted                                                                 |  |                      | 12 |  |      |  | 1,387,563 |      |  |  | (469,216 | ) |  |  | (141,985 | )
|Interest bearing deposits with banks                                            |  |                      |    |  |      |  | 22,585    |      |  |  | 202,297  |   |  |  | (188,164 | )
|Deposits with clearing organizations                                            |  |                      |    |  |      |  | 95,170    |      |  |  | (62,814  | ) |  |  | 9,896    |  
|Receivable from broker-dealers and clearing organizations                       |  |                      | 9  |  |      |  | (152,080  | )    |  |  | 47,304   |   |  |  | (23,656  | )
|Receivable from customers                                                       |  |                      | 8  |  |      |  | 81,072    |      |  |  | (48,863  | ) |  |  | (207,514 | )
|Other assets                                                                    |  |                      | 10 |  |      |  | (132,647  | )    |  |  | 19,051   |   |  |  | (3,857   | )
|Payable to broker dealers and clearing organizations                            |  |                      | 9  |  |      |  | (79,845   | )    |  |  | 124,539  |   |  |  | (87,821  | )
|Payable to customers                                                            |  |                      |    |  |      |  | (587,768  | )    |  |  | 95,053   |   |  |  | 192,442  |  
|Accounts payable, accrued expenses, and other liabilities                       |  |                      | 19 |  |      |  | (345,141  | )    |  |  | 111,278  |   |  |  | 42,370   |  
|Stock appreciation rights                                                       |  |                      | 16 |  |      |  | (96,757   | )    |  |  | (38,338  | ) |  |  | 88,907   |  
|Cash provided by operations                                                     |  |                      |    |  |      |  | 135,433   |      |  |  | 144,379  |   |  |  | (111,645 | )
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Interest received                                                               |  |                      |    |  |      |  | 6,567     |      |  |  | 16,278   |   |  |  | 5,566    |  
|Interest received on fixed deposits placed                                      |  |                      |    |  |      |  | 266,692   |      |  |  | 202,731  |   |  |  | 269,218  |  
|Income taxes paid                                                               |  |                      |    |  |      |  | 144,341   |      |  |  | (171,891 | ) |  |  | (149,524 | )
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Net cash provided by/(used in) by operating activities                          |  |                      |    |  |      |  | 553,033   |      |  |  | 191,497  |   |  |  | 13,615   |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Cash flows from investing activities                                            |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Purchase of Available for Sale Securities: Marketable, At Market Value          |  |                      |    |  |      |  | 133,644   |      |  |  | (39,899  | ) |  |  | (877     | )
|Available for Sale Securities: Not readily marketable (at estimated fair value) |  |                      |    |  |      |  |          |      |  |  | (57,818  | ) |  |  |         |  
|Dividend Income                                                                 |  |                      |    |  |      |  | 3,897     |      |  |  | 1,616    |   |  |  | 283      |  
|Expenditure on furniture and equipment                                          |  |                      |    |  |      |  | (6,463    | )    |  |  | (4,760   | ) |  |  | (14,288  | )
|Expenditure on Computer Software                                                |  |                      |    |  |      |  | (1,001    | )    |  |  | (5,671   | ) |  |  | (25,342  | )
|Sale of Property Plant & Equipment                                              |  |                      |    |  |      |  | (39       | )    |  |  |         |   |  |  |         |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Net cash (used in) / provided in investing activities                           |  |                      |    |  |      |  | 130,038   |      |  |  | (106,532 | ) |  |  | (40,224  | )
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Cash flows from financing activities                                            |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Proceeds from loan from associate company                                       |  |                      |    |  |      |  | 425,400   |      |  |  | 841,500  |   |  |  | 383,700  |  
|Repayment of loan to associate company                                          |  |                      |    |  |      |  | (478,400  | )    |  |  | (788,500 | ) |  |  | (383,700 | )
|Interest and other finance charges paid                                         |  |                      |    |  |      |  | (956      | )    |  |  |          |   |  |  |          |  
|(Repaymnet of) / Proceeds from borrowings                                       |  |                      |    |  |      |  |          |      |  |  | (3,508   | ) |  |  | (1,137   | )
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Net cash provided by / (used in) financing activities                           |  |                      |    |  |      |  | (53,956   | )    |  |  | 49,492   |   |  |  | (1,137   | )
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Effect of foreign exchange fluctuation on Cash and Bank balances                |  |                      |    |  |      |  | 8,991     |      |  |  | (1,184   | ) |  |  | (5,657   | )
|Net increase / (decrease) in cash and bank balance                              |  |                      |    |  |      |  | 638,106   |      |  |  | 133,273  |   |  |  | (33,403  | )
|Cash and bank balance at beginning of the period                                |  |                      |    |  |      |  | 281,486   |      |  |  | 148,213  |   |  |  | 181,616  |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Cash and cash equivalents at the end of the year                                |  |                      |    |  |      |  | 919,592   |      |  |  | 281,486  |   |  |  | 148,213  |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Cash and cash equivalents comprise of:                                          |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Balances with Banks                                                             |  |                      |    |  |      |  | 126,087   |      |  |  | 281,486  |   |  |  | 148,213  |  
|Demand deposits (less than 3 months maturity)                                   |  |                      |    |  |      |  | 752,500   |      |  |  |         |   |  |  |         |  
|Highly liquid investments                                                       |  |                      |    |  |      |  | 41,005    |      |  |  |         |   |  |  |         |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  
|Total                                                                           |  |                      |    |  |      |  | 919,592   |      |  |  | 281,486  |   |  |  | 148,213  |  
|                                                                                |  |                      |    |  |      |  |           |      |  |  |          |   |  |  |          |  

The accompanying notes form an integral part of these consolidated financial statements

These financial statements have been approved by the Board of Directors on July 29, 2012

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



169



---

##### Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



|1. | General information
|-- | -------------------

MF Global 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 2ndFloor, C block, Modern Centre, 101 K. K. Marg, Jacob Circle, Mahalaxmi, Mumbai  400 011. MF Global Sify has one
wholly owned subsidiary in India, MF Global Commodities India Private Limited, which has one wholly owned subsidiary, MF Global Middle East DMCC incorporated in Dubai.

MF Global Overseas Limited (MFG) (formerly Man Financial Holdings Limited ), a company incorporated in the 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 Holdings Limited (a company incorporated in the state of Delaware, USA and listed on the New York Stock
Exchange).

These consolidated financial statements have been approved for issue by the Board of Directors on July 29,
2012.



|2. | Summary of significant accounting policies
|-- | ------------------------------------------



|2.1. | Basis of preparation
|---- | --------------------

These 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.

As on October 31, 2011, MF Global Holdings Ltd (the ultimate parent company) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. Such liquidation
of the ultimate parent company has negatively impacted the scale of operations of the Company. On March 27, 2012, MF Global Overseas Limited & Sify Technologies Limited has entered into Share Purchase Agreements (SPA) with an
international brokerage house for acquiring its 70.15% and 29.85% stake respectively in the Company. In respect of such acquisition, the Company has received necessary regulatory approvals and acquisition is expected to be completed shortly. The
Management believes that this acquisition is expected to substantially revive the business of the Company.



|2.1.1. | Amendments and interpretations effective as at March 31, 2012 but not relevant
|------ | ------------------------------------------------------------------------------

The following standards, amendments and interpretations to published standards are effective as at March 31, 2012 but are not
relevant to the groups operations:



| |  |  | IFRIC 3, (Revised) Business combinations.
| | - |  | -----------------------------------------



| |  |  | IFRS 8  Operating Segments.
| | - |  | ----------------------------



| |  |  | IFRIC 13, Customer loyalty programmers.
| | - |  | -----------------------------------------



| |  |  | IFRIC 15, Agreements for the construction of real estate.
| | - |  | -----------------------------------------------------------



| |  |  | IFRIC 16, Hedges of a net investment in a foreign operation.
| | - |  | --------------------------------------------------------------



| |  |  | IFRIC 18, Transfers of assets from customers.
| | - |  | ---------------------------------------------



| |  |  | IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
| | - |  | -----------------------------------------------------------------------



| |  |  | IAS 17,(Amended) Leases;
| | - |  | ------------------------



| |  |  | IAS 24, (revised), Related party disclosures
| | - |  | ----------------------------------------------

The Management has reviewed the above amendments and interpretation to standards and find that none of them are applicable or relevant to the activities of the company during the year.



170



---

##### Table of Contents

|2.1.2. | Recent Accounting Pronouncements
|------ | --------------------------------

The following Standards and amendments are not yet mandatorily effective and have not been early adopted by the Company;



| |  |  | IFRS 7 Disclosuresoffsetting financial assets and financial liabilities.
| | - |  | ---------------------------------------------------------------------------



| |  |  | IFRS 9, Financial instruments,
| | - |  | --------------------------------



| |  |  | IFRS 10, Consolidated financial statements.
| | - |  | ---------------------------------------------



| |  |  | IFRS 11, Joint arrangements.
| | - |  | ------------------------------



| |  |  | IFRS 12, Disclosure of interests in other entities.
| | - |  | -----------------------------------------------------



| |  |  | IFRS 13 Fair Value Measurement
| | - |  | ------------------------------



| |  |  | IAS 1 (Amended) Presentation of Financial Statements
| | - |  | ----------------------------------------------------



| |  |  | IAS-19 (Amended) Employee benefits
| | - |  | ------------------------------------



| |  |  | IAS 27 (Revised 2011), Consolidated and separate financial statements
| | - |  | -----------------------------------------------------------------------



| |  |  | IAS 28 (Revised 2011), Investments in associates
| | - |  | --------------------------------------------------



| |  |  | IAS 32 Offsetting financial assets and financial liabilities
| | - |  | --------------------------------------------------------------

All the standards mentioned above are effective for annual periods beginning on or after January 1, 2013; earlier application is
permitted. We are in the process of determining the impact of these amendments on our consolidated financial statements and the company does not believe that the adoption of these standards will have a material effect on its consolidated financial
statements.



|2.2. | Consolidation
|---- | -------------

The
Company is a subsidiary of MF Global Holdings Limited, a company incorporated in the State of Delaware, USA. MF Global Holdings Limited is listed on the New York Stock Exchange.

Domestic and foreign subsidiaries considered for consolidation are as follows:



|                                               |  |                         |       |  |                                          |  |     |                                          |  |  |     |  
|---------------------------------------------- |  | ----------------------- | ----- |  | ---------------------------------------- |  | --- | ---------------------------------------- |  |  | --- | -
|                                               |  | Country ofincorporation |       |  | Percentage ofholding as
atMarch 31, 2012 |  |     | Percentage ofholding as
atMarch 31, 2011 | 
|Direct subsidiaries                            |  |                         |       |  |                                          |  |     |                                          |  |  |     |  
|1) MF Global Commodities India Private Limited |  |                         | India |  |                                          |  | 100 | %                                        |  |  | 100 | %
|                                               |  |                         |      
|Indirect Subsidiary                            |  |                         |       |  |                                          |  |     |                                          |  |  |     |  
|1) MF Global Middle East 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.

The financial statements of the Group companies are consolidated on a line-by-line basis and intra-group balances and transactions
including unrealized gain / loss from such transactions are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group.



|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 as at the closing rate at that balance sheet date;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | income and expenses for each income statement are translated at an average exchange rate; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | all resulting exchange differences are recognised as a separate component of equity.
| | - |  | ------------------------------------------------------------------------------------



171



---

##### Table of Contents

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. | Cash and bank balance
|---- | ---------------------

Cash 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.



|2.5. | Restricted Cash
|---- | ---------------

Individual 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.



|2.6. | Interest bearing deposits with banks
|---- | ------------------------------------

Interest 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.



|2.7. | Receivables
|---- | -----------

Receivables 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 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.



|2.8. | Financial instruments
|---- | ---------------------

Financial 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.

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.



|2.9. | Financial assets
|---- | ----------------

The 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 BSEL, obtained by MF Global Sify pursuant to the exchange transaction under the Bombay Stock
Exchange (Corporatisation and Demutualization) scheme 2005.



172



---

##### Table of Contents

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.



|2.10. | Derivatives and Trading
|----- | -----------------------

Financial 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.



|2.11. | Property, plant and equipment
|----- | -----------------------------

Property, plant and equipment are stated at actual cost less accumulated depreciation and any accumulated impairment losses. The cost of an item of premise 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.

On April 1, 2010, the Company changed (with retrospective effect) its method of calculating depreciation on fixed assets, from the Written Down Value method (WDV) to the Straight Line
Method (SLM) at the rates based on managements estimates of useful lives. Management believes that such change will result in a more appropriate presentation of financial statements.

The company adopted the straight line method (SLM) of depreciation so as to write off 100% of the cost of the assets based on
managements estimates of the useful lives of all the assets. Estimated useful lives over which assets are depreciated are as follows:



|                       |  |                                    |         | 
|---------------------- |  | ---------------------------------- | ------- | 
|Type of assets         |  | Rates (SLM) adopted by 
theCompany |        
|Computer systems       |  |                                    | 3 years | 
|Office equipments      |  |                                    | 3 years | 
|Furniture and fixtures |  |                                    | 5 years | 
|Vehicles               |  |                                    | 4 years | 

Tangible assets costing less than Rs.15 are fully depreciated in the year of purchase.

Depreciation on addition of Property, plant and equipment is charged considering the month of purchase as
full month.

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.

The fair value of property, plant and equipment recognized as
a result of a business combination is an estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller. The fair value of items of plant, equipment, fixtures and fittings is based on
the market approach and cost approach.



|2.12. | Intangible assets
|----- | -----------------

All intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses.

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 period of three
years 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.

The
residual values and useful economic lives of intangible assets are reviewed annually.

The fair value of
intangible assets acquired in the business combinations is expected to be derived from the use and realisable value.



173



---

##### Table of Contents

b) Trading rights in Stock Exchange

BSE membership

MF 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 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 membership

MF Global Middle East 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 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.



|2.13. | Impairment of nonfinancial assets
|----- | ----------------------------------

Assets 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.



|2.14. | Payables
|----- | --------

Payables
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 overdraft
|----- | ---------------------------

Borrowings 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. | Provisions
|----- | ----------

Provisions 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 tax
|----- | -------------------------------

The 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 32.445%. MF Global Middle East 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.



174



---

##### Table of Contents

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 benefits
|----- | -----------------

Employee 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 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.

c) Principal transactions

Principal transactions include revenues from proprietary transactions. The Company records in Principal transactions the gains or losses
on repurchase and resale agreements accounted for as sales and purchase transactions.

The Company does not separately
amortize purchase premiums and discounts associated with proprietary transactions, as these are a component of the recorded fair value. Changes in the fair value of such securities are recorded as unrealized gains and losses within Principal
transactions in the consolidated statements of operations.



175



---

##### Table of Contents

d)Other

Other revenues consist of revenues earned in the normal course of operations and other non operating revenue. The same is accounted on
accrual basis.



|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 policies
|-- | -------------------------------------------------



|3.1. | Financial risk factors
|---- | ----------------------

The 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 risk management structure and processes to monitor, evaluate and manage the principal risks in conducting business.

Business Risk

The 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.

Interest rate Risk

The 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 deposits 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 for a short , medium or long-term. Investments in fixed deposits placed with banks earn fixed rate of interest. As at March 31, 2012 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 7.73% p.a. and 6.49% p.a. during the year ended March 31, 2012 and March 31, 2011, respectively.

The group rolls-over fixed deposits on maturity based on the market condition and business needs; the weighted average remaining term of
fixed deposits as at the balance sheet date is approximately 5.36 months and 7.35 months as at March 31, 2012 and March 31, 2011, respectively.

As at March 31, 2012, a 100 bps increase / decrease in interest rates, with all other variables held constant , would have resulted in an increase / decrease in Interest Income by Rs.12,129 (
Previous year Rs. 18,064)

Price Risk

The group is subject to price risk in respect of investments held by the group in listed and unlisted equity 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 these 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 instruments of
highest safety call money market instruments. Highest Safety represents a credit rating equivalent of AAA.

Foreign
Exchange Risk

The group has minimal transactional currency exposure arising from operations in currencies other than its
functional currency.

Credit Risk

Credit 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 fulfil 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 , which are reviewed on an on-going basis.



176



---

##### Table of Contents

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 deposits |    
|Investment grade |  | 2012                |     |  | 2011 | 
|Highest safety   |  |                     | 100 |  |      |  | 100 | 
|High safety      |  |                     |    |  |      |  |    | 
|Adequate safety  |  |                     |    |  |      |  |    | 
|                 |  |                     |     |  |      |  |     | 
|                 |  |                     | 100 |  |      |  | 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.

The credit exposure also arises in relation to
the deposits placed with exchanges and clearing corporations, which is required as per the rules of the exchanges / clearing corporation for the company membership. The risk is inherent in our industry and is largely controlled and influenced by the
regulatory bodies that impose rules on the exchanges and clearing houses.

All exchanges and clearing houses are financially
sound organisations and the Company is therefore not exposed to significant credit risk.

Risk Management Process and
Mitigation

The 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, 2012 and March 31, 2011, groups bad debts as a percentage of broking income were 3.31% and 2.75%, 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 the 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 and
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | approval of margin requirements, limits and risk control of new instruments
| | - |  | ---------------------------------------------------------------------------

Cash Liquidity Risk

In 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 cash 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 intraday requirements. The group evaluates liquidity needs by analysing the impact of liquidity stress scenarios. The following table analyses the Groups financial assets, liabilities and commitments. The amounts
disclosed are the contractual undiscounted cash flows.



177



---

##### Table of Contents

As at March 31, 2012



|                                                                                               |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|---------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | ----------------- |  | --------- | ------------ |  |  | ------------- |  |  | ----- | ------ |  |  |  | --------- | 
|                                                                                               |  | Within 6       |           |  | 6 months          |  |           |              |  |  |               |  |  |       |       
|                                                                                               |  | months         |           |  | to 1 year         |  |           | 2 to 3 years |  |  | After 3 years |  |  | Total |       
|Financial Liabilities                                                                          |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|Payable to broker-dealers and clearing organizations                                           |  |                | 184,659   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 184,659   | 
|Payable to customers                                                                           |  |                | 684,803   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 684,803   | 
|Accounts payable, accrued expenses and other liabilities                                       |  |                | 181,357   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 181,357   | 
|                                                                                               |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|                                                                                               |  |                | 1,050,819 |  |                   |  |          |              |  |  |              |  |  |       |       |  |  |  | 1,050,819 | 
|                                                                                               |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|                                                                                               |  |                |           |  |                  
|                                                                                               |  | Within 6months |           |  | 6 months to1 year |  |           | 2 to 3 years |  |  | After 3 years |  |  | Total |       
|The group has at its disposal following financial assets in addition to unused lines of credit |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|Cash and bank balance                                                                          |  |                | 146,980   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 146,980   | 
|Cash-restricted                                                                                |  |                | 892,500   |  |                   |  | 1,431,000 |              |  |  | 500           |  |  |       |        |  |  |  | 2,324,000 | 
|Interest bearing deposits with bank                                                            |  |                | 49,277    |  |                   |  | 21,500    |              |  |  |               |  |  |       |        |  |  |  | 70,777    | 
|Deposits with clearing organizations                                                           |  |                |          |  |                   |  |           |              |  |  |               |  |  |       | 78,613 |  |  |  | 78,613    | 
|Receivable from broker-dealers and clearing organizations                                      |  |                | 170,660   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 170,660   | 
|Receivable from customers                                                                      |  |                | 340,998   |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 340,998   | 
|Available-for-sale securities Marketable, at market value                                      |  |                | 41,005    |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 41,005    | 
|Interest accrued but not due                                                                   |  |                | 57,302    |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  | 57,302    | 
|                                                                                               |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 
|                                                                                               |  |                | 1,698,722 |  |                   |  | 1,452,500 |              |  |  | 500           |  |  |       | 78,613 |  |  |  | 3,230,335 | 
|                                                                                               |  |                |           |  |                   |  |           |              |  |  |               |  |  |       |        |  |  |  |           | 

As at March 31, 2011



|                                                                                               |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|---------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | ----------------- |  | ------- | ----------- |  |  | ------------ |  |  | ----- | ------- |  |  |  | --------- | 
|                                                                                               |  | Within 6months |           |  | 6 monthsto 1 year |  |         | 2 to 3years |  |  | After 3years |  |  | Total |        
|Financial Liabilities                                                                          |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|Payable to broker-dealers and clearing organizations                                           |  |                | 264,504   |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 264,504   | 
|Payable to customers                                                                           |  |                | 1,272,571 |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 1,272,571 | 
|Borrowings                                                                                     |  |                | 53,000    |  |                   |  |        |             |  |  |             |  |  |       |        |  |  |  | 53,000    | 
|Accounts payable, accrued expenses and other liabilities                                       |  |                | 505,605   |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 505,605   | 
|                                                                                               |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|                                                                                               |  |                | 2,095,680 |  |                   |  |        |             |  |  |             |  |  |       |        |  |  |  | 2,095,680 | 
|                                                                                               |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|                                                                                               |  |                |           |  |                  
|                                                                                               |  | Within 6months |           |  | 6 monthsto 1 year |  |         | 2 to 3years |  |  | After 3years |  |  | Total |        
|The group has at its disposal following financial assets in addition to unused lines of credit |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|Cash and bank balance                                                                          |  |                | 281,486   |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 281,486   | 
|Cash-restricted                                                                                |  |                | 2,832,900 |  |                   |  | 126,163 |             |  |  |              |  |  |       |         |  |  |  | 2,959,063 | 
|Interest bearing deposits with bank                                                            |  |                | 86,523    |  |                   |  | 6,839   |             |  |  |              |  |  |       |         |  |  |  | 93,362    | 
|Deposits with clearing organizations                                                           |  |                |           |  |                   |  |         |             |  |  |              |  |  |       | 173,783 |  |  |  | 173,783   | 
|Receivable from broker-dealers and clearing organizations                                      |  |                | 18,580    |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 18,580    | 
|Receivable from customers                                                                      |  |                | 447,770   |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 447,770   | 
|Available-for-sale securities Marketable, at market value                                      |  |                | 40,776    |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 40,776    | 
|Interest accrued but not due                                                                   |  |                | 67,124    |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  | 67,124    | 
|                                                                                               |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 
|                                                                                               |  |                | 3,775,159 |  |                   |  | 133,002 |             |  |  |             |  |  |       | 173,783 |  |  |  | 4,081,944 | 
|                                                                                               |  |                |           |  |                   |  |         |             |  |  |              |  |  |       |         |  |  |  |           | 



|3.2. | Capital risk management
|---- | -----------------------

The 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, 2012 and March 31, 2011.



|3.3. | Fair value estimation
|---- | ---------------------

The fair value of financial instruments traded in active markets (such as available-for-sale securities) is based on the quoted market price 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 is determined by using valuation techniques except for the investment in equity shares of Bombay Stock
Exchange Limited.



178



---

##### Table of Contents

The fair value of Investment in the equity shares of BSEL is provided by BSEL. The fair
value provided by BSEL is used for valuing investment in shares for the purposes of computation of net worth of trading member.

However the Investment in BSEL have been sold by the company during the financials year March 31, 2011.Please refer to note 14 for
further details.

The carrying value, less impairment provision of trade receivables, is assumed to approximate their fair
values.



|4. | Critical accounting estimates and judgements
|-- | --------------------------------------------

4.1. Critical accounting estimates

In 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. When the fair value of the financial asset cannot be measured reliably, it is measured at cost.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.2. | Critical accounting judgements in applying the entitys accounting policy
|---- | -------------------------------------------------------------------------

4.2.1. Revenue recognition

MF estimates that fixed deposits placed with banks will be held till maturity while determining the accrued interest, which is unpaid on the balance sheet date. In the event 1% of such deposit is
withdrawn before its its maturity date the Interest income will be lower by Rs. 1,197.



179



---

##### Table of Contents

|5. | Intangible assets
|-- | -----------------

5.1. Software



|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|--------------------------------------- |  | ---------------- | ------ | - | ------------------- |  | ------- | ----- |  |  | ------- | -
|                                        |  | Computersoftware |        |   | Webdevelopmentcosts |  |         | Total | 
|Cost                                    |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2010                    |  |                  | 88,691 |   |                     |  | 207,422 |       |  |  | 296,113 |  
|Additions                               |  |                  | 5,671  |   |                     |  |        |       |  |  | 5,671   |  
|Disposals                               |  |                  |       |   |                     |  |        |       |  |  |        |  
|Exchange difference                     |  |                  | (2     | ) |                     |  |        |       |  |  | (2      | )
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2011                    |  |                  | 94,360 |   |                     |  | 207,422 |       |  |  | 301,782 |  
|Additions                               |  |                  | 1,003  |   |                     |  |        |       |  |  | 1,003   |  
|Disposals                               |  |                  |       |   |                     |  |        |       |  |  |        |  
|Exchange difference                     |  |                  | 29     |   |                     |  |        |       |  |  | 29      |  
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2012                    |  |                  | 95,392 |   |                     |  | 207,422 |       |  |  | 302,814 |  
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|Accumulated amortisation and impairment |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2010                    |  |                  | 60,505 |   |                     |  | 207,422 |       |  |  | 267,927 |  
|Charge for the year                     |  |                  | 14,587 |   |                     |  |        |       |  |  | 14,587  |  
|Disposals                               |  |                  |       |   |                     |  |        |       |  |  |        |  
|Exchange difference                     |  |                  | (3     | ) |                     |  |        |       |  |  | (3      | )
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2011                    |  |                  | 75,089 |   |                     |  | 207,422 |       |  |  | 282,511 |  
|Charge for the year                     |  |                  | 12,386 |   |                     |  |        |       |  |  | 12,386  |  
|Disposals                               |  |                  |       |   |                     |  |        |       |  |  |        |  
|Exchange difference                     |  |                  | 31     |   |                     |  |        |       |  |  | 31      |  
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|As at March 31, 2012                    |  |                  | 87,506 |   |                     |  | 207,422 |       |  |  | 294,928 |  
|                                        |  |                  |        |   |                     |  |         |       |  |  |         |  
|Net book amount as at                   |  |                  |        |   |                     |  |         |       |  |  |         |  
|March 31, 2012                          |  |                  | 7,886  |   |                     |  |        |       |  |  | 7,886   |  
|March 31, 2011                          |  |                  | 19,271 |   |                     |  |        |       |  |  | 19,271  |  



|5.2. | Membership in exchanges
|---- | -----------------------

Membership in exchanges consists of:



| | a) | BSE membership of Rs.1,257 and Rs 1,257 as at March 31, 2012 and 2011 respectively, and
| | -- | ---------------------------------------------------------------------------------------



| | b) | DGCX membership of Rs. 5,128 and Rs. 4,476 as at March 31, 2012 and 2011, respectively. DGCX membership value underwent a change due to foreign currency
translation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

BSE membership

The carrying value of the erstwhile BSE membership card in the books of MF Global Sify was Rs.13,570 in August 2005. 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 basedmembership right of BSEL
|                          | 
|Equity shares of BSEL     |  | On the basis of the fair value of the equity shares of BSEL determined by management                              

The fair value of the membership rights of BSEL is calculated by present value over 10 years of
opportunity costs incurred on current deposit and admission fees required for new membership on the date of the balance sheet. The interest rate and present value is determined @ 8% p.a. On the balance sheet date the current deposit requirement is
Rs. 1,000 and admission fees (non  refundable) is Rs. 250.

In accordance with the above methodology, an impairment
charge arose in BSE membership rights of Rs. Nil for the year ended March 31, 2012 and March 31, 2011 respectively.



180



---

##### Table of Contents

|6. | Property, plant and equipment*
|-- | ------------------------------



|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|------------------------ |  | ---------------------- | ----- | - | ---------------- |  | ------- | ---------------- |  |  | -------- | - |  | ----- | ------- | - |  |  | ------- | -
|                         |  | Furniture 
andFixtures |       |   | ComputersSystems |  |         | Officeequipments |  |  | Vehicles |   |  | Total |        
|Cost                     |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2010     |  |                        | 8,317 |   |                  |  | 177,927 |                  |  |  | 37,780   |   |  |       | 13,101  |   |  |  | 237,125 |  
|Additions                |  |                        | 50    |   |                  |  | 4,498   |                  |  |  | 212      |   |  |       |        |   |  |  | 4,760   |  
|Disposals                |  |                        |      |   |                  |  |        |                  |  |  |          |   |  |       |        |   |  |  |        |  
|Exchange difference      |  |                        | (14   | ) |                  |  | (9      | )                |  |  | (8       | ) |  |       | (10     | ) |  |  | (41     | )
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2011     |  |                        | 8,353 |   |                  |  | 182,416 |                  |  |  | 37,984   |   |  |       | 13,091  |   |  |  | 241,844 |  
|Additions                |  |                        | 160   |   |                  |  | 5,652   |                  |  |  | 635      |   |  |       |        |   |  |  | 6,447   |  
|Disposals                |  |                        |      |   |                  |  | (553    | )                |  |  |         |   |  |       | (10,369 | ) |  |  | (10,922 | )
|Exchange difference      |  |                        | 189   |   |                  |  | 123     |                  |  |  | 124      |   |  |       | 128     |   |  |  | 564     |  
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2012     |  |                        | 8,702 |   |                  |  | 187,638 |                  |  |  | 38,743   |   |  |       | 2,850   |   |  |  | 237,933 |  
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|Accumulated depreciation |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2010     |  |                        | 4,011 |   |                  |  | 142,704 |                  |  |  | 13,375   |   |  |       | 6,876   |   |  |  | 166,966 |  
|Charge for the year      |  |                        | 2,739 |   |                  |  | 25,595  |                  |  |  | 20,233   |   |  |       | 4,506   |   |  |  | 53,073  |  
|Disposals                |  |                        |      |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |        |  
|Exchange difference      |  |                        | (7    | ) |                  |  | (7      | )                |  |  | (4       | ) |  |       | (4      | ) |  |  | (22     | )
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2011     |  |                        | 6,743 |   |                  |  | 168,292 |                  |  |  | 33,604   |   |  |       | 11,378  |   |  |  | 220,017 |  
|Charge for the year      |  |                        | 1,555 |   |                  |  | 10,497  |                  |  |  | 4,774    |   |  |       | 1,838   |   |  |  | 18,664  |  
|Disposals                |  |                        |      |   |                  |  | (553    | )                |  |  |         |   |  |       | (10,369 | ) |  |  | (10,922 | )
|Exchange difference      |  |                        | (105  | ) |                  |  | (74     | )                |  |  | (393     | ) |  |       | (275    | ) |  |  | (847    | )
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|As at March 31, 2012     |  |                        | 8,193 |   |                  |  | 178,162 |                  |  |  | 37,985   |   |  |       | 2,572   |   |  |  | 226,912 |  
|                         |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|Net book amount as at    |  |                        |       |   |                  |  |         |                  |  |  |          |   |  |       |         |   |  |  |         |  
|March 31, 2012           |  |                        | 509   |   |                  |  | 9,476   |                  |  |  | 758      |   |  |       | 278     |   |  |  | 11,021  |  
|March 31, 2011           |  |                        | 1,610 |   |                  |  | 14,124  |                  |  |  | 4,380    |   |  |       | 1,713   |   |  |  | 21,827  |  

Change in estimates

On the basis of comprehensive evaluation on April 1, 2010, the Group has changed its method of calculating depreciation on fixed assets from the Written Down Value method (WDV) to the
Straight Line method (SLM) at the revised rates based on managements estimates of useful lives of the assets.

In view
of such changes, the charge of depreciation for the current year is Nil (Previous year higher by Rs. 31,395 (of which Rs.28,180 pertains to earlier periods upto March 31, 2010 and Rs. 3,232 pertains to the Previous year.) and the profit for the
year is lower by Nil (Previous Year Rs.31,395.) Correspondingly, the net block of the Fixed Asset is lower by Nil (Previous Year Rs. 31,395).

As it is impracticable to estimate the effect of such changes on depreciation for the future periods, the same is not disclosed.



|7. | Deferred income tax
|-- | -------------------

The movement in deferred tax assets and liabilities during the respective years is as follows:



|                                       |  |      |         |   |      |  |        | 
|-------------------------------------- |  | ---- | ------- | - | ---- |  | ------ | 
|                                       |  | 2012 |         |   | 2011 | 
|At April 1                             |  |      | 79,476  |   |      |  | 17,901 | 
|Property, plant and equipment          |  |      | 1,511   |   |      |  | 10,479 | 
|Provision on receivable from customers |  |      | 7,870   |   |      |  | 12,765 | 
|Gratuity                               |  |      | (27     | ) |      |  | 891    | 
|Stock appreciation rights              |  |      | (31,881 | ) |      |  | 24,404 | 
|Provision for bonus                    |  |      | (13,033 | ) |      |  | 12,106 | 
|Stamp duty                             |  |      | (1,628  | ) |      |  | 930    | 
|                                       |  |      |         |   |      |  |        | 
|At March 31                            |  |      | 42,288  |   |      |  | 79,476 | 
|                                       |  |      |         |   |      |  |        | 
|Comprised Of:                          |  |      |         |   |      |  |        | 
|Deferred tax assets                    |  |      | 42,288  |   |      |  | 79,476 | 
|Deferred tax liabilities               |  |      |        |   |      |  |       | 
|                                       |  |      |         |   |      |  |        | 
|                                       |  |      | 42,288  |   |      |  | 79,476 | 
|                                       |  |      |         |   |      |  |        | 



181



---

##### Table of Contents

An analysis of the gross deferred tax asset and liability balances is as follows:



|                                       |  |      |        |  |      |  |        | 
|-------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|                                       |  | 2012 |        |  | 2011 | 
|Deferred tax assets:                   |  |      |        |  |      |  |        | 
|Property, plant and equipment          |  |      | 12,819 |  |      |  | 11,308 | 
|Provision on receivable from customers |  |      | 27,999 |  |      |  | 20,129 | 
|Stock appreciation rights              |  |      |       |  |      |  | 31,881 | 
|Provision for bonus                    |  |      |       |  |      |  | 13,033 | 
|Stamp duty                             |  |      | 920    |  |      |  | 2,548  | 
|Gratuity                               |  |      | 550    |  |      |  | 577    | 
|                                       |  |      |        |  |      |  |        | 
|                                       |  |      | 42,288 |  |      |  | 79,476 | 
|                                       |  |      |        |  |      |  |        | 

The analysis of deferred tax assets and deferred tax liabilities is as follows:



|                                                               |  |               |        |  |               |  |        | 
|-------------------------------------------------------------- |  | ------------- | ------ |  | ------------- |  | ------ | 
|                                                               |  | March 31,2012 |        |  | March 31,2011 | 
|Deferred tax assets:                                           |  |               |        |  |               |  |        | 
| Deferred tax asset to be recovered after more than 12 months |  |               | 41,739 |  |               |  | 33,985 | 
| Deferred tax asset to be recovered within 12 months          |  |               | 549    |  |               |  | 45,491 | 
|                                                               |  |               |        |  |               |  |        | 
|                                                               |  |               | 42,288 |  |               |  | 79,476 | 
|                                                               |  |               |        |  |               |  |        | 



|                                                   |  |                              |        |  |                                      |  |        |                         |  |  |                    |   |  |          |         |   |            |  |     |             |  |  |        |   |  |  |         |  
|-------------------------------------------------- |  | ---------------------------- | ------ |  | ------------------------------------ |  | ------ | ----------------------- |  |  | ------------------ | - |  | -------- | ------- | - | ---------- |  | --- | ----------- |  |  | ------ | - |  |  | ------- | -
|Deferred tax assets:                               |  | Property Plantand 
Equipment |        |  | Provision 
onreceivablefromcustomers |  |        | Stockappreciationrights |  |  | Provisionfor Bonus |   |  | Gratuity |         |   | Stamp Duty |  |     | Grand Total | 
|Opening Balance as on April 1, 2011                |  |                              | 829    |  |                                      |  | 7,364  |                         |  |  | 7,477              |   |  |          | 927     |   |            |  |    |             |  |  | 1,618  |   |  |  | 18,215  |  
|Charged / (Credited) to Other Comprehensive Income |  |                              | 10,479 |  |                                      |  | 12,765 |                         |  |  | 24,404             |   |  |          | 12,106  |   |            |  | 577 |             |  |  | 930    |   |  |  | 61,261  |  
|Effect of Change in Tax rates                      |  |                              |        |  |                                      |  |        |                         |  |  |                    |   |  |          |         |   |            |  |     |             |  |  |        |   |  |  |        |  
|                                                   |  |                              |        |  |                                      |  |        |                         |  |  |                    |   |  |          |         |   |            |  |     |             |  |  |        |   |  |  |         |  
|As at March 31, 2011                               |  |                              | 11,308 |  |                                      |  | 20,129 |                         |  |  | 31,881             |   |  |          | 13,033  |   |            |  | 577 |             |  |  | 2,548  |   |  |  | 79,476  |  
|Charged / (Credited) to Other Comprehensive Income |  |                              | 1,511  |  |                                      |  | 7,870  |                         |  |  | (31,881            | ) |  |          | (13,033 | ) |            |  | (28 | )           |  |  | (1,628 | ) |  |  | (37,188 | )
|                                                   |  |                              |        |  |                                      |  |        |                         |  |  |                    |   |  |          |         |   |            |  |     |             |  |  |        |   |  |  |         |  
|As at March 31, 2012                               |  |                              | 12,819 |  |                                      |  | 27,999 |                         |  |  |                   |   |  |          |        |   |            |  | 549 |             |  |  | 920    |   |  |  | 42,288  |  
|                                                   |  |                              |        |  |                                      |  |        |                         |  |  |                    |   |  |          |         |   |            |  |     |             |  |  |        |   |  |  |         |  



182



---

##### Table of Contents

|8. | 
|-- | 



| | 8.1.1. | Receivables from customers
| | ------ | --------------------------

Receivables 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, 2012, receivables of Rs. 85,310 (March 31, 2011: Rs. 10,193) 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, |        
|                   |  | 2012            |         |  | 2011 | 
|up to 6 months     |  |                 | 255,688 |  |      |  | 437,577 | 
|more than 6 months |  |                 | 85,310  |  |      |  | 10,193  | 
|                   |  |                 |         |  |      |  |         | 
|                   |  |                 | 340,998 |  |      |  | 447,770 | 
|                   |  |                 |         |  |      |  |         | 

Receivables are tested individually for impairment. Based on such testing as at March 31, 2012,
receivables of Rs. 86,300 (March 31, 2011: Rs. 60,600) were impaired and provided for. The amount of the provision was Rs. 86,300 as at March 31, 2012 (March 31, 2011: Rs. 60,600).

The ageing of these receivables is as follows:



|                   |  |                 |        |  |      |  |        | 
|------------------ |  | --------------- | ------ |  | ---- |  | ------ | 
|                   |  | As at March 31, |       
|                   |  | 2012            |        |  | 2011 | 
|up to 6 months     |  |                 | 17,525 |  |      |  | 45,796 | 
|more than 6 months |  |                 | 68,775 |  |      |  | 14,804 | 
|                   |  |                 |        |  |      |  |        | 
|                   |  |                 | 86,300 |  |      |  | 60,600 | 
|                   |  |                 |        |  |      |  |        | 

The carrying amounts of the groups receivables are denominated in Indian Rupees (INR):



|                |         |  |      |  |         | 
|--------------- | ------- |  | ---- |  | ------- | 
|As at March 31, |        
|2012            |         |  | 2011 | 
|                | 340,998 |  |      |  | 447,770 | 
|                |         |  |      |  |         | 
|                | 340,998 |  |      |  | 447,770 | 
|                |         |  |      |  |         | 

Movements on the groups provision for impairment of trade receivables are as follows:



|                                |      |                 |        |      |  |  |        |  |  |  |         |  
|------------------------------- | ---- | --------------- | ------ | ---- |  |  | ------ |  |  |  | ------- | -
|                                |      | As at March 31, |       
|                                | 2012 |                 |        | 2011 |  |  | 2010   | 
|As at the beginning of the year |      |                 | 60,600 |      |  |  | 22,300 |  |  |  | 80,000  |  
|Provision for impairment        |      |                 | 25,700 |      |  |  | 38,300 |  |  |  |        |  
|Write back of provision         |      |                 |       |      |  |  |       |  |  |  | (57,700 | )
|                                |      |                 |        |      |  |  |        |  |  |  |         |  
|As at the closing of the year   |      |                 | 86,300 |      |  |  | 60,600 |  |  |  | 22,300  |  
|                                |      |                 |        |      |  |  |        |  |  |  |         |  

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable
mentioned above.



| | 8.1.2. | Trade receivables include brokerage aggregating to Rs. 12,019 from Institutional Clients, invoiced on account of trades executed on their behalf. While these parties,
with whom regular business has discontinued, have neither disputed nor denied such claims. However the amounts have remained outstanding as the Institutional Clients are awaiting clarity about the change of ownership of the Company. The Management
is confident of recovery of these amounts.
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



183



---

##### Table of Contents

9.Receivable from and payable to broker-dealer and clearing
organisations

Amounts 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 at March 31 |        
|                       |  | 2012           |         |  | 2011    | 
|                       |  | Receivable     |         |  | Payable |  |         | Receivable |  |  | Payable | 
|Clearing organizations |  |                |         |  |         |  |         |            |  |  |         |  |  |  |         | 
|- Unsettled trade      |  |                | 159,809 |  |         |  | 29,965  |            |  |  | 8,208   |  |  |  | 38,638  | 
|Broker-dealer          |  |                | 10,851  |  |         |  | 154,694 |            |  |  | 10,372  |  |  |  | 225,866 | 
|                       |  |                |         |  |         |  |         |            |  |  |         |  |  |  |         | 
|Total                  |  |                | 170,660 |  |         |  | 184,659 |            |  |  | 18,580  |  |  |  | 264,504 | 
|                       |  |                |         |  |         |  |         |            |  |  |         |  |  |  |         | 



|10. | Other assets
|--- | ------------



|                                |  |                 |         |  |      |  |         | 
|------------------------------- |  | --------------- | ------- |  | ---- |  | ------- | 
|                                |  | As at March 31, |        
|                                |  | 2012            |         |  | 2011 | 
|Prepaid expenses                |  |                 | 11,553  |  |      |  | 14,544  | 
|Advance tax (net of provisions) |  |                 | 134,726 |  |      |  | 168,746 | 
|Deposits                        |  |                 | 28,900  |  |      |  | 32,663  | 
|Loans and advances (to staff)   |  |                 | 6,110   |  |      |  | 12,594  | 
|Gratuity Trust                  |  |                 | 3,994   |  |      |  | 2,228   | 
|Others*                         |  |                 | 23,716  |  |      |  | 15,025  | 
|                                |  |                 |         |  |      |  |         | 
|                                |  |                 | 208,999 |  |      |  | 245,800 | 
|                                |  |                 |         |  |      |  |         | 



|* | includes Advances to vendors towards expenses, delayed payment charges from clients, withholding tax recoverable, etc.
|- | ----------------------------------------------------------------------------------------------------------------------



|11. | Cash and Bank Balance
|--- | ---------------------

Cash and bank balance consist of:



|             |  |                 |         |  |      |  |         |      |  |  |         | 
|------------ |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|             |  | As at March 31, |        
|             |  | 2012            |         |  | 2011 |  |         | 2010 | 
|Cash in hand |  |                 | 11      |  |      |  | 0       |      |  |  | 32      | 
|Cash at bank |  |                 | 146,969 |  |      |  | 281,486 |      |  |  | 148,181 | 
|             |  |                 |         |  |      |  |         |      |  |  |         | 
|             |  |                 | 146,980 |  |      |  | 281,486 |      |  |  | 148,213 | 
|             |  |                 |         |  |      |  |         |      |  |  |         | 



|12. | Cash  restricted
|--- | -----------------

Restricted cash as of March 31, 2012 includes fixed deposits of Rs. Nil (Rs. 100,000 as of March 31, 2011) placed with banks as margins for bank guarantees issued to clearing organizations and
fixed deposits of Rs.2,324,000 (Rs. 2,859,062 as of March 31, 2011) 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. Nil as at March 31, 2012 (March 31, 2011: Rs. 200,000). Bank guarantees are generally provided to
the Exchanges for the purposes of Margins. An exchange may invoke these guarantees if they suffer any losses or damage through the breach of any of the covenants contained in the agreements.



|13. | Interest bearing deposits with banks
|--- | ------------------------------------

Interest 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.

The net decrease in interest bearing deposits with banks by Rs. 657,648 during the year is primarily on
account of cash money repaid to customers.



184



---

##### Table of Contents

|14. | Available for sale securities
|--- | -----------------------------

Available for sale securities include following:



|                                           |  |                 |           |  |        |  |        |          |  |  |           |  |  |  |        | 
|------------------------------------------ |  | --------------- | --------- |  | ------ |  | ------ | -------- |  |  | --------- |  |  |  | ------ | 
|                                           |  | As at March 31, |          
|                                           |  | 2012            |           |  | 2011   | 
|(a) Equity Shares (Quoted)                 |  | Quantity        |           |  | Amount |  |        | Quantity |  |  | Amount    | 
|Patni Computers Systems Limited            |  |                 |          |  |        |  |       |          |  |  | 18,096    |  |  |  | 8,633  | 
|Piramal Health Care Limited                |  |                 |          |  |        |  |       |          |  |  | 4,888     |  |  |  | 2,037  | 
|Siemens Limited                            |  |                 |          |  |        |  |       |          |  |  | 34,171    |  |  |  | 30,106 | 
|                                           |  |                 |           |  |        |  |        |          |  |  |           |  |  |  |        | 
|Total (a)                                  |  |                 |          |  |        |  |       |          |  |  | 57,155    |  |  |  | 40,776 | 
|                                           |  |                 |           |  |        |  |        |          |  |  |           |  |  |  |        | 
|Templeton IndiaDividend reinvestment plan |  |                 | 4,100,471 |  |        |  | 41,005 |          |  |  | 9,286,667 |  |  |  | 92,868 | 
|                                           |  |                 |           |  |        |  |        |          |  |  |           |  |  |  |        | 
|Total (b)                                  |  |                 | 4,100,471 |  |        |  | 41,005 |          |  |  | 9,286,667 |  |  |  | 92,868 | 
|                                           |  |                 |           |  |        |  |        |          |  |  |           |  |  |  |        | 

The fair value of unlisted securities is determined based on the valuations provided by Bombay Stock
Exchange Limited. This value is considered as fair value of investment in the net worth computation of trading member.



|15. | Share capital and Dividend distribution
|--- | ---------------------------------------



|                                                |  |                 |         |  |      |  |         | 
|----------------------------------------------- |  | --------------- | ------- |  | ---- |  | ------- | 
|                                                |  | As at March 31, |        
|                                                |  | 2012            |         |  | 2011 | 
|Authorised capital                              |  |                 |         |  |      |  |         | 
|70,000,000 ordinary shares of Rs.10/- per share |  |                 | 700,000 |  |      |  | 700,000 | 

As at March 31, 2012, 51,894,182 ordinary shares (March 31, 2011: 51,894,182 ordinary shares) of
Rs.10/- each, issued and fully paidup aggregating to Rs.518,942 (March 31, 2012 Rs. 518,942)

Dividend distribution

Dividends 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. 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 16.22%.



|16. | Sharebased payments
|--- | --------------------

Employees Stock Appreciation Scheme

The 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. As per the SARS Plan, the stock appreciation rights shall vest with the employee and shall be settled in cash on the day following the fourth anniversary of the grant date. The Board of Directors of the
Company has preponed the vesting date of the SARS Plan 2007 and SARS Plan 2008 from March 31, 2011 and March 31, 2012 to July 31, 2010 and March 31, 2011, respectively. 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 fair value of SARs as at March 31, 2011 is Rs 70 per unit (2010: Rs. 86 per unit) 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, 2011. The total unrecognized compensation costs relating to SARs to be recognized in the future over the remaining vesting period is estimated to be Rs. Nil and Rs.
111,718 as of March 31, 2011 and March 31, 2010 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.



185



---

##### Table of Contents

The valuation has been undertaken based on the methodology of Price Earning
Capacity Value (PECV Method) for the valuation of SARS every year.

PECV Method requires determination of
three parameters, which are relevant to the company whose shares are being valued. These are



| |  |  | Corporate tax rate  Current period tax rate is considered as corporate tax rate.
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Future maintainable profit  Future maintainable profit is derived based on simple average adjusted PBT for each year. From the future
maintainable profit, corporate tax at the corporate tax rate has been deducted to derive future maintainable profit after tax.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expected rate of return  Expected rate of return is determined based on the average price earnings multiple of comparable companies on the basis
of their 12 months average market prices.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above parameters are approved by the Board of
Directors. In accordance of this, an independent valuer has provided the valuation certificate at Balance Sheet date.

In the valuation as at March 31, 2011 the corporate tax rate is considered at 32.445% and Expected rate of return is determined at 7.81%.

Changes in number of SARs representing stock options outstanding were as follows:



|                                              |  |                 |   |  |      |  |            |      |  |  |           |  
|--------------------------------------------- |  | --------------- | - |  | ---- |  | ---------- | ---- |  |  | --------- | -
|                                              |  | As at March 31, |  
|                                              |  | 2012            |   |  | 2011 |  |            | 2010 | 
|As at the beginning of the year               |  |                 |  |  |      |  | 2,879,747  |      |  |  | 2,898,747 |  
|Granted during the year                       |  |                 |   |  |      |  |            |      |  |  |          |  
|Exercised                                     |  |                 |  |  |      |  | (2,558,394 | )    |  |  |          |  
|Forfeited                                     |  |                 |  |  |      |  | (321,353   | )    |  |  | (120,008  | )
|Reissued                                      |  |                 |  |  |      |  |           |      |  |  | 100,508   |  
|Lapsed                                        |  |                 |   |  |      |  |            |      |  |  |          |  
|                                              |  |                 |   |  |      |  |            |      |  |  |           |  
|As at the end of the year                     |  |                 |  |  |      |  |           |      |  |  | 2,879,747 |  
|                                              |  |                 |   |  |      |  |            |      |  |  |           |  
|Exercisable at the end of the year            |  |                 |  |  |      |  |           |      |  |  |          |  
|Approximate remaining vesting period in years |  |                 |  |  |      |  |           |      |  |  | 1.24      |  



|17. | Borrowings
|--- | ----------

Aggregate maturities of the borrowings are as follows:



|                             |  |                 |   |  |      |  |        | 
|---------------------------- |  | --------------- | - |  | ---- |  | ------ | 
|                             |  | As at March 31, |  
|                             |  | 2012            |   |  | 2011 | 
|On demand or within one year |  |                 |  |  |      |  | 53,000 | 
|In one to three years        |  |                 |  |  |      |  |       | 
|In three to five years       |  |                 |  |  |      |  |       | 
|                             |  |                 |   |  |      |  |        | 
|                             |  |                 |  |  |      |  | 53,000 | 
|                             |  |                 |   |  |      |  |        | 



186



---

##### Table of Contents

|18. | Employee benefit obligation
|--- | ---------------------------



|                          |  |                       |       |  |      |  |        |      |  |  |         | 
|------------------------- |  | --------------------- | ----- |  | ---- |  | ------ | ---- |  |  | ------- | 
|                          |  | Years ended March 31, |      
|                          |  | 2012                  |       |  | 2011 |  |        | 2010 | 
|Gratuity                  |  |                       | 1,507 |  |      |  | 1,432  |      |  |  | 856     | 
|Stock appreciation rights |  |                       |      |  |      |  | 96,832 |      |  |  | 135,746 | 
|                          |  |                       |       |  |      |  |        |      |  |  |         | 
|                          |  |                       | 1,507 |  |      |  | 98,264 |      |  |  | 136,602 | 
|                          |  |                       |       |  |      |  |        |      |  |  |         | 

The movement in the defined benefit obligation of gratuity over the period is as follows:



|                                   |  |                       |        |   |      |  |        |      |  |  |        |  
|---------------------------------- |  | --------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                   |  | Years ended March 31, |       
|                                   |  | 2012                  |        |   | 2011 |  |        | 2010 | 
|Opening defined benefit obligation |  |                       | 17,403 |   |      |  | 9,861  |      |  |  | 9,700  |  
|Current service cost               |  |                       | 2,640  |   |      |  | 2,879  |      |  |  | 2,853  |  
|Interest cost                      |  |                       | 1,359  |   |      |  | 715    |      |  |  | 679    |  
|Actuarial losses/ (gains)          |  |                       | (1,829 | ) |      |  | 3,948  |      |  |  | (3,373 | )
|Benefits paid                      |  |                       | (836   | ) |      |  |       |      |  |  |        |  
|                                   |  |                       |        |   |      |  |        |      |  |  |        |  
|Closing defined benefit obligation |  |                       | 18,737 |   |      |  | 17,403 |      |  |  | 9,859  |  
|                                   |  |                       |        |   |      |  |        |      |  |  |        |  

The movement in the fair value of plan assets of the year is as follows:



|                                  |  |                       |        |   |      |  |        |      |  |  |        | 
|--------------------------------- |  | --------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | 
|                                  |  | Years ended March 31, |       
|                                  |  | 2012                  |        |   | 2011 |  |        | 2010 | 
|Beginning of year                 |  |                       | 18,198 |   |      |  | 12,237 |      |  |  | 11,200 | 
|Expected return on plan assets    |  |                       | 1,728  |   |      |  | 1,343  |      |  |  | 1,025  | 
|Actuarial (losses)/gains          |  |                       | (81    | ) |      |  | (278   | )    |  |  | 11     | 
|Employer contributions            |  |                       | 2,214  |   |      |  | 6,732  |      |  |  |       | 
|Benefits paid                     |  |                       | (836   | ) |      |  | (1,836 | )    |  |  |       | 
|                                  |  |                       |        |   |      |  |        |      |  |  |        | 
|Closing fair value of plan assets |  |                       | 21,223 |   |      |  | 18,198 |      |  |  | 12,236 | 
|                                  |  |                       |        |   |      |  |        |      |  |  |        | 

The amounts recognised in the income statement in respect of gratuity are as follows:



|                              |  |                       |        |   |      |  |        |      |  |  |        |  
|----------------------------- |  | --------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                              |  | Years ended March 31, |       
|                              |  | 2012                  |        |   | 2011 |  |        | 2010 | 
|Current service cost          |  |                       | 2,640  |   |      |  | 2,879  |      |  |  | 2,853  |  
|Interest cost                 |  |                       | 1,359  |   |      |  | 715    |      |  |  | 679    |  
|Actuarial loss                |  |                       | (1,747 | ) |      |  | 6,061  |      |  |  | (3,384 | )
|Expected return on plan asset |  |                       | (1,728 | ) |      |  | (1,344 | )    |  |  | (1,025 | )
|                              |  |                       |        |   |      |  |        |      |  |  |        |  
|                              |  |                       | 524    |   |      |  | 8,311  |      |  |  | (877   | )
|                              |  |                       |        |   |      |  |        |      |  |  |        |  

The principal actuarial assumptions used were as follows:



|                                                                                                               |  |                       |      |   |      |  |      |      |  |  |      |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                                                                               |  | Years ended March 31, |     
|                                                                                                               |  | 2012                  |      |   | 2011 |  |      | 2010 | 
|Discount rate                                                                                                  |  |                       | 8.00 | % |      |  | 8.00 | %    |  |  | 7.00 | %
|Expected return on plan assets                                                                                 |  |                       | 9.15 | % |      |  | 9.25 | %    |  |  | 9.25 | %
|Long term rate of compensation increase                                                                        |  |                       | 6.00 | % |      |  | 6.00 | %    |  |  | 6.00 | %
|Mortality rates at various age groups are taken as per 1994-96 Life Insurance Corporation (LIC) Ultimate table |  |                       |      |   |      |  |      |      |  |  |      |  



|19. | Accounts payables, accrued expenses and other liabilities
|--- | ---------------------------------------------------------



|                        |  |                 |         |  |      |  |         |      |  |  |         | 
|----------------------- |  | --------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                        |  | As at March 31, |        
|                        |  | 2012            |         |  | 2011 |  |         | 2010 | 
|Accruals                |  |                 | 55,360  |  |      |  | 41,758  |      |  |  | 41,489  | 
|Withholding tax payable |  |                 | 15,868  |  |      |  | 85,062  |      |  |  | 71,382  | 
|Bonus payable           |  |                 | 16,567  |  |      |  | 255,242 |      |  |  | 157,410 | 
|Other payables          |  |                 | 93,562  |  |      |  | 123,543 |      |  |  | 124,046 | 
|                        |  |                 |         |  |      |  |         |      |  |  |         | 
|Total                   |  |                 | 181,357 |  |      |  | 505,605 |      |  |  | 394,327 | 
|                        |  |                 |         |  |      |  |         |      |  |  |         | 



187



---

##### Table of Contents

|20. | Other expenses
|--- | --------------



|                                                      |  |                      |        |  |      |  |        |      |  |  |        | 
|----------------------------------------------------- |  | -------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                      |  | Year ended March 31, |       
|                                                      |  | 2012                 |        |  | 2011 |  |        | 2010 | 
|Professional fees                                     |  |                      | 11,085 |  |      |  | 12,087 |      |  |  | 11,059 | 
|Travelling and conveyance                             |  |                      | 9,272  |  |      |  | 18,901 |      |  |  | 16,068 | 
|Books & periodicals, postage, printing and stationary |  |                      | 28,533 |  |      |  | 29,120 |      |  |  | 25,817 | 
|Loss on account of error trades (net)                 |  |                      | 2,583  |  |      |  | 10,923 |      |  |  | 12,602 | 
|Repairs & maintenance                                 |  |                      | 424    |  |      |  | 818    |      |  |  | 145    | 
|Currency loss on revaluation of current               |  |                      | 9,205  |  |      |  |       |      |  |  |       | 
|Insurance premium                                     |  |                      | 1,590  |  |      |  | 1,248  |      |  |  | 963    | 
|Others                                                |  |                      | 7,638  |  |      |  | 12,531 |      |  |  | 15,457 | 
|                                                      |  |                      |        |  |      |  |        |      |  |  |        | 
|Total                                                 |  |                      | 70,330 |  |      |  | 85,628 |      |  |  | 82,111 | 
|                                                      |  |                      |        |  |      |  |        |      |  |  |        | 



|21. | Employee benefit expense
|--- | ------------------------



|                                 |  |                     |         |  |      |  |         |      |  |  |         | 
|-------------------------------- |  | ------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                 |  | Year ended March 31 |        
|                                 |  | 2012                |         |  | 2011 |  |         | 2010 | 
|Salaries and bonus               |  |                     | 505,907 |  |      |  | 670,766 |      |  |  | 508,264 | 
|Defined contribution plans       |  |                     | 3,992   |  |      |  | 4,047   |      |  |  | 3,452   | 
|Defined benefit plans            |  |                     | 2,169   |  |      |  | 9,134   |      |  |  | 159     | 
|Staff welfare expenses           |  |                     | 5,007   |  |      |  | 14,677  |      |  |  | 6,796   | 
|Sharebased compensation expense |  |                     |        |  |      |  | 95,911  |      |  |  | 89,104  | 
|                                 |  |                     |         |  |      |  |         |      |  |  |         | 
|                                 |  |                     | 517,075 |  |      |  | 794,535 |      |  |  | 607,775 | 
|                                 |  |                     |         |  |      |  |         |      |  |  |         | 

Share based compensation expense has increased during the year due to increase in fair value of SARS .



|22. | Provision for doubtful debts
|--- | ----------------------------

The Companys allowance for doubtful accounts is based upon managements continuing review and evaluation of factors such as collateral value, aging and the financial condition of the customers.
The allowance is assessed to reflect the best estimate of probable losses due to client defaults that have been incurred as of the balance sheet date. Any changes in the estimate are included in the operating results for the current period. In
circumstances where a specific customers inability to meet its financial obligation is known, the Company records a specific provision against accounts receivable to reduce the receivable to the amount that it reasonably believes will be
collected. The bad debt expense aggregating to Rs. 25,700 is recognised for the years ended March 31, 2012 (March 31, 2011: Rs 38,300).



|23. | Other income
|--- | ------------



|                                                |  |                      |         |  |      |  |         |      |  |  |         | 
|----------------------------------------------- |  | -------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                |  | Year ended March 31, |        
|                                                |  | 2012                 |         |  | 2011 |  |         | 2010 | 
|Profit on sale of available-for-sale securities |  |                      |        |  |      |  | 23,603  |      |  |  |        | 
|Delayed payment charges (*)                     |  |                      | 23,219  |  |      |  | 60,014  |      |  |  | 24,999  | 
|Research fees                                   |  |                      | 8,851   |  |      |  |        |      |  |  | 3,072   | 
|Referral fees (**)                              |  |                      | 46,000  |  |      |  | 57,745  |      |  |  | 51,160  | 
|Interest                                        |  |                      | 6,567   |  |      |  | 16,278  |      |  |  | 5,566   | 
|Dividend                                        |  |                      | 3,897   |  |      |  | 1,617   |      |  |  | 283     | 
|Currency fluctuation fain                       |  |                      | 119     |  |      |  | 912     |      |  |  | 7,960   | 
|Expenses reversal (***)                         |  |                      |        |  |      |  |        |      |  |  | 17,567  | 
|Principal trading activity                      |  |                      | 3,493   |  |      |  | 4,056   |      |  |  |        | 
|Miscellaneous income                            |  |                      | 16,173  |  |      |  | 30,565  |      |  |  | 26,365  | 
|                                                |  |                      |         |  |      |  |         |      |  |  |         | 
|                                                |  |                      | 108,319 |  |      |  | 194,790 |      |  |  | 136,972 | 
|                                                |  |                      |         |  |      |  |         |      |  |  |         | 



|(*) | Delayed payment charges represents the penal charges levied to clients on account of delay in settlement of their trade related obligations.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(**) | Referral fees consist of payments received for introducing clients to other MF Global associated companies.
|---- | -----------------------------------------------------------------------------------------------------------

|(***) | The amount of Rs 17,567 was provided in year 2009 on account of group recharges from MF Global Holdings Limited (formerly known as MF Global Limited) has been reversed
during the year 2010, on account of mutual agreement between the stakeholders.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



188



---

##### Table of Contents

|24. | Income tax expense
|--- | ------------------



|                      |  |                      |        |  |      |  |         |      |  |  |         | 
|--------------------- |  | -------------------- | ------ |  | ---- |  | ------- | ---- |  |  | ------- | 
|                      |  | Year ended March 31, |       
|                      |  | 2012                 |        |  | 2011 |  |         | 2010 | 
|Current tax           |  |                      | 25,106 |  |      |  | 127,322 |      |  |  | 122,679 | 
|Deferred tax (Note 7) |  |                      | 37,189 |  |      |  | (61,575 | )    |  |  | 38,181  | 
|                      |  |                      |        |  |      |  |         |      |  |  |         | 
|                      |  |                      | 62,295 |  |      |  | 65,747  |      |  |  | 160,860 | 
|                      |  |                      |        |  |      |  |         |      |  |  |         | 

The tax on MFs profit before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits of the consolidated entities as follows:



|                                                                 |  |                      |         |   |      |  |         |      |  |  |         |  
|---------------------------------------------------------------- |  | -------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                                                 |  | Year ended March 31, |        
|                                                                 |  | 2012                 |         |   | 2011 |  |         | 2010 | 
|Net income before taxes                                          |  |                      | 154,917 |   |      |  | 307,587 |      |  |  | 468,403 |  
|Enacted tax rates in India                                       |  |                      | 32.445  | % |      |  | 33.220  | %    |  |  | 33.990  | %
|                                                                 |  |                      |         |   |      |  |         |      |  |  |         |  
|Computed tax expense                                             |  |                      | 50,263  |   |      |  | 102,180 |      |  |  | 159,210 |  
|                                                                 |  |                      |         |   |      |  |         |      |  |  |         |  
|Income exempt from tax:                                          |  |                      |         |   |      |  |         |      |  |  |         |  
|Dividend                                                         |  |                      | (1,264  | ) |      |  | (536    | )    |  |  | (96     | )
|Non-deductible expenses:                                         |  |                      |         |   |      |  |         |      |  |  |         |  
|Contribution to co-investment plan                               |  |                      |        |   |      |  | 734     |      |  |  | 751     |  
|Others including donations, IT interest etc.                     |  |                      | 773     |   |      |  | 678     |      |  |  | 1,228   |  
|Recharges by parent and affiliate companies                      |  |                      |        |   |      |  |        |      |  |  | 980     |  
|Excess Provisions for earlier years reverse back in current year |  |                      | 7,207   |   |      |  | (26,491 | )    |  |  |        |  
|Income charged at lower rate                                     |  |                      |        |   |      |  | (7,171  | )    |  |  |        |  
|(Gain) / loss in subsidiaries                                    |  |                      | (442    | ) |      |  | (4,209  | )    |  |  | (3,294  | )
|Others                                                           |  |                      | 5,758   |   |      |  | 562     |      |  |  | 2081    |  
|                                                                 |  |                      |         |   |      |  |         |      |  |  |         |  
|Income taxes recognized in the statement of income               |  |                      | 62,295  |   |      |  | 65,747  |      |  |  | 160,860 |  
|                                                                 |  |                      |         |   |      |  |         |      |  |  |         |  



|25. | Financial instruments by category
|--- | ---------------------------------

The accounting policies for financial instruments have been applied to the line items below:

As at March 31, 2012



|                                                          |  |             |           |  |           |  |        |       |  |  |           | 
|--------------------------------------------------------- |  | ----------- | --------- |  | --------- |  | ------ | ----- |  |  | --------- | 
|                                                          |  | Loans and   |           |  | Available |  |        |       | 
|                                                          |  | receivables |           |  | for sale  |  |        | Total | 
|Assets as per Balance Sheet                               |  |             |           |  |           |  |        |       |  |  |           | 
|Cash and bank balance                                     |  |             | 146,980   |  |           |  |        |       |  |  | 146,980   | 
|Cash-restricted                                           |  |             | 2,324,000 |  |           |  |        |       |  |  | 2,324,000 | 
|Interest bearing deposits with bank                       |  |             | 70,777    |  |           |  |        |       |  |  | 70,777    | 
|Deposits with clearing organizations                      |  |             | 78,613    |  |           |  |        |       |  |  | 78,613    | 
|Receivable from broker-dealers and clearing organizations |  |             | 170,660   |  |           |  |        |       |  |  | 170,660   | 
|Receivable from customers                                 |  |             | 340,998   |  |           |  |        |       |  |  | 340,998   | 
|Available-for-sale securities:                            |  |             |           |  |           |  |        |       |  |  |           | 
|Marketable, at market value                               |  |             |           |  |           |  | 41,005 |       |  |  | 41,005    | 
|Not readily marketable (at estimated fair value)          |  |             |           |  |           |  |       |       |  |  |          | 
|Interest accrued but not due                              |  |             | 57,302    |  |           |  |        |       |  |  | 57,302    | 
|Other assets                                              |  |             | 208,999   |  |           |  |        |       |  |  | 208,999   | 
|                                                          |  |             |           |  |           |  |        |       |  |  |           | 
|                                                          |  |             | 3,398,329 |  |           |  | 41,005 |       |  |  | 3,439,334 | 
|                                                          |  |             |           |  |           |  |        |       |  |  |           | 



|                                                         |  |             |           |  |       |  |           | 
|-------------------------------------------------------- |  | ----------- | --------- |  | ----- |  | --------- | 
|                                                         |  | Other       |           |  |       | 
|                                                         |  | financial   |           |  |       | 
|                                                         |  | liabilities |           |  | Total | 
|Liabilities as per Balance Sheet                         |  |             |           |  |       |  |           | 
|Payable to broker dealers and clearing organizations     |  |             | 184,659   |  |       |  | 184,659   | 
|Payable to customers                                     |  |             | 684,802   |  |       |  | 684,802   | 
|Borrowings                                               |  |             |          |  |       |  |          | 
|Accounts payable, accrued expenses and other liabilities |  |             | 181,357   |  |       |  | 181,357   | 
|                                                         |  |             |           |  |       |  |           | 
|                                                         |  |             | 1,050,818 |  |       |  | 1,050,818 | 
|                                                         |  |             |           |  |       |  |           | 



189



---

##### Table of Contents

As at March 31, 2011



|                                                          |  |                      |           |  |                   |  |         |       |  |  |           | 
|--------------------------------------------------------- |  | -------------------- | --------- |  | ----------------- |  | ------- | ----- |  |  | --------- | 
|                                                          |  | Loans andreceivables |           |  | Availablefor sale |  |         | Total | 
|Assets as per Balance Sheet                               |  |                      |           |  |                   |  |         |       |  |  |           | 
|Cash and bank balance                                     |  |                      | 281,486   |  |                   |  |         |       |  |  | 281,486   | 
|Cash-restricted                                           |  |                      | 2,959,063 |  |                   |  |         |       |  |  | 2,959,063 | 
|Interest bearing deposits with bank                       |  |                      | 93,362    |  |                   |  |         |       |  |  | 93,362    | 
|Deposits with clearing organizations and others           |  |                      | 173,783   |  |                   |  |         |       |  |  | 173,783   | 
|Receivable from broker-dealers and clearing organizations |  |                      | 18,580    |  |                   |  |         |       |  |  | 18,580    | 
|Receivable from customers                                 |  |                      | 447,770   |  |                   |  |         |       |  |  | 447,770   | 
|Available-for-sale securities:                            |  |                      |           |  |                   |  |         |       |  |  |           | 
|Marketable, at market value                               |  |                      |           |  |                   |  | 40,776  |       |  |  | 40,776    | 
|Not readily marketable (at estimated fair value)          |  |                      |           |  |                   |  | 92,868  |       |  |  | 92,868    | 
|Interest accrued but not due                              |  |                      | 67,124    |  |                   |  |         |       |  |  | 67,124    | 
|Other assets                                              |  |                      | 251,868   |  |                   |  |         |       |  |  | 251,868   | 
|                                                          |  |                      |           |  |                   |  |         |       |  |  |           | 
|                                                          |  |                      | 4,293,036 |  |                   |  | 133,644 |       |  |  | 4,426,680 | 
|                                                          |  |                      |           |  |                   |  |         |       |  |  |           | 



|                                                         |  |                           |           |  |       |  |           | 
|-------------------------------------------------------- |  | ------------------------- | --------- |  | ----- |  | --------- | 
|                                                         |  | Otherfinancialliabilities |           |  | Total | 
|Liabilities as per Balance Sheet                         |  |                           |           |  |       |  |           | 
|Payable to broker-dealers and clearing organizations     |  |                           | 264,504   |  |       |  | 264,504   | 
|Payable to customers                                     |  |                           | 1,272,571 |  |       |  | 1,272,571 | 
|Borrowings                                               |  |                           | 53,000    |  |       |  | 53,000    | 
|Accounts payable, accrued expenses and other liabilities |  |                           | 505,605   |  |       |  | 505,605   | 
|                                                         |  |                           |           |  |       |  |           | 
|                                                         |  |                           | 2,095,680 |  |       |  | 2,095,680 | 
|                                                         |  |                           |           |  |       |  |           | 

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.

During October 2010, Sify Technologies Limited, the minority shareholder of the Company holding 29.85 percent of the outstanding shares of the Company, requested the Companys Board of Directors to
reconsider certain costs charged to the Company by MF Global Holdings Limited (the majority shareholder) and its affiliated and associated group companies, who hold 70.15 percent of the outstanding shares of the Company. These charges are currently
recorded in the financial statements of the Company for year ended March 31, 2008 aggregating to Rs. 43,479 and March 31, 2009 aggregating to Rs. 15,375. The resolution of this matter between the shareholders remains uncertain and any
financial adjustment that may arise is not presently known. Any financial adjustment that may arise on resolution of the said matter would be expected to be handled prospectively and therefore would be reported in the period in which it is resolved.



|26. | Merger of Subsidiary Company
|--- | ----------------------------

The Scheme of Amalgamation (the Scheme) of MF Global Capital India Private Limited (MFGCIPL) [the Transferor Company] with MF Global Sify Securities India Private Limited
(MFGSSIPL) [the Transferee Company] was sanctioned by the Bombay High Court on March 25, 2011 and the order sanctioning the Scheme was filed with the Registrar of Companies at Mumbai on April 15, 2011 (the Effective
Date).

Accordingly, pursuant to the Scheme, the undertaking of the erstwhile MFGCIPL (comprising all of its properties
and assets (whether movable or immovable, tangible or intangible) such as security deposits, licenses, permits, quotas, approvals, leases, tenancy rights, permissions, incentives if any, and all other rights, title, interests, contracts, consent,
approvals or powers of every nature and descriptions shall without any further act, instrument or deed stand transferred to and vested in and/or deemed to be transferred to and vested in the Transferee Company, free from all encumbrances, but
subject to subsisting charges and pledges, if any. All debts, liabilities, contingent liabilities, financial commitments, duties and obligations pertaining to the Transferor Company, whether provided for or not in the books of account of the
Transferor Company and whether disclosed or undisclosed in its Balance Sheet has been transferred to and vested with MFGSSIPL retrospectively with effect from April 1, 2010 (the Appointed Date). The Scheme has accordingly been given
effect to in these financial statements.



|27. | Commitments and contingencies
|--- | -----------------------------



| | a) | Contingent Liabilities
| | -- | ----------------------

(i)Guarantee given by scheduled banks on behalf of the company in favour of commodity Exchange Rs. Nil (March 31, 2011 Rs. 200,000).



190



---

##### Table of Contents

(ii) Claims against the company not acknowledged as debts Rs. 15,030 (March 31, 2011 Rs.
15,030). In the said claim, based on the facts and merits of the case, the Company is hopeful of succeeding and as such does not expect any significant liability to crystallize.



| | b) | Operating lease commitments  MF as lessee
| | -- | ------------------------------------------

The group has obligations under long term operating leases with initial non-cancellable terms in excess of one year. Aggregate annual rentals for office space as of March 31, 2012, are
approximately as listed below:



|                                             |  |                 |        |  |      |  |        | 
|-------------------------------------------- |  | --------------- | ------ |  | ---- |  | ------ | 
|                                             |  | As at March 31, |       
|                                             |  | 2012            |        |  | 2011 | 
|Not later than 1 year                        |  |                 | 13,728 |  |      |  | 59,409 | 
|Later than 1 year and not later than 5 years |  |                 | 12,821 |  |      |  | 20,346 | 
|Later than 5 years                           |  |                 |       |  |      |  |       | 
|                                             |  |                 |        |  |      |  |        | 
|Total minimum lease commitments              |  |                 | 26,549 |  |      |  | 79,755 | 
|                                             |  |                 |        |  |      |  |        | 

Rent expense for the current year aggregated to Rs. 44,273 (2011: Rs. 59,979) and is included in the
occupancy expense line item on the consolidated statements of income.

c) 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 exposure would be restricted only to the extent of amounts receivable from the exchange and would arise only if the exchange had previously exhausted its resources. However, based on its experience, the company expects the risk of loss
to be remote.



|28. | Capital commitment
|--- | ------------------

Estimated amount of contract (net of advances) remaining to be executed on capital account and not provided for is Rs. 400 (March 31, 2011: Rs. 314)



|29. | Related party transactions
|--- | --------------------------

The share capital of MF is held jointly by MF Global Overseas Limited and Sify Technologies Limited. The ultimate holding company of MF Global Sify is MF Global Holdings Limited.



|a) | Related party relationship
|-- | --------------------------



|                                                               |  |                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Related parties where control exists:                         
|                                                               | 
|Nature of relationship                                         |  | Related party                                                                                                                                                                                                                                                                                                       
|Holding enterprises:                                           |  | MF Global Overseas Limited                                                                                                                                                                                                                                                                                          
|                                                               | 
|Ultimate Holding company:                                      |  | MF Global Holdings Limited                                                                                                                                                                                                                                                                                          
|                                                               | 
|Party having substantial interest:                             |  | Sify Technologies Limited                                                                                                                                                                                                                                                                                           
|                                                              
|Other related parties with whom transactions have taken place:
|                                                               | 
|Nature of relationship                                         |  | Related party                                                                                                                                                                                                                                                                                                       
|Subsidiary Companies:                                          |  | MF Global Commodities India Private Limited                                                                                                                                                                                                                                                                         
|                                                               |  | MF Global Middle East DMCC                                                                                                                                                                                                                                                                                          
|                                                               | 
|Fellow subsidiary Companies:                                   |  | MF Global India Private Limited                                                                                                                                                                                                                                                                                     
|(where transactions exist)                                     |  | MF Global Holdings HK Limited
MF Global Hong Kong Limited MF Global Australia
Limited MF Global Singapore Limited
MF Global Finance & Investment Services India Private Limited MF Global Centralised Services India Private Limited MF Global UK Limited
MF Global Inc (DE) MF Global Futures Trust
Company Limited
|                                                               | 
|Key management personnel:                                      |  | Mr. Vineet Bhatnagar                                                                                                                                                                                                                                                                                                
|                                                               |  | Mr. Rajendra Bhambhani                                                                                                                                                                                                                                                                                              
|                                                               |  | Mr. Randy MacDonald (resigned
w.e.f. November 28, 2011)                                                                                                                                                                                                                                                             
|                                                               |  | Michael Charles Blomfield
(appointed w.e.f. June 22, 2011 and resigned w.e.f. November 28, 2011                                                                                                                                                                                                                     
|                                                               |  | Abizer Diwanji (appointed
w.e.f. November 28, 2011)                                                                                                                                                                                                                                                                 



191



---

##### Table of Contents

|b) | Transactions involving services
|-- | -------------------------------



|                               |  |                      |        |  |      |  |        |      |  |  |         |  
|------------------------------ |  | -------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------- | -
|                               |  | Year ended March 31, |       
|                               |  | 2012                 |        |  | 2011 |  |        | 2010 | 
|Services provided by MF to :   |  |                      |        |  |      |  |        |      |  |  |         |  
|                               |  |                      |       
|Holding Companies              |  |                      |        |  |      |  |        |      |  |  |         |  
|Reimbursement of expenses      |  |                      | 549    |  |      |  |       |      |  |  | 539     |  
|                               |  |                      |       
|Fellow subsidiary Companies    |  |                      |        |  |      |  |        |      |  |  |         |  
|Referral fees                  |  |                      | 48,449 |  |      |  | 57,750 |      |  |  | 51,162  |  
|Research fees                  |  |                      | 173    |  |      |  |        |      |  |  |         |  
|Brokerage income               |  |                      | 18,673 |  |      |  | 5,333  |      |  |  |         |  
|Reimbursement of expenses      |  |                      | 3,676  |  |      |  | 5,165  |      |  |  | 5,646   |  
|                               |  |                      |        |  |      |  |        |      |  |  |         |  
|                               |  |                      | 71,520 |  |      |  | 68,248 |      |  |  | 57,347  |  
|                               |  |                      |        |  |      |  |        |      |  |  |         |  
|Services received by MF from : |  |                      |        |  |      |  |        |      |  |  |         |  
|                               |  |                      |       
|Holding Companies              |  |                      |        |  |      |  |        |      |  |  |         |  
|Bank guarantee commission      |  |                      |       |  |      |  | 72     |      |  |  | 497     |  
|Insurance premium              |  |                      |       |  |      |  |       |      |  |  | (17,567 | )
|                               |  |                      |       
|Fellow subsidiary Companies    |  |                      |        |  |      |  |        |      |  |  |         |  
|Lease line charges             |  |                      |        |  |      |  |        |      |  |  |         |  
|IB commission expense          |  |                      | 4,001  |  |      |  | 4,691  |      |  |  | 2,006   |  
|Interest expense               |  |                      | 956    |  |      |  | 1,562  |      |  |  | 888     |  
|Membership & subscription      |  |                      | 2,197  |  |      |  | 6,368  |      |  |  | 3,266   |  
|                               |  |                      |        |  |      |  |        |      |  |  |         |  
|                               |  |                      | 7,154  |  |      |  | 12,693 |      |  |  | (10,910 | )
|                               |  |                      |        |  |      |  |        |      |  |  |         |  
|Loan (taken) and repaid (Net)  |  |                      | 5,300  |  |      |  | (5,300 | )    |  |  | 383,700 |  



|c) | Key management compensation
|-- | ---------------------------



|                                                |  |                      |         |  |      |  |         |      |  |  |        | 
|----------------------------------------------- |  | -------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------ | 
|                                                |  | Year ended March 31, |        
|                                                |  | 2012                 |         |  | 2011 |  |         | 2010 | 
|Salaries and other short-term employee benefits |  |                      | 138,362 |  |      |  | 122,410 |      |  |  | 71,361 | 
|Other long-term benefits (Co-investment plan)   |  |                      |        |  |      |  |        |      |  |  | 2,208  | 
|Share-based payments                            |  |                      |        |  |      |  |        |      |  |  | 19,653 | 
|                                                |  |                      |         |  |      |  |         |      |  |  |        | 
|                                                |  |                      | 138,362 |  |      |  | 122,410 |      |  |  | 93,222 | 
|                                                |  |                      |         |  |      |  |         |      |  |  |        | 



|d) | Year-end balances arising from transactions involving services
|-- | --------------------------------------------------------------



|                                                                |  |  |        |  |  |  |         | 
|--------------------------------------------------------------- |  |  | ------ |  |  |  | ------- | 
|Due To Related Parties                                          |  |  |        |  |  |  |         | 
|MF Global Holdings Ltd.                                         |  |  | 36,985 |  |  |  | 32,857  | 
|MF Global UK Ltd.                                               |  |  | 33,662 |  |  |  | 57,953  | 
|MF Global Inc. DE                                               |  |  | 9,220  |  |  |  | 6,372   | 
|MF Global Holdings USA Inc.                                     |  |  | 2,308  |  |  |  | 2,014   | 
|MF Global Singapore Pte Ltd.                                    |  |  | 206    |  |  |  | 1,028   | 
|MF Global Holdings HK Ltd.                                      |  |  | 243    |  |  |  |        | 
|MF Global Finance and Investment Services India Private Limited |  |  |       |  |  |  | 53,000  | 
|MF Global Australia Limited                                     |  |  | 143    |  |  |  | 125     | 
|                                                                |  |  |        |  |  |  |         | 
|                                                                |  |  | 82,767 |  |  |  | 153,349 | 
|                                                                |  |  |        |  |  |  |         | 
|Due from Related Parties                                        |  |  |        |  |  |  |         | 
|MF Global Inc. DE                                               |  |  | 256    |  |  |  | 179     | 
|MF Global Mauritius Pvt. Ltd.                                   |  |  | 153    |  |  |  | 1,116   | 
|MF Global Singapore Pte Ltd.                                    |  |  | 5,014  |  |  |  | 1,243   | 
|MF Global Holdings HK Ltd.                                      |  |  |       |  |  |  | 109     | 
|MF Global HK Ltd.                                               |  |  | 308    |  |  |  | 269     | 
|MF Global UK Ltd.                                               |  |  | 6,953  |  |  |  | 7,765   | 
|MF Global Futures Trust Company Limited                         |  |  | 13     |  |  |  |        | 
|MF Global India Pvt. Ltd.                                       |  |  | 1,550  |  |  |  | 1,153   | 
|MF Global FXA Securites Limited                                 |  |  | 231    |  |  |  | 200     | 
|                                                                |  |  |        |  |  |  |         | 
|                                                                |  |  | 14,478 |  |  |  | 12,034  | 
|                                                                |  |  |        |  |  |  |         | 



192



---

##### Table of Contents

| | 29.1. | As stated in Note  1, MF Global Holdings Ltd (the ultimate parent company) filed voluntary petitions for relief under Chapter 11 of the United States
Bankruptcy Code. Meanwhile, the affairs of other affiliated Company of MF Global Group are being managed by the Administrator / Liquidators.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company has reconciled outstanding receivables / payables with the related parties on monthly basis in the ERP system till September 30, 2011. In view of the above petitions, the Company has not
obtained confirmation of outstanding balances with related parties as at March 31, 2012. There were no significant transactions with such parties after the date of filing such petitions. Under these circumstances, the Financials Statements have
been prepared from the book balances which are subject to reconciliation / confirmations from the respective parties. Moreover, MF Global Overseas Limited and Sify Technologies Ltd. have entered into Share Purchase Agreements (SPA) with an
international brokerage house for acquiring its 70.15% and 29.85% respectively. In respect of such acquisition, the Company has received necessary regulatory approvals and acquisition is expected to be completed shortly.

For and on behalf of the Board

Vineet Bhatnagar

Managing Director



193



---

##### Table of Contents

|ITEM19. | Exhibits
|------- | --------



|       |    |     |             |                                                                                                                                                                                                                                                                                                   
|------ | -- | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |    |     | Description
|       |   
|       | 1  | .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)                                                                                                                                                                  
|       |   
|       | 4  | .11 |             | Subscription agreement dated October 22, 2010 between Sify Technologies Limited and Mr Ananda Raju Vegesna, Representative of the entities and affiliates in India of Mr Raju
Vegesna, Chief Executive and Managing Director of the company. (16)                                                 
|       |   
|       | 4  | .12 |             | Amendment to subscription agreement dated September 7, 2011between Sify Technologies Limited and Mr Ananda Raju Vegesna, Representative of the entities and affiliates in India of Mr
Raju Vegesna, Chief Executive and Managing Director of the company. (17)                                    
|       |   
|       | 8  | .1  |             | List of Subsidiaries. (18)                                                                                                                                                                                                                                                                        
|       |   
|       | 11 | .1  |             | Code of Conduct and Conflict of Interest Policy (6)                                                                                                                                                                                                                                               



194



---

##### Table of Contents

|     |  |                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------
|     | 
|12.1 |  | Rule 13a-14(a) Certification of Chief Executive Officer                                           
|     | 
|12.2 |  | Rule 13a-14(a) Certification of Chief Financial Officer                                           
|     | 
|13.1 |  | Section 1350 Certification of Chief Executive Officer                                             
|     | 
|13.2 |  | Section 1350 Certification of Chief Financial Officer                                             
|     | 
|15.1 |  | Consent of ASA & Associates in respect of the Sify Technologies Limited (18)                      
|     | 
|15.2 |  | Consent of KPMG in respect of the Sify Technologies Limited (18)                                  
|     | 
|15.3 |  | Consent of Price Waterhouse in respect of the MF Global Sify Securities India Private Limited (18)
|     | 
|15.4 |  | Consent of ASA & Associates in respect of MF Global Sify Securities India Private Limited (18)    



|(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.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------

|(16) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 15, 2010 and incorporated herein by reference.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(17) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on September 8, 2011 and incorporated herein by reference.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(18) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on August 13, 2012 and incorporated herein by reference.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------



195



---

##### Table of Contents

SIGNATURES

The company hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.



|                      |  |  |  |                           |  |                        
|--------------------- |  |  |  | ------------------------- |  | -----------------------
|                      |  |  |  | SIFY TECHNOLOGIES LIMITED
|                      |  |  | 
|                      |  |  |  | By:                       |  | /s/ Kamal Nath         
|                      |  |  |  | Name:                     |  | Kamal Nath             
|                      |  |  |  | Title:                    |  | Chief Executive Officer
|                      |  |  | 
|                      |  |  |  | By:                       |  | /s/ M P Vijay Kumar    
|                      |  |  |  | Name:                     |  | M P Vijay Kumar        
|Date: August 24, 2012 |  |  |  | Title:                    |  | Chief Financial Officer



196