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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
 Or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
 For the fiscal year ended March 31, 2010.
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
 For the transition period from  to
 o
    
    SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
 Date of event requiring this shell Company report
 Commission file number 000-27663
 Sify Technologies Limited
 (Exact name of Registrant as specified in its charter)
 (Translation at Registrants name into English)
 (Jurisdiction of incorporation or organization)
 (Address of principal executive office)
 (Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act
 Title of each class
    
    Name of each Exchange on which registeredAmerican Depository Shares, each represented by 
one Equity Share, par value Rs.10 per share
    
    Nasdaq Global 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 registeredNone
    
    Not Applicable
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
  (Title of class)
    o No þ
  o No þ
   Yes o þ
  o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
  US GAAP o
    
    International Financial Reporting Standards as issued by the 
International Accounting Standard Board þ
    
    Other o
  Yes o þ




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Table of Contents
 Item
    
    PageCurrency of Presentation and Certain Defined Terms
    
    
    3Forward-Looking Statements
    
    
    4PART IItem 1. Identity of Directors, Senior Management and Advisers
    
    
    5Item 2. Offer Statistics and Expected Timetable
    
    
    5Item 3. Key Information
    
    
    5Item 4. Information on the Company
    
    
    27Item 4A. Unresolved Staff Comments
    
    
    43Item 5. Operating and Financial Review and Prospects
    
    
    43Item 6. Directors, Senior Management and Employees
    
    
    64Item 7. Major Shareholders and Related Party Transactions
    
    
    70Item 8. Financial Information
    
    
    73Item 9. The Offer and Listing
    
    
    75Item 10. Additional Information
    
    
    76Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    92Item 12. Description of Securities Other Than Equity Securities
    
    
    92PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    93Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    93Item 15. Controls and Procedures
    
    
    94Item 16A. Audit Committee Financial Expert
    
    
    97Item 16B. Code of Ethics
    
    
    97Item 16C. Principal Accountant Fees and Services
    
    
    97Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    98Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    98Item 16F. Change in Registrants Certifying Accountant
    
    
    98Item 16G. Corporate Governance
    
    
    98PART IIIItem 17. Financial Statements
    
    
    99Item 18. Financial Statements
    
    
    99Item 19. Exhibits
    
    
    194Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2Exhibit 15.1Exhibit 15.2Exhibit 15.3
   2




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




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Forward-Looking Statements
   4




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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers.
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 Selected Financial Data
 Summary of Consolidated Financial Data
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Sify Technologies Limited
Consolidated Statement of Income
(In thousands of Rupees, except share data
and as otherwise stated)
 Year ended March 31,
    
    
    Year endedMarch 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ inthousands,except share andper share data(Note 1)Revenue
    
    
    6,710,188
    
    
    
    6,162,161
    
    
    
    6,006,215
    
    
    
    5,447,347
    
    
    
    148,652Cost of goods sold and services rendered
    
    
    (4,096,538
    )
    
    
    (3,613,349
    )
    
    
    (3,419,122
    )
    
    
    (2,939,329
    )
    
    
    (90,751
    )Other income
    
    
    131,789
    
    
    
    89,105
    
    
    
    46,152
    
    
    
    66,320
    
    
    
    2,920Selling, general and administrative expenses
    
    
    (2,482,415
    )
    
    
    (2,813,425
    )
    
    
    (2,434,715
    )
    
    
    (2,094,971
    )
    
    
    (54,994
    )Depreciation and amortization
    
    
    (656,797
    )
    
    
    (498,872
    )
    
    
    (394,337
    )
    
    
    (463,780
    )
    
    
    (14,550
    )Impairment loss on intangibles including goodwill
    
    
    (47,269
    )
    
    
    (15,200
    )
    
    
    
    
    
    
    
    
    
    
    (1,047
    )Income from legal settlement
    
    
    561,120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,431Profit / (loss) from operating activities
    
    
    120,078
    
    
    
    (689,580
    )
    
    
    (195,807
    )
    
    
    15,587
    
    
    
    2,661Finance income
    
    
    27,994
    
    
    
    122,565
    
    
    
    161,783
    
    
    
    154,192
    
    
    
    620Finance expenses
    
    
    (293,873
    )
    
    
    (251,660
    )
    
    
    (57,682
    )
    
    
    (25,550
    )
    
    
    (6,510
    )Net finance income / (expense)
    
    
    (265,879
    )
    
    
    (129,095
    )
    
    
    104,101
    
    
    
    128,642
    
    
    
    (5,890
    )Share of profit of equity accounted investee
(net of income tax)
    
    
    91,135
    
    
    
    64,091
    
    
    
    181,127
    
    
    
    61,030
    
    
    
    2,019Profit / (loss) before tax
    
    
    (54,666
    )
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    205,259
    
    
    
    (1,210
    )Income tax (expense) / benefit
    
    
    81,479
    
    
    
    (97,049
    )
    
    
    (63,975
    )
    
    
    66,113
    
    
    
    1,805Profit / (loss) for the year
    
    
    26,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    595Attributable to:Equity holders of the Company
    
    
    17,027
    
    
    
    (900,574
    )
    
    
    (4,696
    )
    
    
    240,841
    
    
    
    378Non-controlling interest
    
    
    9,786
    
    
    
    48,941
    
    
    
    30,142
    
    
    
    30,531
    
    
    
    21726,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    271,372
    
    
    
    595Earnings / (loss) per shareBasic earnings /(loss) per share
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.64
    
    
    
    0.01Diluted earnings/(loss) per share
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    5.63
    
    
    
    0.01
  6




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Particulars
(Rupees in thousands, except share and
per share data)
 Conveniencetranslationinto US$ inthousands,except shareand per sharedata(see note 2(Rupees in thousands, except share and
    
    March 31,
    
    
    below)per share data)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    RsBalance Sheet data:Cash and cash equivalents including restricted cash
    
    
    878,698
    
    
    
    1,710,798
    
    
    
    1,507,327
    
    
    
    3,071,157
    
    
    
    19,466Net current assets
    
    
    (46,814
    )
    
    
    (175,993
    )
    
    
    1,294,199
    
    
    
    2,435,290
    
    
    
    (1,038
    )Total assets
    
    
    9,345,824
    
    
    
    9,145,555
    
    
    
    7,710,760
    
    
    
    7,321,891
    
    
    
    207,040Total equity attributable to equity shareholders
of the Company
    
    
    4,171,092
    
    
    
    3,851,693
    
    
    
    4,694,984
    
    
    
    4,538,906
    
    
    
    92,403Cash Flow DataNet cash provided by (used in):Operating activities
    
    
    759,802
    
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    116,262
    
    
    
    16,832Investing activities
    
    
    (896,683
    )
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (708,316
    )
    
    
    (19,864
    )Financing activities
    
    
    (354,486
    )
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    847,939
    
    
    
    (7,853
    )
 Notes1.
    
    The convenience translation to U.S. Dollars was performed at the reference rate in
the City of Mumbai for cable transfers as published by Reserve Bank of India on March 31,
2010 of Rs.45.14 per $1.00, which should not be construed as a representation that those
Indian rupee or U.S. dollar amounts could have been, or could be, converted into U.S.
dollars or Indian rupees, as the case may be, at this rate or at all.2.
    
    Reference to shares and per share amounts refer to our equity shares. Our outstanding
equity shares include equity shares held by a depository underlying our ADSs. Effective
September 24, 2002, one ADS represented one equity share.  7




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Exchange Rates
   High
    
    
    LowMonth
    
    Rs.
    
    
    Rs.August 2010
    
    
    47.09
    
    
    
    45.95July 2010
    
    
    47.33
    
    
    
    46.46June 2010
    
    
    47.28
    
    
    
    45.64May 2010
    
    
    47.57
    
    
    
    44.56April 2010
    
    
    44.73
    
    
    
    44.33March 2010
    
    
    46.02
    
    
    
    44.94
  PeriodFiscal Year Ended
    
    end
    
    
    Average
    
    
    High
    
    
    LowMarch 31
    
    Rs.
    
    
    Rs.
    
    
    Rs.
    
    
    Rs.2010
    
    
    45.14
    
    
    
    47.36
    
    
    
    50.53
    
    
    
    44.942009
    
    
    50.95
    
    
    
    45.91
    
    
    
    52.06
    
    
    
    39.892008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.482007
    
    
    43.10
    
    
    
    45.12
    
    
    
    46.83
    
    
    
    42.78
  Capitalization and indebtedness
  Reasons for the offer and use of proceeds
   8




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Risk Factors
  Risks Related to our Company and Industry
 We may incur losses in the future and we may not achieve or maintain profitability.
  Our profits may be impacted consequent to the withdrawal of incentive for exports availed under the
Serve from India Scheme on account of changes in Indian Government policy.
     The global economic environment, increased pricing pressure and decreased utilization rates could
negatively impact our revenues and operating results.
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Currency fluctuations may affect the results or our operations or the value of our ADSs.
     We may encounter legal confrontations as the Information Technology Act 2000 lacks specificity as
to issues on online processes and/or Internet.
  Intense competition in our businesses could prevent us from improving our profitability and we may
be required to further modify the rates we charge for our services in response to new pricing
models introduced by new and existing competition which would significantly affect our revenues.
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Margin squeeze may affect the results or our operations.
  Procuring power at lower costs for data centers by the competitors may put us at a disadvantage in
terms of pricing for our data center operations.
  We have added a number of new lines of business in the past years, including the operation and
licensing of public Internet cafés, as well as the provision of broadband services, security
services, e-learning software development services, managed network services and infrastructure management
services. It is therefore difficult to evaluate our historical results of operations.
  
    
    continue to develop and upgrade our technology;
 
    
    maintain and develop strategic relationships with business partners;
 
    
    offer compelling online services and content;
  Despite the our best efforts to optimize costs, our future operating results could fluctuate in
part because our expenses are relatively fixed in the short term while future revenues are
uncertain, and any adverse fluctuations could negatively impact the price of our ADSs.
  
    
    the range of corporate network/data services provided by us and the usage thereof
by our customers;
    
    the number of subscribers to our ISP services and the prevailing prices charged.
    
    advertising revenue generated by our online portal services.
    
    the timing and nature of any agreements we enter into with strategic partners of
our corporate network/data services division;
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
    
    services, products or pricing policies introduced by our competitors;
    
    capital expenditure and other costs relating to our operations;
    
    the timing and nature of our marketing efforts;
    
    our ability to successfully integrate operations and technologies from any
acquisitions, joint ventures or other business combinations or investments;
    
    the introduction of alternative technologies; and
    
    technical difficulties or system failures affecting the telecommunication
infrastructure in India, the Internet generally or the operation of our websites.
   Security breaches could damage our reputation or result in liability to us.
   We face a competitive labor market for skilled personnel and therefore are highly dependent on our
existing key personnel and on our ability to hire additional skilled employees.
  The failure to keep our technical knowledge confidential could erode our competitive advantage.
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If we fail to maintain an effective system of internal control over financial reporting, we may not
be able to accurately report our financial results or prevent or detect fraud. As a result, current
and potential investors could lose confidence in our financial reporting, which could harm our
business and have an adverse effect on our stock price.
  Internal Control  Integrated Framework
  Compliance with new and changing corporate governance and public disclosure requirements adds
uncertainty to our compliance policies and increases our costs of compliance.
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We may inadvertently fail to comply with local laws of other countries in connection with the
negotiation and execution of operational agreements.
  If there is an adverse outcome resulting in cash payout in excess of the insurance coverage in the
class action litigation that has been filed against us, it will impact our financial condition.
   Our financial results are impacted by the financial results of entities that we do not control.
  Our inter-city network is leased from other service providers and is dependent on their quality and
availability.
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The legal system in India does not protect intellectual property rights to the same extent as the
legal system of the United States, and we may be unsuccessful in protecting our intellectual
property rights.
    Our current infrastructure and its scalability may not accommodate increased use while maintaining
acceptable overall performance.
  Our increasing work with governmental agencies may expose us to additional risks.
  
    
    Such projects may be subject to a higher risk of reduction in scope or termination than
other contracts due to political and economic factors such as changes in government,
pending elections or the reduction in, or absence of, adequate funding;
 
    
    Terms and conditions of government contracts tend to be more onerous than other
contracts and may include, among other things, extensive rights of audit, more punitive
service level penalties and other restrictive covenants. Also, the terms of such contracts
are often subject to change due to political and economic factors;
 
    
    Government contracts are often subject to more extensive scrutiny and publicity than
other contracts. Any negative publicity related to such contracts, regardless of the
accuracy of such publicity, may adversely affect our business or reputation;
 
    
    Participation in government contracts could subject us to stricter regulatory
requirements, which may increase our cost of compliance; and
 
    
    Such projects may involve multiple parties in the delivery of services and require
greater project management efforts on our part. Any failure in this regard may adversely
impact our performance.
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We do not plan to pay dividends in the foreseeable future.
  Risks Related to the ADSs and Our Trading Market
 The interests of our significant shareholder,Mr Raju Vegesna, our Chairman and Chief Executive
Officer may differ from your interests.
  
    
    altering our Articles of Association;
    
    issuing additional shares of capital stock, except for pro rata issuances to existing
shareholders;
    
    commencing any new line of business; and
    
    commencing a liquidation.
   An investor in our ADSs may not be able to exercise preemptive rights for additional shares and may
thereby suffer dilution of such investors equity interest in us.
   ADS holders may be restricted in their ability to exercise voting rights.
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The market price of our ADSs has been and may continue to be highly volatile.
  
    
    perception of the level of political and economic stability in India;
    
    actual or anticipated variations in our quarterly operating results;
    
    announcement of technological innovations;
    
    conditions or trends in the corporate network/data services, Internet and electronic
commerce industries;
    
    the competitive and pricing environment for corporate network/data services and Internet
access services in India and the related cost and availability of bandwidth;
    
    the perceived attractiveness of investment in Indian companies;
    
    acquisitions and alliances by us or others in the industry;
    
    changes in estimates of our performance or recommendations by financial analysts;
    
    market conditions in the industry and the economy as a whole;
    
    introduction of new services by us or our competitors;
    
    changes in the market valuations of other Internet service companies;
    
    announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
    
    our failure to integrate successfully our operations with those of any acquired
companies;
    
    additions or departures of key personnel; and
    
    other events or factors, many of which are beyond our control.
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We may not be able to maintain our NASDAQ Global Market listing due to non filing and/or late
filing of periodic reports.
     An active or liquid market for the ADSs is not assured.
  The future sales of securities by us or our Company or existing shareholders may reduce the price
of our ADSs.
  The current capital and credit market conditions may adversely affect our access to capital, the
cost of capital, and ability to execute our business plan.
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Restriction by the Government of India to issue further ADRs may badly affect our ability to access
to fresh capital for funding our ongoing and future expansion plans.
  We may be required to list our Equity Shares on an Indian stock exchange. If we were to list our
Equity Shares on an Indian stock exchange, conditions in the Indian securities market may require
compliance with new and changing regulations framed by Securities Exchange Board of India, listing
requirements of stock exchange, corporate governance, accounting and public disclosure requirements
which might add uncertainty to our compliance policies and increases our costs of compliance
    Risks Related to Investments in Indian Companies
  Changes in the policies of the Government of India could delay the further liberalization of the
Indian economy and adversely affect economic conditions in India generally, which could impact our
business and prospects.
  Regional conflicts in South Asia could adversely affect the Indian economy, disrupt our operations
and cause our business to suffer.
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Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.
  The markets in which we operate are subject to the risk of earthquakes, floods and other natural
disasters.
  We are subject to foreign investment restrictions under Indian law that limit our ability to
attract foreign investors which, together with the lack of a public market for our equity shares,
may adversely impact the value of our ADSs.
   The Government of India may change its regulation of our business or the terms of our license to
provide Internet access services, Voice over Internet Protocol (VoIP) and VPN services without our
consent, and any such change could decrease our revenues and/or increase our costs, which would
adversely affect our operating results.
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In the event that the Government of India or the government of another country changes its tax
policies in a manner that is adverse to us, our tax expense may materially increase, reducing our
profitability.
  Risks Related to the Internet Market in India
  The success of our business depends on the acceptance of the Internet in India, which may be slowed
or halted by high bandwidth costs and other technical obstacles in India.
  We may fail to exploit the market for WiMax services because of lack of access to spectrum.
   We may be compelled to surrender the Spectrum that was allotted to us earlier.
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We may lose our broadband services to retail segment to competitors, and we do not control the
delivery of broadband services to the homes of our customers.
   Our connectivity business may stagnate with a declining contribution.
  We may not be able to retain and acquire customers for our data centers.
   Our datacenters may not be competitive enough in terms of green features.
  We may lose relevance and revenues if we do not position our business models in line with current
and future technology trends.
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We may fail to augment our skills and capability to best manage our services over Internet Protocol
and data networks.
  It may not be possible for us to retain our brand equity if we do not resort to huge investments
for brand development.
  We may not meet the selection criteria set for high value contracts by the Governments.
  The success of our business depends on the development of our capability.
  We may fail to offer end-to-end managed services to sustain our position.
  We may not get repeat corporate orders to optimize the capacity utilisation.
  Absence of policy support will hamper Internet and Data Services.
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Constant improvement of technology standards/ skills and evolving tools and applications are
essential to sustain our position in Remote management of IT infrastructure.
   The continued recession in the United States affects sales of our e-Learning and IMS services.
  Emergence of Enterprise Software Suites may hamper our growth in eLearning stream.
  The success of our strategy depends on our ability to keep pace with technological changes.
  We may not be able to grow our business if online advertising in our markets does not expand.
  
    
    our ability to attract and retain advertisers at profitable rates in light of
intense competition;
 
    
    our ability to generate and continue to grow a large community of users with
demographics attractive to advertisers;
 
    
    advertisers acceptance of the Internet as an effective and sustainable medium;
 
    
    the effectiveness of our advertising delivery, tracking and reporting systems; and
 
    
    our ability to adapt, including technologically, to new forms of Internet
advertising
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If we do not continue to develop and offer compelling content, products and services, our ability
to attract new customers or maintain the engagement of our existing consumers could be adversely
affected.
   The viability of Cyber café services depends on the success of the franchisees to generate or
sustain adequate profitability.
  Our cybercafés may not fetch premium prices due to competition from unorganized sector.
  Heightened security concerns for cybercafés issued by the governments will discourage franchisees
to operate such cybercafés.
  The expected growth for broadband services to retail segment may come down.
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Our pricing for broadband services to retail segment may not be competitive.
  The high cost of accessing the Internet in India limits our pool of potential customers and
restricts the amount of revenues that our Internet access services division might generate.
  The success of our business depends on the acceptance and growth of electronic commerce in India,
which is uncertain, and, to a large extent, beyond our control.
  
    
    inconsistent quality of service;
    
    the need to deal with multiple and frequently incompatible vendors;
    
    inadequate legal infrastructure relating to electronic commerce in India;
    
    a lack of security of commercial data, such as credit card numbers; and
    
    very few Indian companies accepting credit card numbers over the Internet.
  Risks Related to the Internet
 We are now subject to quality of service (QOS) guidelines issued by TRAI. Failure to comply with
one or more guidelines may expose us into fines/penalties.
  
    
    All Internet service providers shall provide adequate information to subscribers
regarding Internet/broadband services being offered and marketed by them.
 
    
    All Internet service providers shall provide information regarding contention
ratios or the number of users competing for the same bandwidth, adopted by them to
provide Internet/broadband service in their tariff plans submitted to TRAI, manual of
practice, call centers and on their websites
 
    
    All Internet service providers shall quarterly publish contention ratio for
different Internet/broadband services on their website to facilitate subscribers to
take informed decision.
 
    
    All Internet service providers must use the contention ratios better than
specified ratios for different services to ensure sufficient bandwidth for providing
good quality of service to their subscribers.
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We may be liable to third parties for information retrieved from the Internet.
  Our business may not be compatible with delivery methods of Internet access services developed in
the future.
  Our service offerings may not be compatible with industry standards developed in the future.
  
 Item 4 . Information on the Company
 History and Development
   27




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sifycorp.com
  www.sify.com
 Online Online Online Online
 iways iways
   Initial Public Offering and Subsequent Financing Transactions
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Acquisition of Minority Interest in Subsidiary
    29




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Principal Capital Expenditures
  Investment Strategy
  Sify Software Limited (formerly Sify Networks Private Limited)
   Globe Travels, USA.
   India World Communication Limited
  Sify International Inc
   30




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Business Overview
  
    
    Corporate Network/Data Services. We offer end-to-end network, hosting, application and
security services that provide our corporate customers with comprehensive Internet and private
network access.
Our services enable our corporate customers to offer a full range of business-to-business and
electronic commerce related services. We provide NLD (National Long Distance) and ILD
(International Long Distance) services through our network. We carry voice traffic, both
national and international, using the IP back-bone and deliver voice traffic to Direct
Inter-connect Operators. We also provide managed infrastructure services and managed security
services in all aspects of infrastructure services, network security and hosting, with digital
certificates based authentication service and VPN solutions. We have launched system integration
service during the year 2009-10. We are the first service provider in India to be ISO 9001:2000
certified in network operations, data center operations and customer relationship management.
 
    
    Internet Access Services. We offer public Internet access to consumers through a retail chain
of e-ports (formerly iway)cybercafés. We also have agreements with certain cable television
operators through which we offer Internet access through cable. As of March 31, 2010, we had
approximately 0.3 million retail Internet access subscribers.
 
    
    Online Portal Services. We operate online portals, such as www.sify.com,
www.samachar.com and www.sifymax.in, that function as principal entry points
and gateway for accessing the Internet by providing useful web-related services and links. We
also offer related content sites specifically tailored to Indian interests worldwide.
 
    
    Others.We facilitate web based learning for various organizations by digitizing and
uploading content to facilitate the same. We also provide remote infrastructure management
services such as Data center management, Network management, Security management and Desktop
management to support the clients from offshore command centers, on a 24 x 7 x 365 basis.
 www.sify.com www.sifymax.in www.samachar.com Sify.com SifyMax.in
       31




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Industry Overview
 Development of the Internet
 Special Communications Needs of Businesses
 The Opportunity in India
     Sify Business Model
   32




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
    
    End-to-end network solutions for business customers.We provide our business
customers with a comprehensive range of Internet, connectivity, security and
consulting, hosting and managed service solutions complemented by a broad base of
web-based business applications. Our corporate services range from dedicated Internet
access, virtual private networks, security, web implementation, electronic commerce
solutions and web hosting. Our end-to-end solutions enable our corporate customers to
address their networking and data communication needs efficiently without having to
assemble products and services from different value-added resellers, Internet service
providers and information technology firms.
 
    
    National private Internet protocol network backbone and Wireless delivery on
the last mile. We operate a large national Internet protocol data network in India. As
of March 31, 2010, we owned and operated 607 points of presence serving more than 550
towns and cities across India. Our network provides the platform to deliver Internet
access and the backbone to provide a full range of corporate network/data services to
consumers. A significant portion of our last mile delivery for corporates, and almost
the entire iway cybercafé network and hi-speed / broadband delivery to homes, is on
the wireless mode, thereby enabling us to implement and deliver superior services
compared to the wire line medium.
 
    
    Internet content and electronic commerce websites customized for the Indian
market. We view the Indian market as a series of specific market segments with unique
cultural and topical interests, rather than an extension of a homogeneous, worldwide
Internet market. We have assembled a team of India-based employees familiar with the
local culture, language and business environments in our markets to develop Internet
content and electronic commerce websites tailored for the Indian market. We regularly
incorporate new and original third-party content suited to our local and regional
audiences to enhance our customers online experience and to attract new users both
within India and abroad. As a result of our local market knowledge, we are able to
place contents in our websites which will attract more users to our websites and to
create brand awareness for our SifyOnlineaccess service.
 
    
    Managed Infrastructure services and Managed Security Services. We have
customer engagements in all aspects of infrastructure services, networks security and
hosting, with digital certificates based authentication service. We have experience in
providing information assurance and compliance certification in accordance with
frameworks such as Committee of Sponsoring Organizations of the Treadway Commission
(COSO) / Control Objectives for Information and related Technology (COBIT). We believe
that our managed infrastructure and security services utilise our experience and skill
sets to provide constant value to our customers, better service levels and reduced
costs. We constantly look at ways to efficiently manage customer assets remotely thus
providing focused superior service at lower cost.
 Strategy
  
    
    Invest in the continued enhancement and expansion of our network
infrastructure to support customer growth, enter into new markets and accommodate
increased customer usage.We intend to continue to increase the capacity and
geographic reach of our network in order to support subscriber growth, enter new
markets and accommodate increased customer usage. We are committed to using proven
technologies and equipment and to providing superior network performance. We have
deployed asynchronous transfer mode, or ATM, switches on nine points of presence along
our network. The rest of our network is based on Internet Protocol, or IP, and we are
the first Indian service provider to have made our network Multi Protocol Label
Switching (MPLS) compliant. As of March 31, 2010, we have acquired adequate capacity
of bandwidth lines, all from major telecommunications companies, which ensures that
there is an assured supply of bandwidth service being provided to Sifys customers
without any disruptions. We have also leased intercity links from multiple suppliers
including BSNL, Bharti, Reliance and Power Grid corporation, such that each one of
our nodes is accessible from at least two other nodes, if not by two long distance
operators. We believe that as the size and capacity of our network infrastructure
grows, its structure and national coverage will create economies of scale. Being
vendor neutral, we are able to procure bandwidth in a cost effective manner. Over
the past five years we have designed and built four data centers in Mumbai, Chennai,
Bangalore and Airoli. We intend to invest in additional data centers, and are
currently building a data center at Noida near New Delhi.
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
    
    Increase penetration in our existing markets by expanding awareness of the
Sify brand name to capitalize on our first mover advantage in India.We intend to
capitalize on our first-to-market advantage in India to establish national service and
a brand name in advance of other private competitors. As of March 31, 2010, we had
approximately 0.3 million retail Internet subscribers and 1,227 operative cybercafés,
of which 6 were owned by us and 1,221 were franchised. Approximately 99% of these
e-portsare on broadband, which provides the user with significantly faster access
speeds. Our marketing strategy includes print and radio advertising, direct mailing
campaigns targeting personal computer owners and operating cybercafés. We are also
actively promoting our broadband services to homes through cable television operators.
As of March 31, 2010, we have more than 1,967 cable television operators across 203
cities in India. We believe that increased focus by GOI on delivery of broadband
services, availability of broadband content, reduced cost of personal computers
coupled with increased purchasing capacity of the middle class in India will drive
this business forward in the future. We are also continuously working on better
alternative technologies to overcome the last mile challenges and to offer superior
connectivity to homes.
 
    
    Expand our services with new technologies to enable our customers to use the
Internet more effectively.We continually seek to expand the breadth of our service
offerings with new technologies. Our cybercafés prominently display the Sify and
SifyOnlinebrands and offer a
full range of our Internet connectivity services. We have previously introduced a
number of other services, including VoIP, video conferencing, e-mail designed for
regional Indian dialects, a user customized portal site and micro-payments.
 
    
    Provide more value added services by leveraging on the rapid growth of
wireless Internet and mobile services in India and strengthen our Internet portal with
more content tailored to Indian interests worldwide.Our portals www.sify.comand
www.samachar.com, function as initial gateways to the Internet, the users starting
point for web browsing and other Internet services, for our consumer Internet service
provider subscribers and cybercafé users. We believe that our portals are media rich
and user friendly, and the portals are interactive websites offering hyperlinks to a
wide variety of websites and services, including our own websites. Our websites cater
to a variety of Indian interests within and outside of India. To achieve our goal of
developing the premier Internet portal focused on the Indian market, we intend to
continue to expand and improve the quality of www.sify.com, and are developing
additional content oriented towards topical and cultural interests of Indians
worldwide.
 
    
    Expand our customer distribution channels through strategic alliances to take
advantage of the sales and marketing capabilities of our strategic partners.We intend
to continue to expand our customer acquisition channels, for both our consumer
Internet access and corporate network/data services. We have arrangements with
leading personal computer manufacturers to bundle our SifyOnlineInternet access
service with the sale of their personal computers in India.
 
    
    Pursue selective strategic investments, alliances and acquisitions to expand
our customer base, increase utilization of our network and add new technologies to our
service mix.We believe that our growth can be supplemented by selective acquisitions
of complementary businesses. We may seek to expand our market presence in our
corporate network business through the acquisition of web hosting, data center, web
implementation and/or systems integration companies serving India, the United States
or other markets. We will also consider acquisitions of Internet service providers
that have a significant or growing customer base in our current or targeted markets.
 
    
    Expand into international markets for providing managed network services.Our
network and application level support can be provided remotely with a minimum of
on-site presence. We are seeking to provide these services to international markets.
The tools utilized to provide these services were developed in-house on Linux/open
source platforms, and we plan to upgrade these tools in the future to meet customer
requirements. We expect our expertise in network management, to enable us to perform
these services to international customers at lower costs. We also intend to provide
managed security solutions, including monitoring and vulnerability assessment, in
addition to managed firewall and intrusion detection services.
 
    
    Superior end-user performance and customer support.We believe that we
provide a high level of customer service, network performance and technical support to
maximize customer satisfaction. A significant number of our employees are engaged in
our customer service or technical support departments, which operate 24-hours-a-day,
seven-days-a-week. Our network engineers continually monitor network traffic and
congestion points to deliver high quality consistent network performance. Our backend
processes are ISO 9001:2000 compliant for network operations, data center operations
and customer care. Our strategy of providing superior network performance and customer
service is designed to result in significant customer growth from referrals and
industry recognition.
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Service Offerings
 Corporate network/data services
  
    
    SiteConnect  which offers site-to-site managed MPLS-enabled IPVPN solutions for
securely connecting regional and large branch offices within India to the corporate
Intranet.
    
    GlobalSite Connect, an international site-to-site managed MPLS-enabled IPVPN solution,
is used for securely connecting international branch offices to the corporate offices. It
provides connectivity anywhere in the world through Sifys alliances and partnerships with
global overseas service providers such as Global Crossing (GC), Asia Net.Com (ANC), and
PCCW Global to name a few.
    
    ExpressConnect, which offers a premium range of high-performance Internet bandwidth
solutions for connecting regional offices, branch offices and remote locations to the
corporate network. These solutions complement our SiteConnect range of MPLS enabled IPVPN
solutions, provide high-speed bandwidth in those situations where basic connectivity and
cost are the top concerns.
    
    RoamConnect, is our national and international remote access VPN, which is used for
securely connecting employees, while they are traveling, to the corporate intranet.
RoamConnect features single number access to SifyNet from anywhere in the country and
provides access from anywhere in the world through Sifys alliances with overseas service
providers such as Verizon, IPASS and Fiberlink.
    
    PartnerConnect is our remote access VPN offering, for providing secure and restricted
dial-up access to business partners such as dealers, distributors and suppliers to the
corporate extranet.
   Application Services
  35




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##### Table of Contents



System integration, Security and Assurance Services.
 Data Centers
 Cloud service.
 On Demand Storage.
 Digital Certification
 Remote Management Services
  VOIP Services.
 ILD Voice & hubbing,
  36




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##### Table of Contents



Internet Access Services iway)
 iway
 Public Internet Access. iway iway iways)
 iways) iway)
 iway
 Sify e-port. iways sify e-port e-port Xpress
 Voice over Internet Protocol s to
 VoIP for home: Sifytalk sifytalk
 Broadband/High Speed Internet to Home:
 Broadband Internet for SOHO / SMB Category:
  37




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##### Table of Contents



Internet Access Services
  Online Portal Services www.sify.com, www.samachar.com
  
    
    The finance channel of Sify http://sify.com/finance/ covers the entire
spectrum of equity markets, business news, insurance, mutual funds, loans, SME news
and a host of paid and free financial services.
 
    
    The sports channel http://sify.com/sports/ covers the entire gamut of Indian and
international sports with special focus on cricket. Comscore has recently acknowledged
Sify Sports as the fastest growing sports site (horizontal) in India with 345% growth
YOY.
 
    
    We also host WWE updates as a standalone service http://wwe.sify.com/ for users.
 
    
    The food channel www.bawarchi.com focuses on Indian recipes and cooking and is
especially popular among non-resident Indians (NRIs) audiences with over 90% of its
content being user generated
 
    
    Our NRI news portal, www.samachar.com, focuses on Indian news and allows
NRIs to stay connected to India by aggregating news from across all popular newspapers
and other news portals. This portal provides a range of news in English and five
Indian languages. Apart from Samachar we have another India targeted news channel
http://sify.com/news/ which offers national and international general, political and
offbeat news.
 
    
    The online shopping mall http://shopping.sify.com/, stocks products from Indias
leading brands and products. We believe that it offers competitive prices and a secure
and convenient method of payment. Users can buy using their credit or debit card, pay
cash on delivery or send a check.
 
    
    Movies channel on Sify http://sify.com/movies/ is one of the key channels which
offer updates from Bollywood/ Hollywood and all regional film industries. The content
includes movie reviews, industry news, video galleries, photo galleries, downloads
(photos) etc.
 
    
    Games channel of Sify http://games.sify.com/ offers multiple scoring non scoring
games. Games include cricketing games, racing games, football
specific games etc.
  38




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##### Table of Contents



Corporate Customers
  Customer Service and Technical Support
  Sales and Marketing
 Corporate Offerings
 Consumer Offerings
  Technology and Network Infrastructure
   
    
    Internet access services,
 
    
    IP/ MPLS Virtual private networks,
 
    
    Internet based Voice services
 Geographic Coverage
  39




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##### Table of Contents



Network Architecture
   Network Operations Center
 Data Centre Infrastructure.
 Competition
 General
 Corporate Network/Data Services
 Internet Access Services
   40




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Online Portal Services
  
    
    Larger production and technical staff;
    
    Greater name recognition and larger marketing budgets and resources; and
    
    Substantially greater financial, technical and other resources.
  Intellectual Property
     Government Regulation
    41




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##### Table of Contents




    
    make recommendations on (i) the need and timing for the introduction of new
service providers, (ii) the terms and conditions of licenses granted to service
providers, (iii) the revocation of licenses for non-compliance, (iv) measures to
facilitate competition and promote efficiency in the operation of telecommunications
services so as to facilitate growth in such services, (v) technological improvements
in the services provided by service providers, (vi) the type of equipment to be used
by service providers, (vii) measures for the development of telecommunications
technology and the telecommunications industry and (viii) the efficient management of
the available spectrum;
 
    
    discharge the following functions: (i) ensure compliance of the terms and
conditions of licenses, (ii) fix the terms and conditions of interconnectivity between
service providers, (iii) ensure technical compatibility and effective interconnection
between service providers, (iv) regulate revenue sharing arrangements between service
providers, (v) establish standards of quality of service, (vi) establish time periods
for providing local and long distance telecommunications circuits between service
providers, (vii) maintain and keep for public inspection a register of interconnect
agreements and (viii) ensure effective compliance of universal service obligations;
 
    
    levy fees and other charges at such rates and in respect of such services as
may be determined by regulation; and
 
    
    perform such other functions as may be entrusted to it by the Government of
India or as may be necessary to carry out the provisions of the Telecom Regulatory
Authority of India Act.
  
    
    to call on service providers to furnish information relating to their
operations;
 
    
    to appoint persons to make official inquiries;
 
    
    to inspect the books of service providers; and
 
    
    to issue directives to service providers to ensure their proper functioning.
      42




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Organizational Structure
  Property, Plant and Equipment
  
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  Operating Results
  Liquidity and Capital Resources
   43




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Research and Development
  Trend Information
  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   Corporate network/data services
  Internet access services
   Online portal services and content offerings
   44




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Other services-Infrastructure Management Services
  Other services-eLearning Services
    Revenues
 Corporate network/data services
  Internet access services
  Online portal services and content offerings
 www.sifymall.com
 Other services
   45




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Expenses
 Cost of goods sold and services rendered
 Corporate network/data services
  Internet access services
  Online portal services and content offerings
  Selling, general and administrative expenses
  Depreciation and amortization
  Impairment
   46




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pro rata basis.
 Inventories
  Deferred tax
   Stock compensation expense
   47




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Results of Operations
  Fiscal2010
    
    
    2009
    
    
    2008%
    
    
    %
    
    
    %Revenues
    
    
    100
    
    
    
    100
    
    
    
    100Cost of goods sold and services rendered
    
    
    61.05
    
    
    
    58.64
    
    
    
    56.92Other income/(expense)
    
    
    1.96
    
    
    
    1.44
    
    
    
    0.76Selling, general and administrative expenses
    
    
    36.99
    
    
    
    45.65
    
    
    
    40.53Depreciation and amortization expenses
    
    
    9.79
    
    
    
    8.34
    
    
    
    6.57Impairment loss on intangibles including goodwill
    
    
    0.70
    
    
    
    0.25
    
    
    
    Income from legal settlement
    
    
    8.36
    
    
    
    
    
    
    
    Profit /(loss) from operating activities
    
    
    1.79
    
    
    
    (11.19
    )
    
    
    (3.26
    )Finance income
    
    
    0.42
    
    
    
    1.99
    
    
    
    2.69Finance expenses
    
    
    (4.38
    )
    
    
    (4.08
    )
    
    
    (0.96
    )Net finance income/(Loss)
    
    
    (3.96
    )
    
    
    (2.09
    )
    
    
    1.53Share of profit of equity accounted investee
    
    
    1.36
    
    
    
    1.04
    
    
    
    3.01Profit before tax
    
    
    (0.81
    )
    
    
    (12.24
    )
    
    
    1.48Income tax (expense)/ benefit
    
    
    1.21
    
    
    
    (1.57
    )
    
    
    (1.06
    )Net profit/(loss) for the year
    
    
    0.40
    
    
    
    (13.81
    )
    
    
    0.42
 Results of year ended March 31, 2010 compared to year ended March 31, 2009
 Revenues
     48




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Other income
 Income from legal settlement.
 Cost of goods sold and services rendered
    49




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Selling, general and administrative expenses
 Depreciation and Amortization expenses
 Impairment loss:
   
    
    Cash flows were projected based on a 5 year business plan. Cash flows were arrived at as an
excess of revenue over the related costs for the same period after giving due effect to
non-cash charges and finance charges, if applicable, together with changes in working capital.
 
    
    Management believes that this forecast period is justified due to the long term nature of
the travel business.
 
    
    The projected revenue growth included in the cash flow projections was 10% during the
projected period. Management believes that this growth percentage was reasonable and is in
line with the average trend of the industry.
 
    
    The projected increase in cost was 5% for call center cost and 10% for administrative
costs.
 
    
    A pre-tax discount rate of 22.26% was applied in determining the recoverable amount of the
cash generating unit. The discount rate was estimated based on an industry average weighted
average cost of capital.
 
    
    In view of the expected long term market conditions, a terminal year end growth rate of 2%
is estimated.
  50




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##### Table of Contents



Net finance income
 Share of profit of investment in associate
 Income tax expense
 Profit
 Results of year ended March 31, 2009 compared to year ended March 31, 2008
 Revenues
     51




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Other income
 Cost of goods sold and services rendered
    52




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Selling, general and administrative expenses
 Depreciation and Amortization expenses
 Impairment loss:
 Net finance income
 Share of profit of investment in associate
 Income tax expense
  53




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Foreign Exchange Fluctuations and Forwards
  Liquidity and capital resources
  2010
    
    
    2009
    
    
    2008
    
    
    2010Rs. in 000
    
    
    Rs. in 000
    
    
    Rs. in 000
    
    
    US $ in 000Profit / (loss) before tax
    
    
    26,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    595Other adjustments for non-cash items
    
    
    952,486
    
    
    
    856,486
    
    
    
    298,076
    
    
    
    21,101Income taxes paid
    
    
    (164,455
    )
    
    
    (108,560
    )
    
    
    (168,426
    )
    
    
    (3,643
    )Net decrease (increase) in working capital
    
    
    (55,042
    )
    
    
    (258,173
    )
    
    
    (1,058,940
    )
    
    
    (1,221
    )Net cash from / (used in) operating activities
    
    
    759,802
    
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    16,832Net cash from / (used in) investing activities
    
    
    (896,683
    )
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (19,864
    )Net cash from / (used in) financing activities
    
    
    (354,486
    )
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    (7,853
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    (2,934
    )
    
    
    945
    
    
    
    (98
    )
    
    
    (65
    )Net increase / (decrease) in cash and cash
equivalents
    
    
    (491,367
    )
    
    
    (576,920
    )
    
    
    (2,181,369
    )
    
    
    (10,885
    )
       54




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Impairment of
Assets.
 Capital expenditure
  Research and development
   55




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Trends
  Off-balance sheet arrangements
  Contractual obligations
  Payments due by period (Rs 000s)Less
    
    
    
    
    
    
    
    
    
    
    More than 5Contractual Obligations
    
    Total
    
    
    than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong Term Debt Obligations
    
    
    449,424
    
    
    
    
    
    
    
    396,169
    
    
    
    53,255
    
    
    
    Short Term Borrowings
    
    
    952,846
    
    
    
    952,846
    
    
    
    
    
    
    
    
    
    
    
    Finance Lease Obligations
    
    
    201,317
    
    
    
    46,086
    
    
    
    101,284
    
    
    
    53,947
    
    
    
    Non-cancellable Operating Lease obligations
    
    
    1,608,509
    
    
    
    119,871
    
    
    
    197,404
    
    
    
    210,486
    
    
    
    1,080,748Proposed Lease Obligations
    
    
    2,423,554
    
    
    
    22,850
    
    
    
    251,400
    
    
    
    269,408
    
    
    
    1,879,896Europe India Gateway Obligations
    
    
    184,908
    
    
    
    184,908
    
    
    
    Purchase Obligations
    
    
    30,552
    
    
    
    30,552Total
    
    
    5,851,110
    
    
    
    1,357,113
    
    
    
    946,257
    
    
    
    587,096
    
    
    
    2,960,644
 Recent Accounting Pronouncements
 (i) Standards early adopted by the Company
 
    
    IFRS 3 (Revised), Business Combinations,as amended, is applicable for annual periods
beginning on or after July 1, 2009. This standard was early adopted by the Group as at April
1, 2009. Business Combinations consummated after April 1, 2009 will be recorded under this
standard. IFRS 3 (Revised) primarily requires the acquisition-related costs to be recognized
as period expenses in accordance with the relevant IFRS. Costs incurred to issue debt or
equity securities are required to be recognized in accordance with IAS 39. Consideration,
after this amendment, will include fair values of all interests previously held by the
acquirer. Re-measurement of such interests to fair value would be carried out through net
profit in the statement of comprehensive income. Contingent consideration is required to be
recognized at fair value even if not deemed probable of payment at the date of acquisition.IFRS 3 (Revised) provides an explicit option on a transaction-by-transaction basis, to measure
any Non-controlling interest (NCI) in the entity acquired at fair value of their proportion of
identifiable assets and liabilities or at full fair value. The first method will result in a
marginal difference in the measurement of goodwill from the existing IFRS 3; however the
second approach will require recording goodwill on NCI as well as on the acquired controlling
interest. Upon consummating a business in future, the company is likely to adopt the first
method for measuring NCI.
    
    IAS 27, as amended, is applicable for annual periods beginning on or after July 1, 2009.
Earlier adoption is permitted provided IFRS 3 (Revised) is also early adopted. This standard
was early adopted by the Company as at April 1, 2009. It requires a mandatory adoption of
economic entity model which treats all providers of equity capital as shareholders of the
entity. Consequently, a partial disposal of interest in a subsidiary in which the parent
company retains control does not result in a gain or loss but in an increase or decrease in
equity. Additionally purchase of some or all of the non-controlling interests is treated as
treasury transaction and accounted for in equity and a partial disposal of interest in a
subsidiary in which the parent company loses control triggers recognition of gain or loss on
the entire interest. A gain or loss is recognized on the portion that has been disposed off
and a further holding gain is recognized on the interest retained, being the difference
between the fair value and carrying value of the interest retained. This Standard requires
an entity to attribute their share of net profit / loss and reserves to the non-controlling
interests even if this results in the non-controlling interests having a deficit balance.
Consistent with the provisions of IFRS 3 (Revised), the Group accounted for its acquisition
of 26% non-controlling interest in Sify Communications Limited on June 26, 2009 as an equity
transaction. Also refer note 40.
  56




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(ii) Recently adopted accounting pronouncements
 
    
    The Company adopted IAS 1 (revised), Presentation of Financial Statements, effective
April 1, 2009. The revision aims to improve users ability to analyze and compare the
information given in financial statements. IAS 1 sets overall requirements for the
presentation of financial statements, guidelines for their structure and minimum
requirements for their content. The revisions include non-mandatory changes in the titles of
some of the financial statements to reflect their function more clearly (for example, the
balance sheet is renamed as statement of financial position). The revised IAS 1 resulted in
consequential amendments to other standards and interpretations. The Group has applied
revised IAS 1 Presentation of Financial Statements (2007), which has became effective as of
April 1, 2009. As a result, the Group presents in the consolidated statement of changes in
equity all owner changes in equity, whereas all non-owner changes in equity are presented in
the consolidated statement of comprehensive income. Furthermore, the Group has included two
statements to display all items of income and expense recognized during the period i.e., a
Statement of Income and a Statement of Comprehensive Income. Comparative information has
been re-presented so that it also is in conformity with the revised standard. Since the
change in accounting policy only impacts presentation aspects, there is no impact on
earnings/ loss per share.
 
    
    IFRIC 18  Transfer of assets from customersdefines the treatment for property, plant
and equipment transferred by customers to companies or for cash received to be invested in
property, plant and equipment that must be used to either connect the customer to a network
or to provide the customer with ongoing access to a supply of goods or services or to both.
The item of property, plant and equipment is to be initially recognized by the Company at
fair value with a corresponding credit to revenue. If an ongoing service is identified as a
part of the agreement, the period over which revenue will be recognized for that service
would be determined by the terms of the agreement with the customer. If the period is not
clearly defined, then revenue should be recognized over a period no longer than the useful
life of the transferred asset used to provide the ongoing service. This interpretation is
applicable prospectively to transfers of assets from customers received on or after July 1,
2009. The Company has adopted this interpretation prospectively for all assets transferred
after July 1, 2009. There has been no impact on the Groups consolidated financial
statements as a result of the adoption of this interpretation.
 
    
    In March 2009, the Amendments to IFRS 7 Financial Instruments disclosure, amended
certain disclosure requirements in the standard. As a result, entities are required to
classify fair value measurements for financial instruments measured at fair value in the
statement of financial position, using a three level fair value hierarchy that reflects the
significance of inputs used in the measurements. In addition, the amendments enhance
disclosure requirements on the nature and extent of liquidity risks to which an entity is
exposed. The Amendments to IFRS 7 apply for annual periods beginning on or after January 1,
2009 and provides an exception in the first year of application for providing comparative
information.
 (iii) New standards and interpretations not yet adopted
  
    
    Improvements to IFRS- In April 2009, the IASB issued Improvements to IFRSs  a
collection of amendments to twelve International Financial Reporting Standards  as part
of its program of annual improvements to its standards, which is intended to make
necessary, but non-urgent, amendments to standards that will not be included as part of
another major project. The latest amendments were included in exposure drafts of
proposed amendments to IFRS published in October 2007, August 2008, and January 2009.
The amendments resulting from this standard mainly have effective dates for annual
periods beginning on or after January 1, 2010, although entities are permitted to adopt
them earlier. In May 2010 the IASB issued Improvements to IFRS 2010,which comprises 11
amendments to 7 standards. Effective dates, early application and transitional
requirements are addressed on a standard-by-standard basis. The majority of the
amendments will be effective January 1, 2011. The Company is evaluating the impact,
these amendments will have on the Groups consolidated financial statements.
  57




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
    
    In November 2009, the IASB issued IFRS 9, Financial instruments, to introduce
certain new requirements for classifying and measuring financial assets. IFRS 9 divides
all financial assets that are currently in the scope of IAS 39 into two classifications
 those measured at amortized cost and those measured at fair value. The standard along
with proposed expansion of IFRS 9 for classifying and measuring financial liabilities,
de-recognition of financial instruments, impairment, and hedge accounting will be
applicable from the year 2013, although entities are permitted to adopt earlier. The
Company is evaluating the impact which this new standard will have on the Groups
financial statements.
 
    
    In November 2009, the IASB issued IFRIC 19, Extinguishing Financial Liabilities with
Equity Instruments; to introduce requirements when an entity renegotiates the terms of
a financial liability with its creditor and the creditor agrees to accept the entitys
 shares and other equity instruments to settle the financial liability fully or
partially. This interpretation is effective from annual periods beginning on or after
July 1, 2010.
 
    
    In October 2009, the IASB issued Classification of Rights Issue  Amendment to IAS 32
Financial Instruments: Presentationwith an effective date of February, 2010.
 
    
    In November 2009, the IASB revised IAS 24 Related Party Disclosureswith an effective
date of January, 2010.
 
    
    In November 2009, the IASB issued Prepayments of a Minimum Funding Requirement 
Amendments to IFRIC 14 :IAS19  the Limit on a Defined Benefit Asset, Minimum Funding
Requirement and their Interaction, with an effective date of January1, 2011.
 Critical Accounting Policies
   Revenue Recognition
  
    
    Corporate network/data services, which provides Internet, connectivity, security and
consulting, hosting, voice and managed service solutions;
 
    
    Internet access services, from homes and through cybercafes;
 
    
    Online portal services and content offerings; and
 
    
    Other services such as development of e-learning software
   58




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##### Table of Contents




    
    the amount of revenue can be measured reliably;
 
    
    it is probable that the economic benefits will flow to the seller;
 
    
    the stage of completion at the balance sheet date can be measured reliably; and
 
    
    the costs incurred, or to be incurred, in respect of the transaction can be measured reliably.
  (i) Corporate network/data services
       59




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##### Table of Contents



(ii) Internet access services
       
    
    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.
   60




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##### Table of Contents



(iii) Online portal services
    (iv) Other services
  Accounting Estimates
   Allowance for accounts receivable
   Business Combinations, Goodwill and Intangible Assets
   61




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##### Table of Contents



Estimated Useful Lives of Property, Plant And Equipment
 Property, Plant and Equipment
 Impairment
 Financial assets:
  Financial assets measured at amortized cost:
  Available-for-sale financial assets:
  Loans and receivables:
   62




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##### Table of Contents



Reversal of impairment loss:
  Non-financial assets:
   pro rata basis.
 Reversal of impairment loss:
  Income taxes:
      63




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##### Table of Contents



Item 6. Directors, Senior Management and Employees
 Directors and Executive Officers
  Name
    
    Age
    
    DesignationRaju Vegesna
    
    
    50
    
    
    Chairman, CEO and Managing DirectorAnanda Raju Vegesna
    
    
    50
    
    
    Executive DirectorC B Mouli (1)
    
    
    63
    
    
    Director, Chairman & Financial Expert of Audit CommitteeS K Rao (1) (2) (3)
    
    
    66
    
    
    DirectorT H Chowdary (2) (3)
    
    
    78
    
    
    Director & Chairman of Compensation & Nominating CommitteesP S Raju (2)
    
    
    56
    
    
    DirectorS R Sukumara (1) (2) (3)
    
    
    65
    
    
    DirectorM P Vijay Kumar
    
    
    40
    
    
    Chief Financial OfficerC V S Suri
    
    
    50
    
    
    Chief Operating OfficerPijush Kanti Das
    
    
    56
    
    
    President  Corporate AffairsP J Nath
    
    
    48
    
    
    Executive President  Enterprise SolutionsNatesh Mani
    
    
    50
    
    
    President  Consumer Infrastructure BusinessBaskar R Sayyaparaju
    
    
    43
    
    
    President  International BusinessAravind Mathur (4)
    
    
    46
    
    
    Chief Architect  Global Infrastructure ServicesVenkata Rao Mallineni
    
    
    42
    
    
    Head  Portals and Consumer MarketingPranesh Babu
    
    
    44
    
    
    Chief Technology OfficerC R Rao
    
    
    50
    
    
    Vice President  Head HR & AdministrationDavid Appasamy (4)
    
    
    52
    
    
    Chief Communications OfficerAjith K N (4)
    
    
    41
    
    
    Head  HR
 (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Compensation Committee.(3)
    
    Member of the Nominating Committee.(4)
    
    Resigned as of June 30, 2010.     64




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.
             65




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Director Compensation
  Officer Compensation
  Summary Compensation Table(Rs. Million)Name
    
    Salary
    
    
    BonusC V S Suri
    
    
    1.01
    
    
    
    Bhaskar R Sayyaparaju
    
    
    6.20
    
    
    
    M P Vijay Kumar
    
    
    6.34
    
    
    
    P J Nath
    
    
    6.99
    
    
    
    Natesh Mani
    
    
    3.19
    
    
    
    Pijush Kanti Das
    
    
    3.40
    
    
    
    0.60Venkat Rao Mallineni
    
    
    3.52
    
    
    
    Pranesh Babu K
    
    
    3.35
    
    
    
    0.72C R Rao
    
    
    3.14
    
    
    
    Arvind Mathur
    
    
    7.66
    
    
    
    David Appasamy
    
    
    2.99
    
    
    
    0.32Ajith K N
    
    
    2.80
    
    
    
    0.22
   66




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Rs. inName
    
    millionC V S Suri
    
    
    0.08Bhaskar R Sayyaparaju
    
    
    0.30M P Vijay Kumar
    
    
    0.33P J Nath
    
    
    0.33Natesh Mani
    
    
    0.17Pijush Kanti Das
    
    
    0.17Venkat Rao Mallineni
    
    
    0.17Pranesh Babu K
    
    
    0.15C R Rao
    
    
    0.18Arvind Mathur
    
    
    0.28David Appasamy
    
    
    0.14Ajith K N
    
    
    0.13
       67




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Board Composition
  
    
    at least two-thirds of our directors shall be subject to re-election by our
shareholders; and
 
    
    at least one-third of our directors who are subject to re-election shall be up
for re-election at each annual meeting of our shareholders.
       Board Committees
  Audit Committee
         68




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Compensation Committee
         Nominating Committee
        Employees
  Stock Ownership
   69




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Equity SharesBeneficially OwnedBeneficial Owner
    
    Number
    
    
    PercentRaju Vegesna *
    
    
    13,902,860
    
    
    
    26.06
    %T. H. Chowdary
    
    
    
    
    
    
    C B Mouli
    
    
    
    
    
    
    P S Raju
    
    
    
    
    
    
    S K Rao
    
    
    
    
    
    
    S R Sukumara
    
    
    
    
    
    
    Ananda Raju Vegesna
    
    
    14,530,000
    
    
    
    27.24
    %
 *
    
    In addition to the above, Mr Raju Vegesna beneficially owns 578,191 shares through his Family
Trust, as a Co Trustee and has voting power. Including this, Raju Vegesna beneficially holds 27.14%
of the issued capital of the Company. M/s T H Chowdary, C B Mouli, P S Raju, S K Rao and S R
Sukumara do not hold any shares in the Company.  Employee Stock Option Plan
    
 Item 7. Major Shareholders and Related Party Transactions
 Principal Shareholders
     70




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Equity SharesBeneficially ownedBeneficial Owner
    
    Number
    
    
    PercentInfinity Capital Ventures, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025
    
    
    13,902,860
    
    
    
    26.06Vegesna Family Trust, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA, 90025
    
    
    578,191
    
    
    
    1.08Infinity Satcom Universal Private Limited, Visakhapatnam
    
    
    14,530,000
    
    
    
    27.24
 Details of significant change in the percentage ownership held by the major shareholders:
 2007-08
    
    
    2008-09
    
    
    2009-10Name of the shareholder
    
    No. of shares
    
    
    %
    
    
    No. of shares
    
    
    %
    
    
    No. of shares
    
    
    %Infinity Capital Ventures, LP, USA
    
    
    17,902,860
    
    
    
    41.81
    
    
    
    17,902,860
    
    
    
    41.81
    
    
    
    13,902,860
    
    
    
    26.06Vegesna Family Trust, USA
    
    
    578,191
    
    
    
    1.35
    
    
    
    578,191
    
    
    
    1.35
    
    
    
    578,191
    
    
    
    1.08Infinity Satcom Universal Private
Limited *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,530,000
    
    
    
    27.24
  United States Shareholders
  Host country Shareholders
  Control of Registrant
    
    
    altering our Articles of Association;
 
    
    issuing additional shares of capital stock, except for pro rataissuances to existing
shareholders;
 
    
    commencing any new line of business; and
 
    
    commencing a liquidation.
  71




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Forfeiture of equity shares issued in a private placement
    Sale of shares in a private transaction
  Merger of Sify Communications Limited with Sify Technologies Limited
 th
   72




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Issuance of Equity Shares on private placement:
   Related Party Transactions
     Loans to employees
  
 Item 8 . Financial Information
 Financial Statements
   73




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##### Table of Contents



Legal Proceedings
      
    
    On October 12, 2009, Department of Telecommunications (DOT) raised a demand on Sify
Technologies for INR 14 million after correcting the arithmetical error in the Assessment
letter issued by the DoT.
 
    
    On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary
merged with Sify Technologies Limited) for INR 26 million.
  74




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##### Table of Contents




    
    Certain items of income have been considered by DOT as licensed activities for payment
of licensee fee as the information was not available to DOT.
 
    
    Certain items like other income, interest on deposits, gain on foreign exchange
fluctuation, profit on sale of assets, provision written back has been considered by DOT as
income eligible for licensed activities as against the Companys claim that they are not
liable for license fee.The Company has responded to the above said demand notices stating that the above demands are
not tenable as the demands were not in accordance with the Telecom Disputes Settlement &
Appellate Tribunal (TDSAT) Order which
has clarified in its Order that the items of income which are liable for license fee and
items of income on which license fees are not liable to be paid. However the TDSAT Order has
been challenged in Supreme Court by DoT and Associations of service providers and finality
would be arrived only after the decision of the Court. The Company currently pays license fee
in accordance with the TDSAT Order and Sify believes that it has adequate legal defenses for
these demands and the ultimate outcome of these actions will not have a material adverse
effect on Sify.
 
 3.3 GHz band
  Dividends
   
 Item 9 . The Offer and Listing
 Trading Markets
   75




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##### Table of Contents



Price History
  Prior Fiscal Years
 High
    
    
    LowFiscal year ended
    
    $
    
    
    $March 31, 2010
    
    
    1.76
    
    
    
    1.59March 31, 2009
    
    
    5.30
    
    
    
    0.42March 31, 2008
    
    
    10.47
    
    
    
    4.00March 31, 2007
    
    
    14.78
    
    
    
    7.43March 31, 2006
    
    
    14.58
    
    
    
    3.81
 Quarters of Prior Fiscal Years
 High
    
    
    LowFiscal year ended March 31, 2009
    
    $
    
    
    $First Quarter
    
    
    5.41
    
    
    
    3.73Second Quarter
    
    
    3.89
    
    
    
    1.60Third Quarter
    
    
    2.05
    
    
    
    0.42Fourth Quarter
    
    
    1.82
    
    
    
    0.48
 High
    
    
    LowFiscal year ended March 31, 2010
    
    $
    
    
    $First Quarter
    
    
    1.74
    
    
    
    1.66Second Quarter
    
    
    2.26
    
    
    
    2.17Third Quarter
    
    
    1.75
    
    
    
    1.70Fourth Quarter
    
    
    1.76
    
    
    
    1.59
 Most recent six months
 High
    
    
    LowMonth
    
    Rs.
    
    
    Rs.October 2010
    
    
    2.81
    
    
    
    1.95September 2010
    
    
    2.97
    
    
    
    1.25August 2010
    
    
    1.50
    
    
    
    1.22July 2010
    
    
    1.50
    
    
    
    1.30June 2010
    
    
    1.35
    
    
    
    1.30May 2010
    
    
    1.44
    
    
    
    1.38April 2010
    
    
    1.69
    
    
    
    1.66March 2010
    
    
    1.76
    
    
    
    1.59
 
 Item 10. Additional Information
    76




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Memorandum and Articles of Association
   77




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##### Table of Contents



1.
    
    To develop and provide Internet service, Internet Telephony, Infrastructure based services,
Virtual Private Network and other related data, voice and video services, wide area
communication network, value added services on the network, lease or other transfers of
network, software, peripherals and related products, and to provide marketing services.
 2.
    
    To provide security products for corporate, carry on the business of consulting,
software and hardware, integrated platform(s) for the e-commerce solutions, applications,
information
technology, security and all other kinds of technology solutions or services,
and to acquire, maintain, operate, manage and undertake technology and infrastructure for this
purpose.
 3
    
    To develop, service & sell/lease data based through direct or electronic media, to
develop a wide area communication network of sell / lease the network or provide value added
services on the network to develop, service, buy / sell computers, software, peripherals and
related products to provide marketing services rising direct as well as electronic media;
 4
    
    To undertake the designing and development of systems and applications software either for
its own use or for sale in India or for export outside India and to design and develop such
systems and application software for or on behalf of manufacturers, owners and users of
computer systems and digital / electronic equipments in India or elsewhere in the world;
 5
    
    To set up and run electronic data processing centres and to carry on the business of data
processing, word processing, software consultancy, system studies, management consultancy,
techno-economic feasibility studies of projects, design and development of management
information systems, share / debenture issues management and / or registration and
share/debenture transfer agency;
 6.
    
    To undertake and execute feasibility studies for Computerisation, setting up of all kind
of computer systems and digital/electronic equipments and the selection, acquisition and
installation thereof whether for the Company or its customers or other users;
 7
    
    To conduct, sponsor or otherwise participate in training programmes, courses, seminar
conferences in respect of any of the objects of the Company and for spreading or imparting the
knowledge and use of computers and computer programming languages including the publication of
books, journals, bulletins, study / course materials, circulars and news-letters; and to
undertake the business as agents, stockist, distributors, franchise holders or otherwise for
trading or dealing in computer systems, peripherals, accessories, parts and computer
consumables, continuous and non-continuous stationery, ribbons and other allied products and
things and standard software packages.
 8
    
    To conduct e-commerce for sale of all kinds of products and services through direct or
electronic media as well as on and off line e-commerce including travel related services,
buying and selling of products and services / merchandise, software, data information etc., in
India and abroad.
  78




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##### Table of Contents



Board of Directors
  (a)
    
    no director of the Company can vote on a proposal, arrangement or contract in
which he is materially interested;(b)
    
    the directors of the Company cannot vote on a proposal in the absence of an
independent quorum for compensation to themselves or their body;(c)
    
    each of our directors is entitled to receive a sitting fee not exceeding
Rs.20,000 for every meeting of the Board of Directors and each meeting of a Committee of
the Board of Directors, as well as all traveling and out-of-pocket expenses incurred in
attending such meetings;(d)
    
    the directors are empowered to borrow moneys through board meetings up to the
prescribed limit and beyond that with the approval of the shareholders through a General
Meeting;(e)
    
    retirement of directors are determined by rotation and not based on age limit;
and(f)
    
    no director is required to hold any qualification shares.
 For additional information, please see Item 6. Director, Senior Management and Employees -
Board Composition, -Board Committees and -Director Compensation, and -Officer Compensation
of this Annual Report on Form 20-F .
 Dividends
      79




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##### Table of Contents




    
    the rate of dividend to be declared may not exceed 10% of its paid up capital or the
average of the rate at which dividends were declared by the Company in the prior five years,
whichever is less;
 
    
    the total amount to be drawn from the accumulated profits earned in the previous years
and transferred to the reserves may not exceed an amount equivalent to 10% of its paid up
capital and free reserves, and the amount so drawn is to be used first to set off the losses
incurred in the fiscal year before any dividends in respect of preference or equity shares
are declared; and
 
    
    the balance of reserves after withdrawals shall not fall below 15% of its paid up
capital.
 Voting Rights
    
    
    amendments of the memorandum of association to alter the objects of the Company and
to change the registered office of the Company under section 146 of the Indian Companies
Act;
 
    
    the issuance of shares with differential rights with respect to voting, dividend or
other provisions of the Indian Companies Act;
 
    
    the sale of the whole or substantially the whole of an undertaking or facilities of
the Company;
 
    
    providing loans, extending guarantees or providing a security in excess of the limits
allowed under Section 372A of the Indian Companies Act;
 
    
    varying the rights of the holders of any class of shares or debentures;
 
    
    the election of a director by minority shareholders; and
 
    
    the buyback of shares.
 Bonus Shares
   80




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Consolidation and Subdivision of Shares
  Preemptive Rights and Issue of Additional Shares
  Annual General Meetings of Shareholders
   2010 Annual General Meeting
   
    
    Adopted of audited financials for the year ended March 31, 2010 as per Indian
GAAP.
 
    
    Reappointment of Messers CB Mouli and PS Raju as directors.
 
    
    Appointment of M/s CKS Associates as statutory auditors in the place of M/s B S R
& Co.
 
    
    Reappointment of Mr Anand Raju Vegesna as executive director.
 
    
    Enhancement of borrowing powers of the company.
 
    
    Authority to create security on the assets of the company.
 
    
    Enhancement of authorised share capital.
 
    
    Issue of further shares to the promoters group.
  81




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##### Table of Contents



Limitations on the Rights to Own Securities
  Register of Shareholders; Record Dates; Transfer of Shares
      Disclosure of Ownership Interest
  Audit and Annual Report
 www.sifycorp.com
  82




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Company Acquisition of Equity Shares
    Liquidation Rights
  Redemption of Equity Shares
  Discriminatory Provisions in Articles
  Alteration of Shareholder Rights
   Provisions on Changes in Capital
   83




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##### Table of Contents



Material Contracts
  Exchange Controls
 General
  Foreign Direct Investment
   Subsequent Transfers
   Issue of shares by Indian companies under ADR / GDR
   84




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##### Table of Contents



Takeover Code
  Fungibility of ADSs
    Transfer of ADSs and Surrender of ADSs
  Government of India Approvals
  
    
    the ADSs must be offered at a price determined by the lead manager of such offering;
 
    
    all equity holders may participate;
 
    
    the issuer must obtain special shareholder approval; and
 
    
    the proceeds must be repatriated to India within one month of the closure of the
issue.
  85




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##### Table of Contents



Ownership Restrictions
      Voting Rights of Deposited Equity Shares Represented by ADSs
    86




---



##### Table of Contents



Taxation
 Indian Taxation
 General
  Residence
   Taxation of Distributions
  87




---



##### Table of Contents



Minimum Alternate Tax
 Fringe Benefits Tax
 Taxation of Capital Gains
    Withholding Tax on Capital Gains
  88




---



##### Table of Contents



Buy-back of Securities
 Stamp Duty and Transfer Tax
 Wealth Tax
 Gift Tax and Estate Duty
 Service Tax
 Income Tax Matters
  Material United States Federal Tax Consequences
   89




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##### Table of Contents



Ownership of ADSs
 Dividends
     90




---



##### Table of Contents



Sale or Exchange of Equity shares or ADSs
 Estate Taxes
 Passive Foreign Investment Company
 
    
    75% or more of its gross income for the taxable year is passive income; or
 
    
    on a quarterly average for the taxable year by value (or, if it is not a publicly
traded corporation and so elects, by adjusted basis) 50% or more of its assets produce or
are held for the production of passive income.
   
    
    pay an interest charge together with tax calculated at maximum ordinary income rates on
excess distributions (as that term is defined in relevant provisions of the U.S. tax
laws), and on any gain on a sale or other disposition of equity shares or ADSs;
 
    
    if a qualified electing fund election is made (as that term is defined in relevant
provisions of the U.S. tax laws), include in their taxable income their pro rata share of
undistributed amounts of our income; or
 
    
    if the equity shares are marketable (as that term is defined in relevant provisions
of the U.S. tax laws), and a mark-to-market election is made, mark-to-market the equity
 shares each taxable year and recognize ordinary gain and, to the extent of prior ordinary
gain, ordinary loss for the increase or decrease in market value for such taxable year.
  Backup Withholding Tax and Information Reporting Requirements
  91




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Documents on Display
 www.sec.gov,
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 General
  Risk Management Procedures
   
 Item 12. Description of Securities Other Than Equity Securities
 
   (i)
    
    a fee not in excess of US $5.00 per 100 ADSs is charged for each
issuance of ADS upon deposit of Shares, excluding certain issuances
described below;(ii)
    
    a fee not in excess of US $5.00 per 100 ADSs is charged for each
surrender of ADSs, property and cash in exchange for the underlying
deposited securities;(iii)
    
    a fee not in excess of US $2.00 per 100 ADSs for each distribution
of cash dividend or other cash distribution pursuant to the deposit
agreement;(iv)
    
    a fee not in excess of US $2.00 per 100 ADSs for the distribution of
ADSs pursuant to stock dividends or other free distributions or an
exercise of rights; and(v)
    
    a fee not in excess of $5.00 per 100 ADSs for depositary services.
  92




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Direct and Indirect Payments by the Depositary to Sify
  Fee
    
    Amount in $USDBroker Fee
    
    
    52,837.95Call Charges
    
    
    767.05Fee for material related to our Extraordinary General Meeting
    
    
    3,342.62Internet, telephone and mail charges
    
    
    380.26Notice mailing
    
    
    904.59Printing and mailing
    
    
    14,136.86Processing Fees
    
    
    26,759.90Processing Fees for Annual meeting
    
    
    24,406.54Text Conversion charges
    
    
    900.00Balance credit available
    
    
    147.08Total amount received
    
    
    124,582.85
 
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
   93




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Item 15. Controls and procedures
 Disclosure Controls and Procedures
   Managements annual report on internal control over financial reporting
 1)
    
    Our management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our
internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board. Our internal control over
financial reporting includes those policies and procedures that:
 
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets.
 
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with applicable accounting principles, and
that our receipts and expenditures are being made only in accordance with authorizations of
our management and directors; and
 
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
  2)
    
    Management assessed the effectiveness of our internal control over financial reporting as
of March 31, 2010.
    94




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##### Table of Contents



Internal Control  Integrated Framework
 3)
    
    Our independent registered public accounting firm, KPMG, has audited the consolidated
financial statements included in this Annual Report on Form 20-F, and as part of their audit,
has issued their report, included herein, on the effectiveness of our internal control over
financial reporting as of March 31, 2010 wherein it is indicated that the Company had a
material weakness in internal controls relating to the failure of a control intended to carry
out an accounting evaluation of certain transactions relating to the purchase of goods for
onward sales.
  
    
    introduced specific policies to ensure that all transactions relating to purchase of
products for onward sales in the System Integration business are subject to a fact specific
accounting evaluation to enforce operating effectiveness.
 
    
    augment the IFRS expertise in our accounting team by imparting specific training to
evaluate the trading transactions from a Gross Versus Net reporting.
 
    
    performed an accounting evaluation of all the transactions of purchase of products for
onward sales in the Systems and noted that the accounting controls surrounding
appropriateness of the Gross versus Net reporting are operating effectively.
  95




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Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated
Framework
     Internal Control -
Integrated Framework
   
  96




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Changes in internal control over financial reporting
  
 Item 16A. Audit Committee financial expert
  
 Item 16B. Code of Ethics
  www.sifycorp.com
  
 Item 16C. Principal Accountant Fees and Services
  Fiscal year endedType of Service
    
    march 31,2010
    
    
    march 31,2009(a) Audit Fees
    
    Rs.12.45 million
    
    Rs.11.00 million(b) Audit Related Fees
    
    Nil
    
    Nil(c) Tax Fees
    
    Nil
    
    Nil(d) All Other Fees
    
    Nil
    
    Nil
   97




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##### Table of Contents



Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  
 Item 16F : Change in Registrants Certifying Accountant
     
 Item 16 G. Corporate Governance
    98




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PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
 Consolidated Statements and other Financial Information
  99




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Report of Independent Registered Public Accounting Firm
      Internal Control  Integrated Framework
  
  100




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Sify Technologies Limited
Consolidated Statement of Financial Position
 As at March 31,
    
    
    As at March 31,Note
    
    
    2010
    
    
    2009
    
    
    2010Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ thousands(Unaudited)Note 2(c)AssetsProperty, plant and equipment
    
    
    5
    
    
    
    3,452,022
    
    
    
    3,260,914
    
    
    
    76,474Intangible assets
    
    
    6
    
    
    
    129,524
    
    
    
    177,872
    
    
    
    2,869Investment in equity accounted investee
    
    
    7
    
    
    
    633,469
    
    
    
    542,901
    
    
    
    14,033Restricted cash
    
    
    8
    
    
    
    
    
    
    
    1,000
    
    
    
    Lease prepayments
    
    
    9
    
    
    
    273,911
    
    
    
    311,185
    
    
    
    6,068Other assets
    
    
    10
    
    
    
    554,358
    
    
    
    496,325
    
    
    
    12,281Deferred tax assets
    
    
    11
    
    
    
    
    
    
    
    8,524
    
    
    
    Total non-current assets
    
    
    
    
    
    
    5,043,284
    
    
    
    4,798,721
    
    
    
    111,725Inventories
    
    
    12
    
    
    
    21,488
    
    
    
    39,088
    
    
    
    476Trade and other receivables, net
    
    
    13
    
    
    
    3,195,012
    
    
    
    2,455,526
    
    
    
    70,780Prepayments for current assets
    
    
    14
    
    
    
    191,318
    
    
    
    128,548
    
    
    
    4,238Restricted cash
    
    
    8
    
    
    
    360,909
    
    
    
    1,329,756
    
    
    
    7,995Cash and cash equivalents
    
    
    8
    
    
    
    517,789
    
    
    
    380,042
    
    
    
    11,471Other investments
    
    
    15
    
    
    
    
    
    
    
    13,874
    
    
    
    Total current assets
    
    
    
    
    
    
    4,286,516
    
    
    
    4,346,834
    
    
    
    94,960Total assets
    
    
    
    
    
    
    9,329,800
    
    
    
    9,145,555
    
    
    
    206,685Equity
    
    
    16Share capital
    
    
    
    
    
    
    546,332
    
    
    
    441,018
    
    
    
    12,103Share premium
    
    
    
    
    
    
    16,528,621
    
    
    
    16,375,217
    
    
    
    366,164Share based payment reserve
    
    
    
    
    
    
    180,124
    
    
    
    149,535
    
    
    
    3,990Other components of equity
    
    
    
    
    
    
    3,374
    
    
    
    (9,691
    )
    
    
    75Accumulated deficit
    
    
    
    
    
    
    (13,087,359
    )
    
    
    (13,104,386
    )
    
    
    (289,929
    )Total equity attributable to equity holders of the Company
    
    
    
    
    
    
    4,171,092
    
    
    
    3,851,693
    
    
    
    92,403Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    248,848
    
    
    
    Total equity
    
    
    
    
    
    
    4,171,092
    
    
    
    4,100,541
    
    
    
    92,403
  101




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##### Table of Contents



Sify Technologies Limited
Consolidated Statement of Financial Position
 As at March 31,
    
    
    As at March 31,Note
    
    
    2010
    
    
    2009
    
    
    2010Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ thousands(Unaudited)Note 2(c)LiabilitiesFinance lease obligations, other than current installments
    
    
    17
    
    
    
    155,347
    
    
    
    122,382
    
    
    
    3,441Borrowings
    
    
    20
    
    
    
    449,424
    
    
    
    201,389
    
    
    
    9,956Employee benefits
    
    
    18
    
    
    
    54,807
    
    
    
    64,300
    
    
    
    1,214Other liabilities
    
    
    19
    
    
    
    165,800
    
    
    
    134,116
    
    
    
    3,673Total non-current liabilities
    
    
    
    
    
    
    825,378
    
    
    
    522,187
    
    
    
    18,284Finance lease obligations, current installments
    
    
    17
    
    
    
    45,970
    
    
    
    32,943
    
    
    
    1,018Borrowings
    
    
    20
    
    
    
    952,846
    
    
    
    1,182,770
    
    
    
    21,109Bank overdraft
    
    
    8
    
    
    
    1,060,284
    
    
    
    1,397,083
    
    
    
    23,489Trade and other payables
    
    
    21
    
    
    
    1,855,664
    
    
    
    1,555,230
    
    
    
    41,109Deferred income
    
    
    22
    
    
    
    418,566
    
    
    
    354,801
    
    
    
    9,273Total current liabilities
    
    
    
    
    
    
    4,333,330
    
    
    
    4,522,827
    
    
    
    95,998Total liabilities
    
    
    
    
    
    
    5,158,708
    
    
    
    5,045,014
    
    
    
    114,282Total equity and liabilities
    
    
    
    
    
    
    9,329,800
    
    
    
    9,145,555
    
    
    
    206,685
   102




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Sify Technologies Limited
Consolidated Statement of Income
 Year endedYear ended March 31,
    
    
    March 31,Note
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ thousands(Unaudited)Note2(c)Revenue- Rendering of services
    
    
    
    
    
    
    5,657,140
    
    
    
    5,519,140
    
    
    
    5,230,642
    
    
    
    125,324- Sale of products
    
    
    
    
    
    
    1,053,048
    
    
    
    643,021
    
    
    
    775,573
    
    
    
    23,328Total
    
    
    23
    
    
    
    6,710,188
    
    
    
    6,162,161
    
    
    
    6,006,215
    
    
    
    148,652Cost of goods sold and services rendered- Rendering of services
    
    
    
    
    
    
    (3,157,472
    )
    
    
    (3,033,798
    )
    
    
    (2,721,768
    )
    
    
    (69,948
    )- Sale of products
    
    
    
    
    
    
    (939,066
    )
    
    
    (579,551
    )
    
    
    (697,354
    )
    
    
    (20,803
    )Total
    
    
    25
    
    
    
    (4,096,538
    )
    
    
    (3,613,349
    )
    
    
    (3,419,122
    )
    
    
    (90,751
    )Other income
    
    
    26
    
    
    
    131,789
    
    
    
    89,105
    
    
    
    46,152
    
    
    
    2,920Selling, general and administrative expenses
    
    
    28
    
    
    
    (2,482,415
    )
    
    
    (2,813,425
    )
    
    
    (2,434,715
    )
    
    
    (54,994
    )Depreciation and amortization
    
    
    5 & 6
    
    
    
    (656,797
    )
    
    
    (498,872
    )
    
    
    (394,337
    )
    
    
    (14,550
    )Impairment loss on intangibles including goodwill
    
    
    6
    
    
    
    (47,269
    )
    
    
    (15,200
    )
    
    
    
    
    
    
    (1,047
    )Income from legal settlement
    
    
    27
    
    
    
    561,120
    
    
    
    
    
    
    
    
    
    
    
    12,431Profit / (loss) from operating activities
    
    
    
    
    
    
    120,078
    
    
    
    (689,580
    )
    
    
    (195,807
    )
    
    
    2,661Finance income
    
    
    31
    
    
    
    27,994
    
    
    
    122,565
    
    
    
    161,783
    
    
    
    620Finance expenses
    
    
    31
    
    
    
    (293,873
    )
    
    
    (251,660
    )
    
    
    (57,682
    )
    
    
    (6,510
    )Net finance income / (expense)
    
    
    31
    
    
    
    (265,879
    )
    
    
    (129,095
    )
    
    
    104,101
    
    
    
    (5,890
    )Share of profit of equity accounted investee
    
    
    7
    
    
    
    91,135
    
    
    
    64,091
    
    
    
    181,127
    
    
    
    2,019Profit / (loss) before tax
    
    
    
    
    
    
    (54,666
    )
    
    
    (754,584
    )
    
    
    89,421
    
    
    
    (1,210
    )Income tax (expense) / benefit
    
    
    11
    
    
    
    81,479
    
    
    
    (97,049
    )
    
    
    (63,975
    )
    
    
    1,805Profit / (loss) for the year
    
    
    
    
    
    
    26,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    595Attributable to:Equity holders of the Company
    
    
    
    
    
    
    17,027
    
    
    
    (900,574
    )
    
    
    (4,696
    )
    
    
    378Non-controlling interest
    
    
    
    
    
    
    9,786
    
    
    
    48,941
    
    
    
    30,142
    
    
    
    21726,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    595Earnings / (loss) per share
    
    
    32Basic earnings /(loss) per share
    
    
    
    
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    0.01Diluted earnings/(loss) per share
    
    
    
    
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )
    
    
    0.01
   103




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Sify Technologies Limited
Consolidated Statement of Comprehensive Income
 Year ended March 31,Note
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslationinto US$thousandsNote 2(c)(Unaudited)Profit / (loss) for the year
    
    
    
    
    
    
    26,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    595Other comprehensive incomeForeign currency translation differences for foreign operations
    
    
    
    
    
    
    1,682
    
    
    
    (1,256
    )
    
    
    163
    
    
    
    37Defined benefit plan actuarial gains / (losses)
    
    
    
    
    
    
    5,508
    
    
    
    (4,346
    )
    
    
    (2,816
    )
    
    
    122Change in fair value of available for sale investments, transferred to profit or loss
    
    
    
    
    
    
    6,441
    
    
    
    
    
    
    
    
    
    
    
    142Change in fair value of available for sale investments
    
    
    
    
    
    
    
    
    
    
    (5,361
    )
    
    
    (1,080
    )
    
    
    Share of gains and (losses) from equity accounted investees (net of taxes)
    
    
    
    
    
    
    (566
    )
    
    
    296
    
    
    
    (9,669
    )
    
    
    (13
    )Income tax on other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    957
    
    
    
    Other comprehensive income for the year, net of income tax
    
    
    
    
    
    
    13,065
    
    
    
    (10,667
    )
    
    
    (12,445
    )
    
    
    288Total comprehensive income for the year
    
    
    16
    
    
    
    39,878
    
    
    
    (862,300
    )
    
    
    13,001
    
    
    
    883Attributable to:Equity holders of the Company
    
    
    
    
    
    
    30,092
    
    
    
    (911,241
    )
    
    
    (17,141
    )
    
    
    666Non-controlling interest
    
    
    
    
    
    
    9,786
    
    
    
    48,941
    
    
    
    30,142
    
    
    
    217Total comprehensive income/(expense) for the year
    
    
    
    
    
    
    39,878
    
    
    
    (862,300
    )
    
    
    13,001
    
    
    
    883
   104




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##### Table of Contents



Sify Technologies Limited
Consolidated Statement of Changes in Equity    For year ended March 31, 2010
 Share
    
    
    
    
    
    
    Retainedbased
    
    
    Other
    
    
    earnings /
    
    
    
    
    
    
    Non-Share
    
    
    Share
    
    
    payment
    
    
    components
    
    
    (accumulated
    
    
    
    
    
    
    controllingParticulars
    
    capital
    
    
    premium
    
    
    reserve
    
    
    of equity
    
    
    deficit)
    
    
    Total
    
    
    interest
    
    
    Total equityBalance at April 1, 2009
    
    
    441,018
    
    
    
    16,375,217
    
    
    
    149,535
    
    
    
    (9,691
    )
    
    
    (13,104,386
    )
    
    
    3,851,693
    
    
    
    248,848
    
    
    
    4,100,541Total comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,065
    
    
    
    17,027
    
    
    
    30,092
    
    
    
    9,786
    
    
    
    39,878Transactions with owners, recorded directly in equityIssue of share capital
    
    
    105,300
    
    
    
    737,537
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    842,837
    
    
    
    
    
    
    
    842,837Share options exercised
    
    
    14
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    84Share-based payment transactions
    
    
    
    
    
    
    
    
    
    
    30,589
    
    
    
    
    
    
    
    
    
    
    
    30,589
    
    
    
    
    
    
    
    30,589Changes in ownership interests in subsidiaries that do not result in a loss of controlAcquisition 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
  105




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##### Table of Contents



Sify Technologies Limited
Consolidated Statement of Changes in Equity    For year ended March 31, 2009
 Share
    
    
    
    
    
    
    Retainedbased
    
    
    Other
    
    
    earnings /
    
    
    
    
    
    
    Non-Share
    
    
    Share
    
    
    payment
    
    
    components
    
    
    (accumulated
    
    
    
    
    
    
    controllingParticulars
    
    capital
    
    
    premium
    
    
    reserve
    
    
    of equity
    
    
    deficit)
    
    
    Total
    
    
    interest
    
    
    Total equityBalance at April 1, 2008
    
    
    441,018
    
    
    
    16,368,647
    
    
    
    149,398
    
    
    
    976
    
    
    
    (12,265,055
    )
    
    
    4,694,984
    
    
    
    199,907
    
    
    
    4,894,891Total comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,667
    )
    
    
    (900,574
    )
    
    
    (911,241
    )
    
    
    48,941
    
    
    
    (862,300
    )Transactions with owners, recorded directly in equityShare-based payment transactions
    
    
    
    
    
    
    
    
    
    
    61,380
    
    
    
    
    
    
    
    
    
    
    
    61,380
    
    
    
    
    
    
    
    61,380Stock options lapsed
    
    
    
    
    
    
    
    
    
    
    (61,243
    )
    
    
    
    
    
    
    61,243
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    6,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,570
    
    
    
    
    
    
    
    6,570Balance at March 31, 2009
    
    
    441,018
    
    
    
    16,375,217
    
    
    
    149,535
    
    
    
    (9,691
    )
    
    
    (13,104,386
    )
    
    
    3,851,693
    
    
    
    248,848
    
    
    
    4,100,541
  106




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##### Table of Contents



Sify Technologies Limited
Consolidated Statement of Changes in Equity    For year ended March 31, 2008
 Share
    
    
    
    
    
    
    Retainedbased
    
    
    Other
    
    
    earnings /
    
    
    
    
    
    
    Non-Share
    
    
    Share
    
    
    payment
    
    
    components
    
    
    (accumulated
    
    
    
    
    
    
    controllingParticulars
    
    capital
    
    
    premium
    
    
    reserve
    
    
    of equity
    
    
    deficit)
    
    
    Total
    
    
    interest
    
    
    Total equityBalance at April 1, 2007
    
    
    428,003
    
    
    
    16,262,096
    
    
    
    101,540
    
    
    
    13,421
    
    
    
    (12,266,154
    )
    
    
    4,538,906
    
    
    
    169,765
    
    
    
    4,708,671Total comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,445
    )
    
    
    (4,696
    )
    
    
    (17,141
    )
    
    
    30,142
    
    
    
    13,001Transactions with owners, recorded directly in equityIssue of share capital
    
    
    12,817
    
    
    
    99,332
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,149
    
    
    
    
    
    
    
    112,149Stock options exercised
    
    
    198
    
    
    
    7,219
    
    
    
    (2,757
    )
    
    
    
    
    
    
    
    
    
    
    4,660
    
    
    
    
    
    
    
    4,660Stock options lapsed
    
    
    
    
    
    
    
    
    
    
    (5,795
    )
    
    
    
    
    
    
    5,795
    
    
    
    
    
    
    
    
    
    
    
    Share-based payment transactions
    
    
    
    
    
    
    
    
    
    
    56,410
    
    
    
    
    
    
    
    
    
    
    
    56,410
    
    
    
    
    
    
    
    56,410Others
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2008
    
    
    441,018
    
    
    
    16,368,647
    
    
    
    149,398
    
    
    
    976
    
    
    
    (12,265,055
    )
    
    
    4,694,984
    
    
    
    199,907
    
    
    
    4,894,891
   107




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##### Table of Contents



Sify Technologies Limited
Consolidated Statements of Cash Flows
For the fiscal years ended March 31,
 Year ended March 31,2010
    
    
    2009
    
    
    2008
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ thousands(Unaudited)Note 2(c)Profit/(loss) for the year
    
    
    26,813
    
    
    
    (851,633
    )
    
    
    25,446
    
    
    
    595Adjustments for:Depreciation and amortization
    
    
    656,797
    
    
    
    498,872
    
    
    
    394,337
    
    
    
    14,550Impairment loss on intangibles including goodwill
    
    
    47,269
    
    
    
    15,200
    
    
    
    
    
    
    
    1,047Share of profit of equity accounted investee
    
    
    (91,135
    )
    
    
    (64,091
    )
    
    
    (181,127
    )
    
    
    (2,019
    )(Gain) / loss on sale of property, plant and equipment
    
    
    (2,414
    )
    
    
    (828
    )
    
    
    107
    
    
    
    (53
    )Provision for doubtful receivables
    
    
    121,987
    
    
    
    84,346
    
    
    
    131,954
    
    
    
    2,702Provision for finance lease receivables
    
    
    
    
    
    
    6,929
    
    
    
    
    
    
    
    Realized loss on sale of investments
    
    
    373
    
    
    
    
    
    
    
    
    
    
    
    8Stock compensation expense
    
    
    30,589
    
    
    
    61,380
    
    
    
    56,410
    
    
    
    678Net finance (income) / expense
    
    
    265,879
    
    
    
    129,095
    
    
    
    (104,101
    )
    
    
    5,890Income tax expense/(benefit)
    
    
    (81,479
    )
    
    
    97,049
    
    
    
    63,975
    
    
    
    (1,805
    )Unrealized (gain)/ loss on account of exchange
differences
    
    
    703
    
    
    
    455
    
    
    
    496
    
    
    
    16Amortization of leasehold prepayments
    
    
    3,917
    
    
    
    8,403
    
    
    
    
    
    
    
    87Provision for infrastructure costs
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    979,299
    
    
    
    (4,823
    )
    
    
    387,497
    
    
    
    21,696Change in trade and other receivables
    
    
    (585,805
    )
    
    
    (314,349
    )
    
    
    (678,051
    )
    
    
    (12,980
    )Change in inventories
    
    
    17,600
    
    
    
    (1,337
    )
    
    
    (9,066
    )
    
    
    390Change in other assets
    
    
    (64,112
    )
    
    
    224,625
    
    
    
    (757,472
    )
    
    
    (1,420
    )Change in trade and other payables
    
    
    517,497
    
    
    
    (171,261
    )
    
    
    460,211
    
    
    
    11,464Change in employee benefits
    
    
    (3,984
    )
    
    
    17,704
    
    
    
    7,111
    
    
    
    (88
    )Change in deferred income
    
    
    63,762
    
    
    
    (13,555
    )
    
    
    (81,673
    )
    
    
    1,413924,257
    
    
    
    (262,996
    )
    
    
    (671,443
    )
    
    
    20,475Income taxes paid
    
    
    (164,455
    )
    
    
    (108,560
    )
    
    
    (168,426
    )
    
    
    (3,643
    )Net cash from / (used in) operating activities
    
    
    759,802
    
    
    
    (371,556
    )
    
    
    (839,869
    )
    
    
    16,832
  108




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Sify Technologies Limited
Consolidated Statements of Cash Flows
For the fiscal years ended March 31,
 Year ended March 31,2010
    
    
    2009
    
    
    2008
    
    
    2010Rs
    
    
    Rs
    
    
    Rs
    
    
    Conveniencetranslation intoUS$ thousands(Unaudited)Note 2(c)Cash flows from / (used in) investing activitiesAcquisition of property, plant and equipment
    
    
    (759,435
    )
    
    
    (1,170,905
    )
    
    
    (849,091
    )
    
    
    (16,824
    )Expenditure on intangible assets
    
    
    (220,299
    )
    
    
    (165,247
    )
    
    
    (30,238
    )
    
    
    (4,880
    )Proceeds from sale of property, plant and equipment
    
    
    5,979
    
    
    
    2,393
    
    
    
    5,630
    
    
    
    132Net investment in leases
    
    
    
    
    
    
    5,111
    
    
    
    16,552
    
    
    
    Finance income received
    
    
    57,130
    
    
    
    154,492
    
    
    
    121,162
    
    
    
    1,266Short term investments (net)
    
    
    19,942
    
    
    
    
    
    
    
    (20,315
    )
    
    
    442Net cash from / (used in) investing activities
    
    
    (896,683
    )
    
    
    (1,174,156
    )
    
    
    (756,300
    )
    
    
    (19,864
    )Cash flows from / (used in) financing activitiesProceeds from issue of share capital (including
share premium)
    
    
    84
    
    
    
    
    
    
    
    116,809
    
    
    
    2Proceeds from / (repayment) of borrowings (net)
    
    
    8,409
    
    
    
    1,227,733
    
    
    
    (643,574
    )
    
    
    186Finance expenses paid
    
    
    (318,723
    )
    
    
    (249,908
    )
    
    
    (57,679
    )
    
    
    (7,061
    )Repayment of finance lease liabilities
    
    
    (44,256
    )
    
    
    (9,028
    )
    
    
    (756
    )
    
    
    (980
    )Net cash from / (used in) financing activities
    
    
    (354,486
    )
    
    
    968,797
    
    
    
    (585,200
    )
    
    
    (7,853
    )Net increase / (decrease) in cash and cash
equivalents
    
    
    (491,367
    )
    
    
    (576,920
    )
    
    
    (2,181,369
    )
    
    
    (10,885
    )Cash and cash equivalents at April 1
    
    
    312,715
    
    
    
    888,690
    
    
    
    3,070,157
    
    
    
    6,927Effect of exchange fluctuations on cash held
    
    
    (2,934
    )
    
    
    945
    
    
    
    (98
    )
    
    
    (65
    )Cash and cash equivalents at March 31
    
    
    (181,586
    )
    
    
    312,715
    
    
    
    888,690
    
    
    
    (4,023
    )Refer note 3 (c) and note 8 for the
composition of
cash and cash equivalents.Supplementary informationAdditions to property, plant and equipment
represented by finance lease obligations
    
    
    99,950
    
    
    
    158,962
    
    
    
    8,166
    
    
    
    2,214
   109




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##### 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
  2. Basis of preparation
 a. Statement of compliance
   b. Basis of measurement
  
    
    Available for sale financial assets are measured at fair value
 
    
    Derivative financial instruments are measured at fair value
 
    
    Financial instruments at fair value through profit or loss are measured at fair value.
 
    
    The defined benefit asset is recognised as the net total of the plan assets, plus
unrecognised past service cost and unrecognised actuarial losses, less 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.
  c. Functional and presentation currency
   Convenience translation (unaudited):
  110




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##### Table of Contents



d. Use of estimates and judgements
  :
 
    
    Measurement of the recoverable amounts of cash-generating units containing goodwill
(Note 6)
 
    
    Useful lives of property, plant and equipment (Note 3 e and Note 5)
 
    
    Useful lives of intangible assets (Note 3 f and Note 6)
 
    
    Lease classification (Note 3 g, 9, 17 and 31)
 
    
    Utilization of tax losses (Note 11)
 
    
    Measurement of defined employee benefit obligations (Note 18)
 
    
    Measurement of share-based payments (Note 30 and Note 31)
 
    
    Valuation of financial instruments (Note 3 c, 4, 38 and 39)
 
    
    Provisions and contingencies (Note 3 m and 35)
 3. Significant accounting policies
  a. Basis of consolidation
 (i) Subsidiaries
  (ii) Associates (equity accounted investees)
   111




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##### Table of Contents



(iii) Transactions eliminated on consolidation
  b. Foreign currency
 (i) Foreign currency transactions
  (ii) Foreign operations
  c. Financial instruments
 (i) Non-derivative financial instruments
   Non-derivative financial assets
 a) Available-for-sale financial assets
    112




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##### Table of Contents



b) Loans and receivables
  c) Others
  Non-derivative financial liabilities
    (ii) Derivative financial instruments
   d. Share capital
  e. Property, plant and equipment
   113




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##### Table of Contents



(i) Subsequent costs
  (ii) Depreciation
  Estimate of useful lifein yearsBuildings
    
    
    28Plant and machinery comprising computers, servers etc.
    
    
    2  5
    *Plant and machinery comprising other items
    
    
    8
    *Furniture and fittings
    
    
    5Office equipment
    
    
    5Motor vehicles
    
    
    3  5
 *
    
    Revised during the year ended March 31, 2008. Also refer note 5.Depreciation methods, useful lives and residual values are reviewed at the reporting date. f. Business combinations and intangible assets
 (i) Business combinations
     114




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##### Table of Contents



(ii) Goodwill
  Acquisitions prior to April 1, 2006
  Acquisitions on or after April 1, 2006
  Acquisition of non-controlling interest
  Subsequent measurement
  (iii) Other intangible assets
  (iv) Subsequent expenditure
  (v) Amortisation of intangible assets with finite useful lives
  Estimate of useful lifein yearsSoftware
    
    Not exceeding 3 yearsTechnical know-how
    
    5 yearsLicense fees
    
    20 yearsPortals and web development cost
    
    5 yearsCustomer related intangibles
    
    5 years
   115




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##### Table of Contents



g. Leases
  Assets taken on finance lease:
  Assets taken on operating lease:
  Assets given on finance lease:
  Deposits provided to lessors:
   h. Inventories
  i. Construction contracts in progress
    116




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##### Table of Contents



j. Impairment
 Financial assets
  Financial assets measured at amortized cost
  Available-for-sale financial assets
  Loans and receivables
  Reversal of impairment loss
  Non-financial assets
    pro rata basis.
 Reversal of impairment loss
   117




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##### Table of Contents



k. Employee benefits
  (a) Defined contribution plan (Provident fund)
  (b) Defined benefit plans (Gratuity)
   (c) Short term benefits
  (d) Compensated leave of absence
   118




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##### Table of Contents



l. Share-based payment transactions
   m. Provisions
   n. Revenue
    (i) Corporate network/data services
   119




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##### Table of Contents



(ii) Internet access services
   120




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##### Table of Contents




    
    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.
  (iii) Online portal services
     121




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##### Table of Contents



(iv) Other services
  (v) Deferred income
  o. Export entitlements
  p. Finance income and expense
   q. Borrowing costs
  r. Income taxes
    122




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##### Table of Contents



s. Earnings / (loss) per share
  t. Recent accounting pronouncements
 Standards early adopted by the Company
 
    
    IFRS 3 (Revised), Business Combinations,as amended, is applicable for annual periods
beginning on or after July 1, 2009. This standard was early adopted by the Group as at April
1, 2009. Business Combinations consummated after April 1, 2009 will be recorded under this
standard. IFRS 3 (Revised) primarily requires the acquisition-related costs to be recognized
as period expenses in accordance with the relevant IFRS. Costs incurred to issue debt or
equity securities are required to be recognized in accordance with IAS 39. Consideration,
after this amendment, will include fair values of all interests previously held by the
acquirer. Re-measurement of such interests to fair value would be carried out through net
profit in the statement of comprehensive income. Contingent consideration is required to be
recognized at fair value even if not deemed probable of payment at the date of acquisition.
  
    
    IAS 27, as amended, is applicable for annual periods beginning on or after July 1, 2009.
Earlier adoption is permitted provided IFRS 3 (Revised) is also early adopted. This standard
was early adopted by the Company as at April 1, 2009. It requires a mandatory adoption of
economic entity model which treats all providers of equity capital as shareholders of the
entity. Consequently, a partial disposal of interest in a subsidiary in which the parent
company retains control does not result in a gain or loss but in an increase or decrease in
equity. Additionally purchase of some or all of the non-controlling interests is treated as
treasury transaction and accounted for in equity and a partial disposal of interest in a
subsidiary in which the parent company loses control triggers recognition of gain or loss on
the entire interest. A gain or loss is recognized on the portion that has been disposed off
and a further holding gain is recognized on the interest retained, being the difference
between the fair value and carrying value of the interest retained. This Standard requires
an entity to attribute their share of net profit / loss and reserves to the non-controlling
interests even if this results in the non-controlling interests having a deficit balance.
Consistent with the provisions of IFRS 3 (Revised), the Group accounted for its acquisition
of 26% non-controlling interest in Sify Communications Limited on June 26, 2009 as an equity
transaction. Also refer to note 40.
  123




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##### Table of Contents



Recently adopted accounting pronouncements
 
    
    The Company adopted IAS 1 (revised), Presentation of Financial Statements, effective
April 1, 2009. The revision aims to improve users ability to analyze and compare the
information given in financial statements. IAS 1 sets overall requirements for the
presentation of financial statements, guidelines for their structure and minimum
requirements for their content. The revisions include non-mandatory changes in the titles of
some of the financial statements to reflect their function more clearly (for example, the
balance sheet is renamed as statement of financial position). The revised IAS 1 resulted in
consequential amendments to other standards and interpretations. The Group has applied
revised IAS 1 Presentation of Financial Statements (2007), which has became effective as of
April 1, 2009. As a result, the Group presents in the consolidated statement of changes in
equity all owner changes in equity, whereas all non-owner changes in equity are presented in
the consolidated statement of comprehensive income. Furthermore, the Group has included two
statements to display all items of income and expense recognized during the period i.e., a
Statement of Income and a Statement of Comprehensive Income. Comparative information has
been re-presented so that it also is in conformity with the revised standard. Since the
change in accounting policy only impacts presentation aspects, there is no impact on
earnings/ loss per share.
 
    
    IFRIC 18  Transfer of assets from customersdefines the treatment for property, plant
and equipment transferred by customers to companies or for cash received to be invested in
property, plant and equipment that must be used to either connect the customer to a network
or to provide the customer with ongoing access to a supply of goods or services or to both.
The item of property, plant and equipment is to be initially recognized by the Company at
fair value with a corresponding credit to revenue. If an ongoing service is identified as a
part of the agreement, the period over which revenue will be recognized for that service
would be determined by the terms of the agreement with the customer. If the period is not
clearly defined, then revenue should be recognized over a period no longer than the useful
life of the transferred asset used to provide the ongoing service. This interpretation is
applicable prospectively to transfers of assets from customers received on or after July 1,
2009. The Company has adopted this interpretation prospectively for all assets transferred
after July 1, 2009. There has been no impact on the Groups consolidated financial
statements as a result of the adoption of this interpretation.
 
    
    In March 2009, the
Amendments to IFRS 7Financial Instrument disclosure, amended
certain disclosure requirements in the standard. As a result, entities are required to
classify fair value measurements for financial instruments measured at fair value in the
statement of financial position, using a three level fair value hierarchy that reflects the
significance of inputs used in the measurements. In addition, the amendments enhance
disclosure requirements on the nature and extent of liquidity risks to which an entity is
exposed. The Amendments to IFRS 7 apply for annual periods beginning on or after January 1,
2009 and provides an exception in the first year of application for providing comparative
information.
 Standards issued but not yet effective and not early adopted by the Group
  
    
    Improvements to IFRS- In April 2009, the IASB issued Improvements to IFRSs  a
collection of amendments to twelve International Financial Reporting Standards  as part
of its program of annual improvements to its standards, which is intended to make
necessary, but non-urgent, amendments to standards that will not be included as part of
another major project. The latest amendments were included in exposure drafts of proposed
amendments to IFRS published in October 2007, August 2008, and January 2009. The amendments
resulting from this standard mainly have effective dates for annual periods beginning on or
after January 1, 2010, although entities are permitted to adopt them earlier. In May 2010,
the IASB issued Improvements to IFRS 2010,which comprises 11 amendments to 7 standards.
Effective dates, early application and transitional requirements are addressed on a
standard-by-standard basis. The majority of the amendments will be effective January 1,
2011. The Company is evaluating the impact, these amendments will have on the Groups
consolidated financial statements.
  124




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##### Table of Contents




    
    In November 2009, the IASB issued IFRS 9, Financial instruments, to introduce certain
new requirements for classifying and measuring financial assets. IFRS 9 divides all
financial assets that are currently in the scope of IAS 39 into two classifications 
those measured at amortized cost and those measured at fair value. The standard along with
proposed expansion of IFRS 9 for classifying and measuring financial liabilities,
de-recognition of financial instruments, impairment, and hedge accounting will be
applicable from the year 2013, although entities are permitted to adopt earlier. The
Company is evaluating the impact which this new standard will have on the Groups financial
statements.
 
    
    In November 2009, the IASB issued IFRIC 19, Extinguishing Financial Liabilities with
Equity Instruments; to introduce requirements when an entity renegotiates the terms of a
financial liability with its creditor and the creditor
agrees to accept the entitys shares and other equity instruments to settle the financial
liability fully or partially. This interpretation is effective from annual periods beginning
on or after July 1, 2010.
 
    
    In October 2009, the IASB issued Classification of Rights Issue  Amendment to IAS 32
Financial Instruments: Presentationwith an effective date of February 1,2010.
 
    
    In November 2009, the IASB revised IAS 24 Related Party Disclosureswith an effective
date of January 1,2011.
 
    
    In November 2009, the IASB issued Prepayments of a Minimum Funding Requirement 
Amendments to IFRIC 14, IAS19  the Limit on a Defined Benefit Asset, Minimum Funding
Requirement and their Interaction, with an effective date of January 1, 2011.
 4. Determination of fair values
  (i) Property, plant and equipment
  (ii) Inventories
  (iii) Intangible assets
  (iv) Investments in equity and debt securities
   125




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##### Table of Contents



(v) Trade and other receivables
  (vi) Derivatives
  (vii) Non derivative financial liabilities
  (viii) Share-based payment transactions
   126




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##### Table of Contents



5. Property, plant and equipment
  Cost
    
    
    Accumulated depreciation
    
    
    CarryingAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    amount asApril 01,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March 31,
    
    
    at March 31,Particulars
    
    2009
    
    
    Additions
    
    
    Disposals
    
    
    2010
    
    
    2009
    
    
    for the year
    
    
    Deletions
    
    
    2010
    
    
    2010Building
    
    
    769,663
    
    
    
    7,756
    
    
    
    
    
    
    
    777,419
    
    
    
    148,401
    
    
    
    28,671
    
    
    
    
    
    
    
    177,072
    
    
    
    600,347Plant and machinery
    
    
    4,733,122
    
    
    
    827,043
    
    
    
    257,469
    
    
    
    5,302,696
    
    
    
    2,765,920
    
    
    
    420,314
    
    
    
    256,546
    
    
    
    2,929,688
    
    
    
    2,373,008Computer equipments
    
    
    497,223
    
    
    
    26,462
    
    
    
    5,781
    
    
    
    517,904
    
    
    
    367,972
    
    
    
    66,709
    
    
    
    5,050
    
    
    
    429,631
    
    
    
    88,273Office equipment
    
    
    162,132
    
    
    
    68,106
    
    
    
    1,820
    
    
    
    228,418
    
    
    
    96,955
    
    
    
    12,070
    
    
    
    1,773
    
    
    
    107,252
    
    
    
    121,166Furniture and fittings
    
    
    628,279
    
    
    
    101,188
    
    
    
    23,319
    
    
    
    706,148
    
    
    
    389,771
    
    
    
    77,608
    
    
    
    21,942
    
    
    
    445,437
    
    
    
    260,711Vehicles
    
    
    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
    
    
    
    3,443,505Add: Construction in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,517Total
    
    
    6,798,688
    
    
    
    1,030,555
    
    
    
    290,467
    
    
    
    7,538,776
    
    
    
    3,775,439
    
    
    
    606,732
    
    
    
    286,900
    
    
    
    4,095,271
    
    
    
    3,452,022
  Cost
    
    
    Accumulated depreciation
    
    
    CarryingAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    amount asApril 01,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March 31,
    
    
    at March 31,Particulars
    
    2008
    
    
    Additions
    
    
    Disposals
    
    
    2009
    
    
    2008
    
    
    for the year
    
    
    Deletions
    
    
    2009
    
    
    2009Building
    
    
    769,663
    
    
    
    
    
    
    
    
    
    
    
    769,663
    
    
    
    120,924
    
    
    
    27,477
    
    
    
    
    
    
    
    148,401
    
    
    
    621,262Plant and machinery
    
    
    3,683,632
    
    
    
    1,097,317
    
    
    
    47,827
    
    
    
    4,733,122
    
    
    
    2,526,445
    
    
    
    286,805
    
    
    
    47,330
    
    
    
    2,765,920
    
    
    
    1,967,202Computer equipments
    
    
    438,597
    
    
    
    58,824
    
    
    
    198
    
    
    
    497,223
    
    
    
    297,049
    
    
    
    71,001
    
    
    
    78
    
    
    
    367,972
    
    
    
    129,251Office equipment
    
    
    116,691
    
    
    
    47,090
    
    
    
    1,649
    
    
    
    162,132
    
    
    
    83,928
    
    
    
    14,673
    
    
    
    1,646
    
    
    
    96,955
    
    
    
    65,177Furniture and fittings
    
    
    422,939
    
    
    
    208,486
    
    
    
    3,146
    
    
    
    628,279
    
    
    
    339,750
    
    
    
    52,720
    
    
    
    2,699
    
    
    
    389,771
    
    
    
    238,508Vehicles
    
    
    9,174
    
    
    
    
    
    
    
    905
    
    
    
    8,269
    
    
    
    3,846
    
    
    
    2,981
    
    
    
    407
    
    
    
    6,420
    
    
    
    1,849Total
    
    
    5,440,696
    
    
    
    1,411,717
    
    
    
    53,725
    
    
    
    6,798,688
    
    
    
    3,371,942
    
    
    
    455,657
    
    
    
    52,160
    
    
    
    3,775,439
    
    
    
    3,023,249Add: Construction in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237,665Total
    
    
    5,440,696
    
    
    
    1,411,717
    
    
    
    53,725
    
    
    
    6,798,688
    
    
    
    3,371,942
    
    
    
    455,657
    
    
    
    52,160
    
    
    
    3,775,439
    
    
    
    3,260,914
  127




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##### Table of Contents



Cost
    
    
    Accumulated depreciation
    
    
    Carrying amountAs at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    As at
    
    
    
    
    
    
    
    
    
    
    As at
    
    
    as atApril 01,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    April 1,
    
    
    Depreciation
    
    
    
    
    
    
    March 31,
    
    
    March 31,Particulars
    
    2007
    
    
    Additions
    
    
    Disposals
    
    
    2008
    
    
    2007
    
    
    for the year
    
    
    Deletions
    
    
    2008
    
    
    2008Building
    
    
    634,230
    
    
    
    135,433
    
    
    
    
    
    
    
    769,663
    
    
    
    94,656
    
    
    
    26,268
    
    
    
    
    
    
    
    120,924
    
    
    
    648,739Plant and machinery
    
    
    3,180,761
    
    
    
    508,820
    
    
    
    5,949
    
    
    
    3,683,632
    
    
    
    2,341,233
    
    
    
    187,414
    
    
    
    2,202
    
    
    
    2,526,445
    
    
    
    1,157,187Computer equipments
    
    
    353,874
    
    
    
    84,857
    
    
    
    134
    
    
    
    438,597
    
    
    
    204,953
    
    
    
    92,230
    
    
    
    134
    
    
    
    297,049
    
    
    
    141,548Office equipment
    
    
    103,935
    
    
    
    12,803
    
    
    
    47
    
    
    
    116,691
    
    
    
    71,989
    
    
    
    11,982
    
    
    
    43
    
    
    
    83,928
    
    
    
    32,763Furniture and fittings
    
    
    386,994
    
    
    
    37,209
    
    
    
    1,264
    
    
    
    422,939
    
    
    
    303,712
    
    
    
    36,975
    
    
    
    937
    
    
    
    339,750
    
    
    
    83,189Vehicles
    
    
    8,766
    
    
    
    4,448
    
    
    
    4,040
    
    
    
    9,174
    
    
    
    2,439
    
    
    
    3,788
    
    
    
    2,381
    
    
    
    3,846
    
    
    
    5,328Total
    
    
    4,668,560
    
    
    
    783,570
    
    
    
    11,434
    
    
    
    5,440,696
    
    
    
    3,018,982
    
    
    
    358,657
    
    
    
    5,697
    
    
    
    3,371,942
    
    
    
    2,068,754Add: Construction in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,031Total
    
    
    4,668,560
    
    
    
    783,570
    
    
    
    11,434
    
    
    
    5,440,696
    
    
    
    3,018,982
    
    
    
    358,657
    
    
    
    5,697
    
    
    
    3,371,942
    
    
    
    2,181,785
 Change in estimated useful life
  2008
    
    
    2009
    
    
    2010
    
    
    2011Decrease / (increase) in depreciation expense
    
    
    110,315
    
    
    
    98,650
    
    
    
    61,498
    
    
    
    (17,674
    )
 Leased assets
   Capital Commitments
  Construction in progress
  Security
   128




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##### Table of Contents



6. Intangible assets
  March 31, 2010
    
    
    March 31, 2009Goodwill
    
    
    14,595
    
    
    
    40,461Other intangible assets
    
    
    114,929
    
    
    
    137,411129,524
    
    
    
    177,872
 (i) Goodwill
  March 31, 2010
    
    
    March 31, 2009Balance at the beginning of the year
    
    
    40,461
    
    
    
    50,796Effect of movement in exchange rates
    
    
    (2,482
    )
    
    
    4,865Impairment loss recognised during the year
    
    
    (23,384
    )
    
    
    (15,200
    )Net carrying amount of goodwill
    
    
    14,595
    
    
    
    40,461
  Impairment testing for cash-generating units containing goodwill
    
    
    Cash flows were projected based on a 5 year business plan. Cash flows were arrived at as an
excess of revenue over the related costs for the same period after giving due effect to
non-cash charges and finance charges, if applicable, together with changes in working capital.
 
    
    Management believes that this forecast period is justified due to the long term nature of
the travel business.
 
    
    The projected revenue growth included in the cash flow projections was 10% during the
projected period. Management believes that this growth percentage was reasonable and is in
line with the average trend of the industry.
 
    
    The projected increase in cost was 5% for call center cost and 10% for administrative
costs.
 
    
    A pre-tax discount rate of 22.26% was applied in determining the recoverable amount of the
cash generating unit. The discount rate was estimated based on an industry average weighted
average cost of capital.
 
    
    In view of the expected long term market conditions, a terminal year end growth rate of 2%
is estimated.
   129




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##### Table of Contents



(ii) Other intangibles
  Technical
    
    
    Portals
    
    
    Customerknow-
    
    
    and web
    
    
    related
    
    
    
    
    
    
    Licensehow
    
    
    content
    
    
    intangibles
    
    
    Software
    
    
    fees
    
    
    Total(A) CostBalance as at April 1, 2007
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    240,878
    
    
    
    50,000
    
    
    
    625,915Acquisitions during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,238
    
    
    
    
    
    
    
    30,238Balance as at March 31, 2008
    
    
    82,753
    
    
    
    52,730
    
    
    
    199,554
    
    
    
    271,116
    
    
    
    50,000
    
    
    
    656,153Acquisitions during the year
    
    
    
    
    
    
    
    
    
    
    1,016
    
    
    
    48,099
    
    
    
    
    
    
    
    49,115Balance as at March 31, 2009
    
    
    82,753
    
    
    
    52,730
    
    
    
    200,570
    
    
    
    319,215
    
    
    
    50,000
    
    
    
    705,268Acquisitions during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,468
    
    
    
    
    
    
    
    51,468Disposals during the year
    
    
    
    
    
    
    52,730
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,730Balance as at March 31, 2010
    
    
    82,753
    
    
    
    
    
    
    
    200,570
    
    
    
    370,683
    
    
    
    50,000
    
    
    
    704,006(B) AmortizationBalance as at April 1, 2007
    
    
    82,753
    
    
    
    52,710
    
    
    
    136,269
    
    
    
    216,324
    
    
    
    906
    
    
    
    488,962Amortization for the year
    
    
    
    
    
    
    20
    
    
    
    13,657
    
    
    
    19,503
    
    
    
    2,500
    
    
    
    35,680Balance as at March 31, 2008
    
    
    82,753
    
    
    
    52,730
    
    
    
    149,926
    
    
    
    235,827
    
    
    
    3,406
    
    
    
    524,642Amortization for the year
    
    
    
    
    
    
    
    
    
    
    19,921
    
    
    
    20,794
    
    
    
    2,500
    
    
    
    43,215Balance as at March 31, 2009
    
    
    82,753
    
    
    
    52,730
    
    
    
    169,847
    
    
    
    256,621
    
    
    
    5,906
    
    
    
    567,857Amortization for the year
    
    
    
    
    
    
    
    
    
    
    6,144
    
    
    
    41,421
    
    
    
    2,500
    
    
    
    50,065Impairment loss on intangibles
    
    
    
    
    
    
    
    
    
    
    22,148
    
    
    
    1,737
    
    
    
    
    
    
    
    23,885Disposals during the year
    
    
    
    
    
    
    52,730
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,730Balance as at March 31, 2010
    
    
    82,753
    
    
    
    
    
    
    
    198,139
    
    
    
    299,779
    
    
    
    8,406
    
    
    
    589,077(C) Carrying amountsAs at March 31, 2008
    
    
    
    
    
    
    
    
    
    
    49,628
    
    
    
    35,289
    
    
    
    46,594
    
    
    
    131,511As at March 31, 2009
    
    
    
    
    
    
    
    
    
    
    30,723
    
    
    
    62,594
    
    
    
    44,094
    
    
    
    137,411As at March 31, 2010
    
    
    
    
    
    
    
    
    
    
    2,431
    
    
    
    70,904
    
    
    
    41,594
    
    
    
    114,929
 Capital commitments
  Capitalized borrowing costs
   130




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##### Table of Contents



7. Investment in equity accounted investees
  March 31, 2010
    
    
    March 31, 2009Balance sheetTotal assets
    
    
    3,974,094
    
    
    
    3,435,921Total liabilities
    
    
    1,851,919
    
    
    
    1,617,159Shareholders equity
    
    
    2,122,175
    
    
    
    1,818,762Total Liabilities and shareholders equity
    
    
    3,974,094
    
    
    
    3,435,921
 For the year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Statement of operationsRevenues
    
    
    1,612,545
    
    
    
    1,413,643
    
    
    
    2,503,520Net profit
    
    
    307,543
    
    
    
    216,917
    
    
    
    606,255
  8. Cash and cash equivalents
  (a) Restricted cash
 March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Non currentAgainst future performance obligation
    
    
    
    
    
    
    1,000
    
    
    
    1,000CurrentBank deposits held under lien against borrowings /
guarantees from banks
    
    
    360,909
    
    
    
    1,329,756
    
    
    
    877,582Total restricted cash
    
    
    360,909
    
    
    
    1,329,756
    
    
    
    877,582(b) Non restricted cashCurrentCash and bank balances
    
    
    517,789
    
    
    
    380,042
    
    
    
    628,745Total cash (a+b)
    
    
    878,698
    
    
    
    1,710,798
    
    
    
    1,507,327Bank overdraft used for cash management purposes
    
    
    (1,060,284
    )
    
    
    (1,397,083
    )
    
    
    (617,637
    )Less: Non current restricted cash
    
    
    
    
    
    
    (1,000
    )
    
    
    (1,000
    )Cash and cash equivalents for the statement of cash flows
    
    
    (181,586
    )
    
    
    312,715
    
    
    
    888,690
  131




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##### Table of Contents



9. Lease prepayments
 March 31, 2010
    
    
    March 31, 2009Towards buildings*
    
    
    273,911
    
    
    
    311,185273,911
    
    
    
    311,185
 *
    
    Includes Rs.189,903 (March 31, 2009 : Rs 256,050) paid to VALS Developers Private Limited. Also
refer note 37.  10. Other assets
 March 31, 2010
    
    
    March 31, 2009Non currentWithholding taxes (see note (a) below)
    
    
    
    
    
    
    174,234Other deposits (see note (b) and (c) below)
    
    
    554,358
    
    
    
    322,091554,358
    
    
    
    496,325CurrentNet investment in leases
    
    
    
    
    
    
    
    
    
    Financial assets included in other assets
    
    
    249,744
    
    
    
    227,468
 (a)
    
    Withholding taxes represent taxes deducted at source by the customers and paid to the
Government, which is adjustable against tax liability of the Company. The company started receiving
refunds of such taxes from the Government. Accordingly the withholding taxes is expected to be
realized within next 12 months and hence the withholding taxes are classified as current and
included as part of trade and other receivables. Refer note 13.(b)
    
    Includes Rs. 32,098 (March 31 2009: Rs.26,775) paid to VALS Developers Private Limited. Also
refer note 37.(c)
    
    Includes Rs. 304,614 (March 31 2009: Rs. 111,333) paid to Emirates Integrated
Telecommunications Company PJSC in relation to supply of capacity from the Europe India Gateway and
borrowing cost capitalized thereon. 11. Deferred tax assets and liabilities
  Assets / (liabilities)Recognised deferred tax assets / (liabilities)
    
    March 31, 2010
    
    
    March 31, 2009Deferred tax assetsProperty, plant and equipment
    
    
    
    
    
    
    1,796Intangible assets
    
    
    
    
    
    
    2,212Allowance for doubtful trade and other receivables
    
    
    
    
    
    
    4,516Carry forward capital losses
    
    
    82,869
    
    
    
    67,73582,869
    
    
    
    76,259Deferred tax liabilitiesProperty, plant and equipment
    
    
    (76
    )
    
    
    Intangible assets
    
    
    (189
    )
    
    
    Investment in equity accounted investees
    
    
    (82,604
    )
    
    
    (67,735
    )(82,869
    )
    
    
    (67,735
    )Net deferred tax asset recognized in balance sheet
    
    
    
    
    
    
    8,524
  132




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##### Table of Contents



Movement in temporary differences during the year
 Balance
    
    
    Recognised
    
    
    
    
    
    
    Balance
    
    
    Recognised
    
    
    
    
    
    
    Balanceas at
    
    
    in
    
    
    Recognised
    
    
    as at
    
    
    in
    
    
    Recognised
    
    
    as atApril 1,
    
    
    income
    
    
    in
    
    
    March
    
    
    income
    
    
    in
    
    
    March2008
    
    
    statement
    
    
    Equity
    
    
    31, 2009
    
    
    statement
    
    
    Equity
    
    
    31, 2010Property, plant and equipment
    
    
    1,733
    
    
    
    63
    
    
    
    
    
    
    
    1,796
    
    
    
    (1,872
    )
    
    
    
    
    
    
    (76
    )Intangible assets
    
    
    3,155
    
    
    
    (943
    )
    
    
    
    
    
    
    2,212
    
    
    
    (2,401
    )
    
    
    
    
    
    
    (189
    )Allowance for doubtful trade and other
receivables
    
    
    10,644
    
    
    
    (6,128
    )
    
    
    
    
    
    
    4,516
    
    
    
    (4,516
    )
    
    
    
    
    
    
    Tax loss carry forwards
    
    
    56,859
    
    
    
    10,816
    
    
    
    60
    
    
    
    67,735
    
    
    
    14,371
    
    
    
    763
    
    
    
    82,869Investment in equity accounted investees
    
    
    (56,821
    )
    
    
    (10,854
    )
    
    
    (60
    )
    
    
    (67,735
    )
    
    
    (14,106
    )
    
    
    (763
    )
    
    
    (82,604
    )15,570
    
    
    
    (7,046
    )
    
    
    
    
    
    
    8,524
    
    
    
    (8,524
    )
    
    
    
    
    
    
    
 Unrecognized deferred tax assets / (liabilities)
 As at March 31, 2010
    
    
    As at March 31, 2009Deductible temporary differences
    
    
    172,136
    
    
    
    82,062Unrecognized tax losses
    
    
    3,360,093
    
    
    
    3,440,6803,532,229
    
    
    
    3,522,742
   Income tax expense recognized in profit or loss
 March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Current tax expense / (benefit)Current period
    
    
    (90,003
    )
    
    
    90,003
    
    
    
    12,013(90,003
    )
    
    
    90,003
    
    
    
    12,013Deferred tax expenseOrigination and reversal of temporary differences
    
    
    22,895
    
    
    
    17,862
    
    
    
    31,469Recognition of previously unrecognized tax losses
    
    
    (14,371
    )
    
    
    (10,854
    )
    
    
    (34,887
    )Reversal of previously recognized tax losses
    
    
    
    
    
    
    38
    
    
    
    55,3808,524
    
    
    
    38
    
    
    
    51,962Total income tax expense / (benefit)
    
    
    (81,479
    )
    
    
    97,049
    
    
    
    63,975
  133




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##### Table of Contents



Income tax directly recognised in other comprehensive income
 March 31,2010
    
    
    March 31,2009
    
    
    March 31,2008Actuarial (gains) or losses
    
    
    
    
    
    
    
    
    
    
    957Tax effect of changes in the fair value of other investments
    
    
    
    
    
    
    
    
    
    
    556Tax effect on share of profit of associate recognised in OCI
    
    
    
    
    
    
    
    
    
    
    Tax effect on foreign currency translation differences
    
    
    
    
    
    
    
    
    
    
    (85
    )Income tax benefit / (expense) recognized directly in equity
    
    
    
    
    
    
    
    
    
    
    1,428
 Reconciliation of effective tax rate
  Year ended
    
    
    Year ended
    
    
    Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Profit / (loss) before income taxes
    
    
    (54,666
    )
    
    
    (754,584
    )
    
    
    89,421Enacted tax rates in India
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.99
    %Computed expected tax expense / (benefit)
    
    
    (18,581
    )
    
    
    (256,483
    )
    
    
    30,394Effect of:Share based payment expense not deductible for tax purposes
    
    
    8,188
    
    
    
    16,149
    
    
    
    14,234Unrecognized deferred tax assets on losses incurred during the
year (net of temporary differences, if any)
    
    
    41,370
    
    
    
    359,669
    
    
    
    65,714Unrecognized deferred tax asset on temporary differences
    
    
    
    
    
    
    
    
    
    
    12,634Share of profit of equity accounted investee taxed at a lower rate
    
    
    (12,203
    )
    
    
    (8,582
    )
    
    
    (24,253
    )Recognition of previously unrecognized tax losses
    
    
    (18,774
    )
    
    
    (13,203
    )
    
    
    (37,312
    )Reversal of tax expense consequent to merger (Refer note 40)
    
    
    (81,479
    )
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    (501
    )
    
    
    2,564(81,479
    )
    
    
    97,049
    
    
    
    63,975
 12. Inventories
  March 31, 2010
    
    
    March 31, 2009Communication hardware
    
    
    19,826
    
    
    
    30,832Application software
    
    
    1,662
    
    
    
    4,264Others
    
    
    
    
    
    
    3,99221,488
    
    
    
    39,088
   134




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##### Table of Contents



13. Trade and other receivables
  March 31, 2010
    
    
    March 31, 2009(i) Trade receivables, net
    
    
    1,912,348
    
    
    
    1,504,927(ii) Other receivables including deposits
    
    
    1,196,450
    
    
    
    950,599(iii) Construction contract in progress
    
    
    86,214
    
    
    
    3,195,012
    
    
    
    2,455,526
 (i)
    
    Trade receivables as of March 31, 2010 and March 31, 2009 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 24. Trade
receivables consist of:
 March 31, 2010
    
    
    March 31, 2009Trade receivables from related parties
    
    
    
    
    
    
    698Other trade receivables
    
    
    2,083,054
    
    
    
    1,620,5242,083,054
    
    
    
    1,621,222Less: Allowance for doubtful receivables
    
    
    (170,706
    )
    
    
    (116,295
    )Balance at the end of the year
    
    
    1,912,348
    
    
    
    1,504,927
  For the year endedMarch 31, 2010
    
    
    March 31, 2009Balance at the beginning of the year
    
    
    116,295
    
    
    
    83,316Add : Additional provision, net
    
    
    121,987
    
    
    
    84,346Less : Bad debts written off
    
    
    (67,576
    )
    
    
    (51,367
    )Balance at the end of the year
    
    
    170,706
    
    
    
    116,295
 (ii)
    
    Other receivables comprises of the following items:
 March 31, 2010
    
    
    March 31, 2009Advances and other deposits (Refer Note (a) and (c) below)
    
    
    657,609
    
    
    
    745,876Deposits with Department of Income tax / Withholding taxes (Refer Note (b) below)
    
    
    530,146
    
    
    
    191,457Employee advances
    
    
    8,695
    
    
    
    13,2661,196,450
    
    
    
    950,599Financial assets included in other receivables
    
    
    322,833
    
    
    
    405,989
 Notes:a)
    
    Advances and other deposits primarily comprises of receivables in the form of custom duty
credit entitlement, service tax and other advances given in the ordinary course of business.  135




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##### Table of Contents



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.c)
    
    During the year ended March 31, 2010, the Group entered into a lease for 290,753 sq ft of
building from Reliable Infomatics Park Private Ltd on a long term lease. The group has paid a
sum of Rs 51,786 as a security deposit for the above lease. During the year, the Group has
surrendered the above lease. The company expects to realize the above amount within the next
12 months. 14. Prepayments for current assets
  March 31, 2010
    
    
    March 31, 2009Prepayments for purchase of bandwidth
    
    
    79,402
    
    
    
    63,961Prepayments related to insurance
    
    
    17,680
    
    
    
    12,682Prepayments-others
    
    
    57,245
    
    
    
    47,066Lease prepayments
    
    
    36,991
    
    
    
    4,839191,318
    
    
    
    128,548
 15. Other investments
  March 31, 2010
    
    
    March 31, 2009Gains/ (Loss)
    
    
    
    
    
    
    
    
    
    
    Gains/ (Loss)recognized in
    
    
    
    
    
    
    
    
    
    
    recognized inother
    
    
    
    
    
    
    
    
    
    
    otherGross
    
    
    comprehensive
    
    
    
    
    
    
    Gross
    
    
    comprehensiveamount
    
    
    income
    
    
    Fair value
    
    
    amount
    
    
    income
    
    
    Fair valueInvestment in mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,315
    
    
    
    (6,441
    )
    
    
    13,874
  136




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##### Table of Contents



16. Share capital and share premium
 No of shares
 Year ended March 31,2010
    
    
    2009
    
    
    2008Issued as at April 01
    
    
    42,820,082
    
    
    
    55,637,082
    
    
    
    42,800,265Issued for cash*
    
    
    
    
    
    
    
    
    
    
    12,817,000
    *Issued for consideration other than cash
    
    
    10,530,000
    
    
    
    
    
    
    
    Exercise of share options
    
    
    1,416
    
    
    
    
    
    
    
    19,817Shares forfeited*
    
    
    
    
    
    
    (12,817,000
    )
    
    
    Issued as at March 31
    
    
    53,351,498
    
    
    
    42,820,082
    
    
    
    55,637,082
 *
    
    Paid up Rs.1/- per share      Translation reserve
  Share based payment reserve
  Fair value reserve
  Recognised actuarial gain / loss
   137




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##### Table of Contents



17. Finance lease obligations
  March 31, 2010
    
    
    March 31, 2009Present
    
    
    
    
    
    
    
    
    
    
    PresentFuture
    
    
    
    
    
    
    value
    
    
    Future
    
    
    
    
    
    
    valueminimum
    
    
    
    
    
    
    minimum
    
    
    minimum
    
    
    
    
    
    
    minimumlease
    
    
    
    
    
    
    lease
    
    
    lease
    
    
    
    
    
    
    leasepayments
    
    
    Interest
    
    
    payments
    
    
    payments
    
    
    Interest
    
    
    paymentsLess than one year
    
    
    65,148
    
    
    
    (19,178
    )
    
    
    45,970
    
    
    
    42,743
    
    
    
    (9,800
    )
    
    
    32,943Between one and five years
    
    
    182,206
    
    
    
    (26,859
    )
    
    
    155,347
    
    
    
    138,246
    
    
    
    (15,864
    )
    
    
    122,382Total
    
    
    247,354
    
    
    
    (46,037
    )
    
    
    201,317
    
    
    
    180,989
    
    
    
    (25,664
    )
    
    
    155,325
 18. Employee benefits
 March 31, 2010
    
    
    March 31, 2009Gratuity payable
    
    
    16,753
    
    
    
    15,082Compensated absences
    
    
    38,054
    
    
    
    49,21854,807
    
    
    
    64,300
 Gratuity cost
  March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Service cost
    
    
    14,498
    
    
    
    12,067
    
    
    
    8,533Interest cost
    
    
    4,501
    
    
    
    3,038
    
    
    
    1,639Expected return on plan asset
    
    
    (2,963
    )
    
    
    (1,672
    )
    
    
    (957
    )16,036
    
    
    
    13,433
    
    
    
    9,215
  March 31, 2010
    
    
    March 31, 2009Present value of projected benefit obligation at the end of the year
    
    
    51,046
    
    
    
    43,389Funded status of the plans
    
    
    34,293
    
    
    
    28,307Recognised (asset) / liability
    
    
    16,753
    
    
    
    15,082
  Change in defined benefit obligation
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Projected benefit obligation at the beginning of the year
    
    
    43,389
    
    
    
    27,332
    
    
    
    20,785Service cost
    
    
    14,498
    
    
    
    12,067
    
    
    
    8,533Interest cost
    
    
    4,501
    
    
    
    3,038
    
    
    
    1,639Actuarial (gain) / loss
    
    
    (5,957
    )
    
    
    3,662
    
    
    
    2,393Benefits paid
    
    
    (5,385
    )
    
    
    (2,710
    )
    
    
    (6,018
    )Projected benefit obligation at the end of the year
    
    
    51,046
    
    
    
    43,389
    
    
    
    27,332
  138




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##### Table of Contents



Change in plan assets
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Fair value of plan assets at the beginning of the year
    
    
    28,307
    
    
    
    18,740
    
    
    
    8,422Expected return on plan assets
    
    
    2,965
    
    
    
    1,672
    
    
    
    957Actuarial gain / (loss)
    
    
    (449
    )
    
    
    (684
    )
    
    
    (423
    )Employer contributions
    
    
    8,855
    
    
    
    11,290
    
    
    
    15,801Benefits paid
    
    
    (5,385
    )
    
    
    (2,711
    )
    
    
    (6,017
    )Fair value of plan assets at the end of the year
    
    
    34,293
    
    
    
    28,307
    
    
    
    18,740Actual return on plan assets
    
    
    2,513
    
    
    
    988
    
    
    
    534
 Actuarial assumptions at end of the year
  March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Discount rate
    
    
    8.15
    % P.a
    
    
    7.95
    % P.a
    
    
    7.85
    % P.aLong-term rate of compensation increase
    
    
    8.00
    % P.a
    
    
    8.00
    % P.a
    
    
    6.00
    % P.aExpected long term rate of return on plan assets
    
    
    8.00
    % P.a
    
    
    8.00
    % P.a
    
    
    7.50
    % P.aAverage future working life time
    
    11.06 years
    
    
    10.99 years
    
    
    10.23 years
 Discount rate: .
 Long term rate of compensation increase:
 Expected long term rate of return on plan assets:
   Historical information
 March 31, 2010
    
    
    March 31, 2009Experience adjustment on plan liabilities
    
    
    (4,818
    )
    
    
    1,574Experience adjustment on plan assets
    
    
    (450
    )
    
    
    (684
    )
 Contributions
 Plan assets:
 March 31, 2010
    
    
    March 31, 2009Funds managed by insurers
    
    
    100
    %
    
    
    100
    %
 Actuarial gains and losses recognised in other comprehensive income
  March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Actuarial gain / (loss)
    
    
    5,508
    
    
    
    (4,346
    )
    
    
    (2,816
    )5,508
    
    
    
    (4,346
    )
    
    
    (2,816
    )
  139




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##### Table of Contents



Contributions to defined contribution plans
  19. Other liabilities
 March 31, 2010
    
    
    March 31, 2009Franchisee deposits and other liabilities
    
    
    165,800
    
    
    
    134,116165,800
    
    
    
    134,116
  20. Borrowings
 March 31, 2010
    
    
    March 31, 2009CurrentLoan secured against fixed deposits (Refer note 1 below)
    
    
    
    
    
    
    310,000Term bank loans (Refer note 2 below)
    
    
    216,000
    
    
    
    331,944Other working capital facilities (Refer note 3 below)
    
    
    697,165
    
    
    
    540,826Borrowings from others (Refer note 4 below)
    
    
    39,681
    
    
    
    952,846
    
    
    
    1,182,770Non currentTerm bank loans (Refer note 2 below)
    
    
    325,940
    
    
    
    201,389Borrowings from others (Refer note 4 below)
    
    
    123,484
    
    
    
    449,424
    
    
    
    201,389
  1.
    
    Loan secured against fixed deposits of Rs. Nil as at March 31, 2010 (Rs. 310,000 as at
March 31, 2009) represent bank loans for working capital requirements. These borrowings bear
interest ranging from 10%-11.90% p.a. and are repayable within one year from the balance
sheet date.
 2.
    
    Term bank loans bear interest ranging from 9.50% to 13.50% 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.
 3.
    
    Letter of credit discounted (including buyers credit) is secured by pari-passu charge on
current assets of the Company and moveable assets of the company, both present and future.
These borrowings bear interest ranging from 11% to 14% p.a. Such facilities are renewable
every year.
 4.
    
    Borrowings from others are secured against relevant assets and software. However, the
Company is in the process of obtaining no objection certificate from the bank with whom such
relevant assets and software are hypothecated.
  140




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##### Table of Contents



21. Trade and other payables
 March 31, 2010
    
    
    March 31, 2009Trade payables
    
    
    989,020
    
    
    
    690,388Advance from customers
    
    
    37,047
    
    
    
    52,224Accrued expenses
    
    
    686,452
    
    
    
    668,769Other payables
    
    
    143,145
    
    
    
    143,8491,855,664
    
    
    
    1,555,230Financial liabilities included in trade and other payables
    
    
    1,798,764
    
    
    
    1,411,358
 22. Deferred income
  March 31, 2010
    
    
    March 31, 2009Corporate network/data services
    
    
    328,309
    
    
    
    308,521Internet access services
    
    
    24,941
    
    
    
    28,065Other services
    
    
    65,316
    
    
    
    18,215418,566
    
    
    
    354,801
 23. Revenue
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Rendering of servicesService revenue*
    
    
    5,356,852
    
    
    
    5,253,535
    
    
    
    4,868,673Initial franchise fee
    
    
    11,369
    
    
    
    30,489
    
    
    
    43,503Installation service revenue
    
    
    288,919
    
    
    
    235,116
    
    
    
    318,4665,657,140
    
    
    
    5,519,140
    
    
    
    5,230,642Sale of products
    
    
    1,053,048
    
    
    
    643,021
    
    
    
    775,5736,710,188
    
    
    
    6,162,161
    
    
    
    6,006,215
 *
    
    Including revenue arising from construction contracts (refer note 24) 24. Construction contracts in progress
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Contract revenue
recognised for the
year ended March
31, 2010
    
    
    86,214
    
    
    
    
    
    
    
    Aggregate amounts
of costs incurred
and recognized
profits (less
recognised losses)
upto the reporting
date
    
    
    86,214
    
    
    
    
    
    
    
    Advances received
    
    
    16,441
    
    
    
    
    
    
    
    Gross amount due
from customers for
contract work
presented as an
asset
    
    
    86,214
    
    
    
    
    
    
    
    
  141




---



##### Table of Contents



25. Cost of goods sold and services rendered
  26. Other income
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Duty credit entitlement
    
    
    82,486
    
    
    
    79,278
    
    
    
    46,152Others
    
    
    49,303
    
    
    
    9,827
    
    
    
    131,789
    
    
    
    89,105
    
    
    
    46,152
 27. Income from legal settlement
  28. Selling, general and administrative expenses
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Personnel expenses
    
    
    745,067
    
    
    
    987,585
    
    
    
    715,365Marketing and promotion expenses
    
    
    482,554
    
    
    
    608,318
    
    
    
    558,573Administrative and other expenses*
    
    
    1,238,770
    
    
    
    1,217,522
    
    
    
    1,160,7772,466,391
    
    
    
    2,813,425
    
    
    
    2,434,715
 *
    
    Includes foreign exchange gain / (loss) of Rs.9,397, Rs.21,320 and Rs.(22,587) for the years
ended March 31, 2010, 2009 and 2008 respectively.  29. Personnel expenses
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Salaries and wages
    
    
    1,269,638
    
    
    
    1,532,378
    
    
    
    940,942Contribution to provident fund and other funds
    
    
    77,197
    
    
    
    70,354
    
    
    
    40,838Staff welfare expenses
    
    
    27,499
    
    
    
    38,225
    
    
    
    26,168Employee stock compensation expense
    
    
    30,589
    
    
    
    61,380
    
    
    
    60,9331,404,923
    
    
    
    1,702,337
    
    
    
    1,068,881Attributable to cost of goods sold and services rendered
    
    
    659,856
    
    
    
    714,752
    
    
    
    431,588Attributable to selling, general and administration
expenses
    
    
    745,067
    
    
    
    987,585
    
    
    
    637,293
  142




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##### Table of Contents



30. Share-based payments
  (i) Associate Stock Option Plan 2002
   One sixth of the options:
    
    At the end of one year from the date of the grantFive sixth of the options:
    
    At the end of each quarter during the second and third year from the date of the grant in eight
equal installments.
   Weighted average exerciseNo. of options granted,
    
    Number of options
    
    
    price in Rs.exercised and forfeited
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Outstanding at beginning of the year
    
    
    
    
    
    
    
    
    
    
    6,250
    
    
    
    
    
    
    
    
    
    
    
    228.74Granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired during the year
    
    
    
    
    
    
    
    
    
    
    6,250
    
    
    
    
    
    
    
    
    
    
    
    228.74Exercised during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (ii) Associate Stock Option Plan 2005
   One sixth of the options:
    
    At the end of one year from the date of the grantFive sixth of the options:
    
    At the end of each quarter during the second and third year from the date of the grant in eight
equal installments.
  143




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##### Table of Contents



Weighted average exerciseNo. of options granted,
    
    Number of options
    
    
    price in Rs.exercised and forfeited
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Outstanding at the beginning of the year
    
    
    
    
    
    
    326,093
    
    
    
    868,195
    
    
    
    
    
    
    
    328.84
    
    
    
    238.32Granted during the year
    
    
    
    
    
    
    
    
    
    
    119,400
    
    
    
    
    
    
    
    
    
    
    
    340.82Forfeited during the year
    
    
    
    
    
    
    (29,167
    )
    
    
    (122,442
    )
    
    
    
    
    
    
    449.16
    
    
    
    376.64Expired during the year
    
    
    
    
    
    
    (296,926
    )
    
    
    (28,293
    )
    
    
    
    
    
    
    317.02
    
    
    
    461.51Exercised during the year
    
    
    
    
    
    
    
    
    
    
    (13,567
    )
    
    
    
    
    
    
    
    
    
    
    238.32Replaced during the year (Refer to
notes below)
    
    
    
    
    
    
    
    
    
    
    (497,200
    )
    
    
    
    
    
    
    
    
    
    
    422.91Outstanding at the end of the year
    
    
    
    
    
    
    
    
    
    
    326,093
    
    
    
    
    
    
    
    
    
    
    
    328.84Vested and exercisable at the end of
the year
    
    
    
    
    
    
    
    
    
    
    235,010
    
    
    
    
    
    
    
    
    
    
    
    328.84Weighted average grant date fair value
of grants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120.00
 (iii) Associate Stock Option Plan 2007
   One sixth of the option quantity:
    
    At the end of one year from the date of the grant.Five sixth of the option quantity:
    
    At the end of each quarter during the second, third and fourth year from the date of the
grant in twelve equal installments.
   Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    Number
    
    
    exercise
    
    
    Number
    
    
    exerciseNumber
    
    
    price in
    
    
    of
    
    
    price in
    
    
    of
    
    
    price inNo. of options granted,
    
    of options
    
    
    Rs.
    
    
    options
    
    
    Rs.
    
    
    options
    
    
    Rs.exercised and forfeited
    
    2010
    
    
    2010
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Outstanding at the beginning of the
year
    
    
    1,211,900
    
    
    
    152.51
    
    
    
    1,200,400
    
    
    
    157.35
    
    
    
    
    
    
    
    Granted during the year
    
    
    50,000
    
    
    
    89.34
    
    
    
    142,500
    
    
    
    117.46
    
    
    
    708,200
    
    
    
    184.84Replaced (Refer to notes below)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123,900
    )
    
    
    184.84Replacement options granted
(Refer to notes below)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    621,100Forfeited during the year
    
    
    (93,616
    )
    
    
    153.58
    
    
    
    (131,000
    )
    
    
    158.77
    
    
    
    (5,000
    )
    
    
    157.35Expired during the year
    
    
    (88,068
    )
    
    
    158.01
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308.42Exercised during the year
    
    
    (1,416
    )
    
    
    59.02
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at the end of the
year
    
    
    1,078,800
    
    
    
    149.21
    
    
    
    1,211,900
    
    
    
    152.51
    
    
    
    1,200,400
    
    
    
    157.35Vested and Exercisable at the
end of the year
    
    
    437,210
    
    
    
    155.55
    
    
    
    185,167
    
    
    
    157.35
    
    
    
    
    
    
    
    Weighted average grant date
fair value of grants during the
year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71.82
    
    
    
    
    
    
    
    80.78
  144




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##### Table of Contents



Year ended
    
    
    Year ended
    
    
    Year endedMarch 31,
    
    
    March 31,
    
    
    March 31,No. of options granted, exercised and forfeited
    
    2010
    
    
    2009
    
    
    2008Weighted average share price
    
    99.26
    
    
    130.41
    
    
    174.83Weighted average exercise price
    
    89.34
    
    
    117.46
    
    
    157.35Expected volatility
    
    115.8%  136.7%
    
    
    53.5%  120.0%
    
    
    53.83%  77.82%Option life
    
    3  4.5 years
    
    
    3  4.5 years
    
    
    3  4.5 yearsExpected dividends
    
    
    
    
    
    
    
    Risk-free interest rate
    
    2.43%  2.69%
    
    
    1.64%  3.45%
    
    
    2.50%  7.50%
  WeightedNumber
    
    
    Weighted
    
    
    average
    
    
    Number
    
    
    WeightedRange of
    
    
    outstanding at
    
    
    average
    
    
    remaining
    
    
    exercisable at
    
    
    averageexercise price
    
    
    March 31,
    
    
    exercise price
    
    
    contractual
    
    
    March 31,
    
    
    exercise pricein Rs.
    
    
    2010
    
    
    in Rs.
    
    
    life
    
    
    2010
    
    
    in Rs.ASOP 2007
    
    
    51.51-188.32
    
    
    
    1,078,800
    
    
    
    149.21
    
    
    
    2.97
    
    
    
    437,210
    
    
    
    155.55
 Modification
   145




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##### Table of Contents



Assumptions
    
    Pre modification
    
    
    Post modificationCurrent market price
    
    174.83
    
    
    174.83Exercise price
    
    308.34  578.38
    
    
    157.35Expected term
    
    3  4.5 years
    
    
    3  4.5 yearsVolatility
    
    53.83%  77.82%
    
    
    53.01%  77.82%Dividend yield
    
    0%
    
    
    0%Discount rate
    
    2.5%
    
    
    2.5%
 31. Financial income and expense
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Interest income on bank deposits
    
    
    19,489
    
    
    
    116,495
    
    
    
    160,262Interest income from leases
    
    
    
    
    
    
    435
    
    
    
    1,232Others
    
    
    8,505
    
    
    
    5,635
    
    
    
    289Finance income
    
    
    27,994
    
    
    
    122,565
    
    
    
    161,783Interest expense on lease obligations
    
    
    16,476
    
    
    
    2,243
    
    
    
    1,826Bank charges (including letter of credit,
bill discounting and buyers credit charges)
    
    
    100,241
    
    
    
    86,216
    
    
    
    46,484Interest expense on borrowings
    
    
    177,156
    
    
    
    163,201
    
    
    
    9,372Finance expense
    
    
    (293,873
    )
    
    
    (251,660
    )
    
    
    (57,682
    )Net finance income / (expense) recognised
in profit or loss
    
    
    (265,879
    )
    
    
    (129,095
    )
    
    
    104,101
 32. Earnings / (loss) per share
  Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Net profit / (loss )  as reported
    
    
    17,027
    
    
    
    (900,574
    )
    
    
    (4,696
    )Weighted average number of shares  basic
    
    
    50,840,358
    
    
    
    43,350,320
    
    
    
    42,877,726Basic earnings / (loss) per share
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )Weighted average number of shares  diluted
    
    
    50,853,293
    
    
    
    43,350,320
    
    
    
    42,877,726Diluted earnings / (loss) per share
    
    
    0.33
    
    
    
    (20.77
    )
    
    
    (0.11
    )
  146




---



##### Table of Contents



Weighted average number of ordinary shares basic
 Year ended March 31,2010
    
    
    2009
    
    
    2008Issued fully paid ordinary shares at April 01
    
    
    42,820,082
    
    
    
    42,820,082
    
    
    
    42,800,265Effect of shares issued on exercise of stock options
    
    
    166
    
    
    
    
    
    
    
    14,562Effect of partly paid shares
    
    
    
    
    
    
    530,238
    
    
    
    62,899Effect of shares issued consequent to amalgamation
of Sify Communications Limited
    
    
    8,020,110
    
    
    
    
    
    
    
    Weighted average number of equity shares and
equivalent shares outstanding
    
    
    50,840,358
    
    
    
    43,350,320
    
    
    
    42,877,726
 Weighted average number of ordinary shares diluted
 Year ended March 31,2010
    
    
    2009
    
    
    2008Weighted average number of ordinary shares (basic)
    
    
    50,840,358
    
    
    
    43,350,320
    
    
    
    42,877,726Effect of stock options
    
    
    12,935
    
    
    
    
    
    
    
    Weighted average number of equity shares outstanding (diluted)
    
    
    50,853,293
    
    
    
    43,350,320
    
    
    
    42,877,726
  33. Operating leases
  As at March 31, 2010
 Less
    
    
    
    
    
    
    MoreLease obligations
    
    Total
    
    
    than 1 year
    
    
    1-5 years
    
    
    than 5 yearsNon-cancellable operating lease obligations
    
    
    1,608,509
    
    
    
    119,871
    
    
    
    407,890
    
    
    
    1,080,748Non-cancellable obligations towards
proposed lease *
    
    
    2,423,554
    
    
    
    22,850
    
    
    
    520,808
    
    
    
    1,879,896
 As at March 31, 2009
 Less
    
    
    
    
    
    MoreLease obligations
    
    Total
    
    
    than 1 year
    
    
    1-5 years
    
    
    than 5 yearsNon-cancellable operating lease obligations
    
    
    1,801,477
    
    
    
    135,165
    
    
    
    585,564
    
    
    
    1,080,748Non-cancellable obligations towards
proposed lease *
    
    
    2,423,554
    
    
    
    
    
    
    
    549,538
    
    
    
    1,874,016
 *
    
    For details on proposed lease, refer Note 37 on related parties.  147




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##### Table of Contents



34. Segment reporting
  
    
    Corporate network/data services, which provides Internet, connectivity, security and
consulting, hosting and managed service solutions;
 
    
    Internet access services, from homes and through cybercafés,
 
    
    Online portal services and content offerings; and
 
    
    Other services, such as development of e-learning software.
        148




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##### Table of Contents



Year ended March 31, 2010
 Corporatenetwork /
    
    
    Internet
    
    
    Online
    
    
    Consumerdata
    
    
    access
    
    
    portal
    
    
    one
    
    
    Otherservices
    
    
    services
    
    
    services
    
    
    (Sub-total)
    
    
    services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    5,335,268
    
    
    
    713,929
    
    
    
    130,842
    
    
    
    844,771
    
    
    
    530,149
    
    
    
    6,710,188Allocated segment expenses
    
    
    (3,929,727
    )
    
    
    (757,431
    )
    
    
    (140,966
    )
    
    
    (898,397
    )
    
    
    (406,063
    )
    
    
    (5,234,187
    )Impairment loss on
intangibles including
goodwill
    
    
    
    
    
    
    
    
    
    
    (47,269
    )
    
    
    (47,269
    )
    
    
    
    
    
    
    (47,269
    )Segment operating income /
(loss)
    
    
    1,405,541
    
    
    
    (43,502
    )
    
    
    (57,393
    )
    
    
    (100,895
    )
    
    
    124,086
    
    
    
    1,428,732Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (477,807
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (936,842
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (656,797
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,789Income from legal settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561,120Finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,994Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (223,990
    )Share of profit of equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,135Profit / (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54,666
    )Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,479Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,813
 Year ended March 31, 2009
 Corporatenetwork /
    
    
    Internet
    
    
    Online
    
    
    Consumerdata
    
    
    access
    
    
    portal
    
    
    one
    
    
    Otherservices
    
    
    services
    
    
    services
    
    
    (Sub-total)
    
    
    services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    4,305,235
    
    
    
    1,128,182
    
    
    
    177,324
    
    
    
    1,305,506
    
    
    
    551,420
    
    
    
    6,162,161Allocated segment expenses
    
    
    (2,842,889
    )
    
    
    (1,295,332
    )
    
    
    (220,967
    )
    
    
    (1,516,299
    )
    
    
    (473,008
    )
    
    
    (4,832,196
    )Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    (15,200
    )
    
    
    (15,200
    )
    
    
    
    
    
    
    (15,200
    )Segment operating income /
(loss)
    
    
    1,462,346
    
    
    
    (167,150
    )
    
    
    (58,843
    )
    
    
    (225,993
    )
    
    
    78,412
    
    
    
    1,314,765Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (484,478
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,130,221
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (498,872
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,105Finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,565Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (231,539
    )Share of profit of equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,091Profit / (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (754,584
    )Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,049
    )Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (851,633
    )
  149




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##### Table of Contents



Year ended March 31, 2008
 Corporatenetwork /
    
    
    Internet
    
    
    Online
    
    
    Consumerdata
    
    
    access
    
    
    portal
    
    
    one
    
    
    Otherservices
    
    
    services
    
    
    services
    
    
    (Sub-total)
    
    
    services
    
    
    TotalA
    
    
    B
    
    
    A+BSegment revenue
    
    
    3,822,108
    
    
    
    1,545,226
    
    
    
    210,766
    
    
    
    1,755,992
    
    
    
    428,115
    
    
    
    6,006,215Allocated segment expenses
    
    
    (2,434,316
    )
    
    
    (1,432,982
    )
    
    
    (298,031
    )
    
    
    (1,731,013
    )
    
    
    (366,851
    )
    
    
    (4,532,180
    )Segment operating income / (loss)
    
    
    1,387,792
    
    
    
    112,244
    
    
    
    (87,265
    )
    
    
    24,979
    
    
    
    61,264
    
    
    
    1,474,035Unallocated expenses:Cost of goods sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333,681
    )Selling, general and
administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,014,382
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (394,337
    )Other income / (expense), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,152Finance income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,783Finance expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,276
    )Share of profit of equity
accounted investee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,127Profit / (loss) before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,421Income tax (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,975
    )Profit / (loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,446
 Reconciliations
 Selling, generalandCost of goods
    
    
    administrative
    
    
    Financesold
    
    
    expenses
    
    
    expenses
    
    
    TotalYear ended March 31, 2010Allocated segment expenses
    
    
    3,618,731
    
    
    
    1,545,573
    
    
    
    69,883
    
    
    
    5,234,187Unallocated segment expenses
    
    
    477,807
    
    
    
    936,842
    
    
    
    223,990Total as per income statement
    
    
    4,096,538
    
    
    
    2,482,415
    
    
    
    293,873Year ended March 31, 2009Allocated segment expenses
    
    
    3,128,871
    
    
    
    1,683,204
    
    
    
    20,121
    
    
    
    4,832,196Unallocated segment expenses
    
    
    484,478
    
    
    
    1,130,221
    
    
    
    231,539Total as per income statement
    
    
    3,613,349
    
    
    
    2,813,425
    
    
    
    251,660Year ended March 31, 2008Allocated segment expenses
    
    
    3,085,441
    
    
    
    1,420,333
    
    
    
    26,406
    
    
    
    4,532,180Unallocated segment expenses
    
    
    333,681
    
    
    
    1,014,382
    
    
    
    31,276Total as per income statement
    
    
    3,419,122
    
    
    
    2,434,715
    
    
    
    57,682
  150




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##### Table of Contents



Geographic segments
  Rest of theDescription
    
    India
    
    
    world
    
    
    TotalRevenuesYear ended March 31, 2010
    
    
    4,950,352
    
    
    
    1,759,836
    
    
    
    6,710,188Year ended March 31, 2009
    
    
    5,071,137
    
    
    
    1,091,024
    
    
    
    6,162,161Year ended March 31, 2008
    
    
    5,342,248
    
    
    
    663,967
    
    
    
    6,006,215
  35. Contingencies
      36. Legal proceedings
   151




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##### Table of Contents




    
    On October 12, 2009, Department of Telecommunications (DOT) raised a demand on Sify
Technologies for INR 14 million after correcting the arithmetical error in the Assessment
letter issued by the DoT.
 
    
    On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary
merged with Sify Technologies Limited) for INR 26 million.
  152




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##### Table of Contents




    
    Certain items of income have been considered by DOT as licensed activities for payment
of licensee fee as the information was not available to DOT.
 
    
    Certain items like other income, interest on deposits, gain on foreign exchange
fluctuation, profit on sale of assets, provision written back has been considered by DOT as
income eligible for licensed activities as against the Companys claim that they are not
liable for license fee.The Company has responded to the above said demand notices stating that the above demands
are not tenable as the demands were not in accordance with the Telecom Disputes Settlement &
Appellate Tribunal (TDSAT) Order which has clarified in its Order that the items of income
which are liable for license fee and items of income on which license fees are not liable to
be paid. However the TDSAT Order has been challenged in Supreme Court by DoT and
Associations of service providers and finality would be arrived
only after the decision of the Court. The Company currently pays license fee in accordance
with the TDSAT Order and Sify believes that it has adequate legal defenses for these demands
and the ultimate outcome of these actions will not have a material adverse effect on Sify.
 
 3.3 GHz band
  37. Related parties
  Country
    
    
    % of Ownership interestof
    
    
    March 31,
    
    
    March 31,Particulars
    
    incorporation
    
    
    2010
    
    
    2009SubsidiariesSify Communications Limited (until March 31,
2008 also refer note 40)
    
    India
    
    
    
    
    
    
    74Sify International Inc.
    
    USA
    
    
    100
    
    
    
    100Sify Software Limited (Formerly Sify Networks
Private Limited)
    
    India
    
    
    100
    
    
    
    100Sify Technologies (Singapore) Pte. Limited
(Incorporated on December 7, 2009)
    
    Singapore
    
    
    100
    
    
    
    AssociatesMF Global-Sify Securities India Private Limited
    
    India
    
    
    29.85
    
    
    
    29.85Others (Entities in which the Key Management
Personnel have controlling
interest/significant influence)Server Engines LLC
    
    USA
    
    
    
    
    
    
    Server Engines India Private Limited
    
    India
    
    
    
    
    
    
    VALS Developers Private Limited
    
    India
    
    
    
    
    
    
    Infinity Satcom Universal Private Limited
    
    India
    
    
    
    
    
    
    
  153




---



##### Table of Contents



KeyManagementTransactions
    
    Associates
    
    
    Others
    
    
    Personnel***Consultancy services received
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    1,240Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    52,441Contributions to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,427Share based payment transactions
    
    
    
    
    
    
    
    
    
    
    9,486Issuance of shares on amalgamation of erstwhile
Sify Communications limited with Sify Technologies
limited
    
    
    
    
    
    
    842,837
    
    
    
    Amount of outstanding balancesDebtors
    
    
    
    
    
    
    
    
    
    
    Advance lease rentals and refundable deposits made*
    
    
    
    
    
    
    282,825
    
    
    
    
  KeymanagementTransactions
    
    Associates
    
    
    Others
    
    
    personnel***Sale of goods / services
    
    
    6,600
    
    
    
    734
    
    
    
    Advance lease rentals and refundable deposits made*
    
    
    
    
    
    
    282,825
    
    
    
    Consultancy services received
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    1,220Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    50,672Contributions to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,389Share based payments
    
    
    
    
    
    
    
    
    
    
    33,579Amount of outstanding balancesDebtors
    
    
    524
    
    
    
    174
    
    
    
    Advance lease rentals and refundable deposits made
    
    
    
    
    
    
    282,825
    
    
    
    
  KeymanagementTransactions
    
    Associates
    
    
    Others
    
    
    personnel***Purchase of goods / services
    
    
    
    
    
    
    3,796
    
    
    
    Issue of shares for cash**
    
    
    
    
    
    
    112,149
    
    
    
    Consultancy services
    
    
    
    
    
    
    
    
    
    
    240Sitting fees paid
    
    
    
    
    
    
    
    
    
    
    1,320Salaries and other short term benefits
    
    
    
    
    
    
    
    
    
    
    53,298Contribution to defined contribution plans
    
    
    
    
    
    
    
    
    
    
    2,516Share based payments
    
    
    
    
    
    
    
    
    
    
    40,169
  154




---



##### Table of Contents



*
    
    Represents deposits made to VALS Developers Private Limited (VALS).VALS is owned and controlled
by Raju Vegesna Infotech & Industries Private Limited, in which Mr. Raju Vegesna, our principal
share holder and Chief Executive Officer, is holding 94.66% equity in his personal capacity.
During the year ended March 31, 2009, Sify entered into a Memorandum of Understanding (MoU) for
long term lease with VALS Developers Private Limited to obtain land and 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 connection with this memorandum of understanding,
Sify has paid a security deposit of Rs.125,700 and advance rental of Rs.157,125 to VALS. As per the
terms of the MOU, 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.
Subsequently on October 30,2010, the Board of Directors have proposed to cancel the MoU for lease
arrangement and has decided to acquire the property which is under construction from the third
party directly. The above deposits would be adjusted against the consideration payable for
acquiring the property.**
    
    Also refer note 16 in relation to transactions relating to issue of equity shares to Infinity
Satcom Universal 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. 38. Financial instruments
 Financial instruments by category
  Financialassets /liabilitiesat fairvaluethrough
    
    
    
    
    
    
    Other
    
    
    TotalLoans and
    
    
    profit and
    
    
    Available
    
    
    financial
    
    
    carrying
    
    
    Total fairParticulars
    
    Note
    
    
    receivables
    
    
    loss
    
    
    for sale
    
    
    liabilities
    
    
    value
    
    
    valueAssetsCash and cash equivalents
    
    
    8
    
    
    
    878,698
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    878,698
    
    
    
    878,698Other assets
    
    
    10
    
    
    
    249,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,744
    
    
    
    249,744Trade receivables
    
    
    13
    
    
    
    1,912,348
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,912,348
    
    
    
    1,912,348Other receivables
    
    
    13
    
    
    
    315,835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315,835
    
    
    
    315,835Derivative financial instruments
    
    
    13
    
    
    
    
    
    
    
    6,998
    
    
    
    
    
    
    
    
    
    
    
    6,998
    
    
    
    6,998LiabilitiesBank overdraft
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060,284
    
    
    
    1,060,284
    
    
    
    1,060,284Finance lease liabilities
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    201,317
    
    
    
    201,317
    
    
    
    201,317Other liabilities
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165,800
    
    
    
    165,800
    
    
    
    165,800Borrowings from banks
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,239,105
    
    
    
    1,239,105
    
    
    
    1,239,105Borrowings from others
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163,165
    
    
    
    163,165
    
    
    
    163,165Trade and other payables
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,798,764
    
    
    
    1,798,764
    
    
    
    1,798,764
  155




---



##### Table of Contents



Financialassets /liabilitiesat fairvaluethrough
    
    
    
    
    
    
    Other
    
    
    TotalLoans and
    
    
    profit and
    
    
    Available
    
    
    financial
    
    
    carrying
    
    
    Total fairParticulars
    
    Note
    
    
    receivables
    
    
    loss
    
    
    for sale
    
    
    liabilities
    
    
    value
    
    
    valueAssetsCash and cash equivalents
    
    
    8
    
    
    
    1,710,798
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,710,798
    
    
    
    1,710,798Other assets
    
    
    10
    
    
    
    227,468
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,468
    
    
    
    227,468Trade receivables
    
    
    13
    
    
    
    1,504,927
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,504,927
    
    
    
    1,504,927Other receivables
    
    
    13
    
    
    
    402,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    402,992
    
    
    
    402,992Derivative financial instruments
    
    
    13
    
    
    
    
    
    
    
    2,997
    
    
    
    
    
    
    
    
    
    
    
    2,997
    
    
    
    2,997Other investments
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    13,874
    
    
    
    
    
    
    
    13,874
    
    
    
    13,874LiabilitiesBank overdraft
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    1,397,083Finance lease liabilities
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,325
    
    
    
    155,325
    
    
    
    155,325Other liabilities
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,116
    
    
    
    134,116
    
    
    
    134,116Borrowings from banks
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,384,519
    
    
    
    1,384,519
    
    
    
    1,384,519Trade and other payables
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    1,411,358
 Details of financial assets pledged as collateral
  March 31, 2010
    
    
    March 31, 2009Cash and cash equivalents
    
    
    878,698
    
    
    
    1,710,798Other assets
    
    
    249,744
    
    
    
    227,468Trade receivables
    
    
    1,912,348
    
    
    
    1,504,927Other receivables
    
    
    315,835
    
    
    
    402,9923,356,625
    
    
    
    3,846,185
 Derivative financial instruments
  As ofMarch 31, 2010
    
    
    March 31, 2009Forward contractsIn U.S. Dollars (Sell)
    
    
    
    
    
    
    In U.S Dollars (Buy)
    
    
    
    
    
    
    Option contractsIn U.S Dollars (Sell)
    
    
    67,710
    
    
    
    216,538In U.S Dollars (Buy)
    
    
    
    
    
    
    25,475
   As ofMarch 31, 2010
    
    
    March 31, 2009Sell:Not later than one month
    
    
    33,855
    
    
    
    25,525Later than one month and not later than three months
    
    
    33,855
    
    
    
    50,950Later than three months and not later than six months
    
    
    
    
    
    
    76,425Later than six months and not later than one year
    
    
    
    
    
    
    63,63867,710
    
    
    
    216,538
  156




---



##### Table of Contents



As ofMarch 31, 2010
    
    
    March 31, 2009Buy:Not later than one month
    
    
    
    
    
    
    25,475Later than one month and not later than three months
    
    
    
    
    
    
    Later than three months and not later than six months
    
    
    
    
    
    
    Later than six months and not later than one year
    
    
    
    
    
    
    
    
    
    
    25,475
 Interest, (expenses), gains and (losses) recognized on financial assets and liabilities
 Recognised in profit or loss
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Loans and receivablesInterest income on bank deposits
    
    
    19,489
    
    
    
    116,495
    
    
    
    160,262Interest income from leases
    
    
    
    
    
    
    435
    
    
    
    1,232Interest income from other loans and receivables
    
    
    8,505
    
    
    
    5,635
    
    
    
    289Impairment loss of trade receivables
    
    
    (121,987
    )
    
    
    (84,346
    )
    
    
    (131,954
    )Impairment loss on finance lease receivables
    
    
    
    
    
    
    (6,929
    )
    
    
    Financial assets at fair value through profit or lossNet change in fair value of derivative financial
instruments
    
    
    6,998
    
    
    
    2,997
    
    
    
    (3,312
    )Other financial liabilitiesInterest expenses on lease obligations
    
    
    (16,476
    )
    
    
    (2,243
    )
    
    
    (1,826
    )Interest expenses on borrowings from banks, others
and overdrafts
    
    
    (177,156
    )
    
    
    (163,201
    )
    
    
    (9,372
    )
 Recognised directly in other comprehensive income
 Year endedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Net change in fair
value of
available-for-sale
financial assets
    
    
    
    
    
    
    (5,361
    )
    
    
    (1,080
    )
 39. Financial Risk Management
  
    
    Credit risk
 
    
    Liquidity risk
 
    
    Market risk
   157




---



##### Table of Contents



Credit risk
 Trade and other receivables
  Cash and cash equivalents and other investments
  Guarantees
   Exposure to credit risk
  March 31, 2010
    
    
    March 31, 2009Cash and cash equivalents
    
    
    878,698
    
    
    
    1,710,798Other assets
    
    
    249,744
    
    
    
    227,468Trade receivables
    
    
    1,912,348
    
    
    
    1,504,927Other receivables
    
    
    315,835
    
    
    
    402,992Derivative financial instruments
    
    
    6,998
    
    
    
    2,997Other investments
    
    
    
    
    
    
    20,3153,363,623
    
    
    
    3,869,497
 Financial assets that are past due but not impaired
  Period (in days)
    
    March 31, 2010
    
    
    March 31, 2009Past due 181 - 270 days
    
    
    160,979
    
    
    
    120,662Past due 271 - 365 days
    
    
    29,346
    
    
    
    59,534More than 365 days
    
    
    114,932
    
    
    
    305,257
    
    
    
    180,196
   158




---



##### Table of Contents



Financial assets that are not past due
  Details of collateral and other credit enhancements held
 March 31, 2010
    
    
    March 31, 2009Security deposits received for internet access services
    
    
    16,236
    
    
    
    32,918
 Liquidity risks
  As at March 31, 2010
 Carrying
    
    
    Contractualamount
    
    
    cash flows
    
    
    0-12 months
    
    
    1-3 years
    
    
    3-5 yearsNon-derivative financial liabilitiesBank overdrafts
    
    
    1,060,284
    
    
    
    1,060,284
    
    
    
    1,060,284
    
    
    
    
    
    
    
    Finance lease liabilities
    
    
    201,317
    
    
    
    247,354
    
    
    
    65,148
    
    
    
    123,922
    
    
    
    58,284Other liabilities
    
    
    165,800
    
    
    
    165,800
    
    
    
    165,800
    
    
    
    
    
    
    
    Borrowing from banks
    
    
    1,239,105
    
    
    
    1,333,922
    
    
    
    972,962
    
    
    
    360,960
    
    
    
    Borrowings from others
    
    
    163,165
    
    
    
    207,828
    
    
    
    57,041
    
    
    
    91,247
    
    
    
    59,540Trade and other payables
    
    
    1,798,764
    
    
    
    1,798,764
    
    
    
    1,798,764
    
    
    
    
    
    
    
    4,628,435
    
    
    
    4,813,952
    
    
    
    4,119,999
    
    
    
    576,129
    
    
    
    117,824
 As at March 31, 2009
 Carrying
    
    
    Contractualamount
    
    
    cash flows
    
    
    0-12 months
    
    
    1-3 years
    
    
    3-5 yearsNon-derivative financial liabilitiesBank overdrafts
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    1,397,083
    
    
    
    
    
    
    
    Finance lease liabilities
    
    
    155,325
    
    
    
    180,989
    
    
    
    42,743
    
    
    
    84,746
    
    
    
    53,500Other liabilities
    
    
    134,116
    
    
    
    134,116
    
    
    
    134,116
    
    
    
    
    
    
    
    Borrowing from banks
    
    
    1,384,159
    
    
    
    1,498,236
    
    
    
    1,261,604
    
    
    
    200,694
    
    
    
    35,938Trade and other payables
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    1,411,358
    
    
    
    
    
    
    
    4,482,041
    
    
    
    4,621,782
    
    
    
    4,246,904
    
    
    
    285,440
    
    
    
    89,438
 Market risk:
  159




---



##### Table of Contents



Currency risk
 
    
    Forecasting inflows and outflows denominated in US$ for a twelve-month period
    
    Estimating the net-exposure in foreign currency, in terms of timing and amount
    
    Determining the extent to which exposure should be protected through one or more
risk-mitigating instruments to maintain the permissible limits of uncovered exposures.
 
    
    Carrying out a variance analysis between estimate and actual on an ongoing basis, and
taking stop-loss action when the adverse movements breaches the 5% barrier of deviation,
subject to review by Audit Committee.
  All amounts in respective currencies as mentioned (in thousands)
 USD
    
    
    CAD
    
    
    CHF
    
    
    Euro
    
    
    GBP
    
    
    DHS
    
    
    HKDCash and cash equivalents
    
    
    1,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trade receivables
    
    
    8,869
    
    
    
    168
    
    
    
    209
    
    
    
    32
    
    
    
    96
    
    
    
    1
    
    
    
    Trade payables
    
    
    (4,764
    )
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    (12
    )
    
    
    
    
    
    
    (11
    )Gross balance sheet exposure
    
    
    5,303
    
    
    
    168
    
    
    
    209
    
    
    
    1
    
    
    
    84
    
    
    
    1
    
    
    
    (11
    )Forward exchange / option
contracts
    
    
    (1,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net exposure
    
    
    3,803
    
    
    
    168
    
    
    
    209
    
    
    
    1
    
    
    
    84
    
    
    
    1
    
    
    
    (11
    )
  All amounts in respective currencies as mentioned (in thousands)
 USD
    
    
    CAD
    
    
    CHF
    
    
    Euro
    
    
    GBP
    
    
    SGD
    
    
    DHSCash and cash equivalents
    
    
    1,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trade receivables
    
    
    5,770
    
    
    
    301
    
    
    
    161
    
    
    
    2
    
    
    
    91
    
    
    
    16
    
    
    
    Trade payables
    
    
    (3,390
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (14
    )
    
    
    (26
    )
    
    
    (6
    )Gross balance sheet exposure
    
    
    3,727
    
    
    
    301
    
    
    
    161
    
    
    
    (13
    )
    
    
    77
    
    
    
    (10
    )
    
    
    (6
    )Forward exchange / option
contracts
    
    
    (3,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net exposure
    
    
    (23
    )
    
    
    301
    
    
    
    161
    
    
    
    (14
    )
    
    
    77
    
    
    
    (10
    )
    
    
    (6
    )
 Sensitivity analysis
  Othercomprehensiveincome
    
    
    Profit or lossMarch 31, 2010
    
    
    
    
    
    
    (19,367
    )March 31, 2009
    
    
    
    
    
    
    (2,253
    )
  Interest Rate Risk:
  160




---



##### Table of Contents



Profile
  Carrying amountFixed rate instruments
    
    March 31, 2010
    
    
    March 31, 2009Financial assets- Fixed deposits with banks
    
    
    531,192
    
    
    
    1,401,224Financial liabilities- Borrowings from banks
    
    
    697,165
    
    
    
    850,826- Borrowings from others
    
    
    163,165
    
    
    
    Variable rate instrumentsFinancial liabilities- Borrowings from banks
    
    
    541,940
    
    
    
    533,333- Bank overdrafts
    
    
    1,060,284
    
    
    
    1,397,083
 Fair value sensitivity for fixed rate instruments
  Cash flow sensitivity for variable rate instruments
  Equity
    
    
    Profit or lossMarch 31, 2010
    
    
    
    
    
    
    (16,022
    )March 31, 2009
    
    
    
    
    
    
    (19,304
    )
  40. Acquisition of non-controlling interest in subsidiary
  
    
    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.
  161




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##### Table of Contents




    
    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
  i.
    
    to provide extension of time for listing the shares in the Indian stock exchangesii.
    
    to grant a special permission to issue shares on rights basis to the existing shareholders
  42. Subsequent events
 Issuance of shares to existing promoter group
     162




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MF Global Sify Securities India Private Limited
 IFRS Consolidated Financial Statements
 As at March 31, 2010 and 2009 and for the years ended March 31, 2010, 2009, 2008
  163




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##### Table of Contents



Index
 Particulars
    
    Page No.Report of Independent Registered Public Accounting Firm
    
    
    165Consolidated Statement of Balance Sheet
    
    
    166Consolidated Income Statement
    
    
    167Consolidated Statement of Comprehensive Income
    
    
    168Consolidated Statement of Changes in Equity
    
    
    169Consolidated Statement of Cash Flow
    
    
    170Notes to the consolidated financial statements
    
    
    171
  164




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     
  165




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##### 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 March 31,Note
    
    
    2010
    
    
    2009ASSETSCash and bank balance
    
    
    11
    
    
    
    148,213
    
    
    
    181,616Cash-restricted
    
    
    12
    
    
    
    2,489,847
    
    
    
    2,347,862Interest bearing deposits with bank
    
    
    13
    
    
    
    295,659
    
    
    
    107,495Receivable from broker-dealers and clearing organizations
    
    
    9
    
    
    
    65,884
    
    
    
    42,228Receivable from customers (net of provision of Rs.22,300
and Rs. 80,000 respectively)
    
    
    8
    
    
    
    437,207
    
    
    
    171,993Available-for-sale securities:Marketable, at market value
    
    
    14
    
    
    
    877
    
    
    
    Not readily marketable (at estimated fair value)
    
    
    14
    
    
    
    11,447
    
    
    
    9,920Deposits with clearing organizations
    
    
    
    
    
    
    110,969
    
    
    
    120,865Interest accrued but not due
    
    
    
    
    
    
    71,443
    
    
    
    102,170Other assets
    
    
    10
    
    
    
    220,282
    
    
    
    189,581Intangible assets:Computer software including work in progress (Rs. 238)
    
    
    5.1
    
    
    
    28,424
    
    
    
    16,074Memberships in exchanges
    
    
    5.2
    
    
    
    5,782
    
    
    
    9,495Property, plant and equipment
    
    
    6
    
    
    
    70,159
    
    
    
    80,540Deferred tax asset (Net)
    
    
    7
    
    
    
    17,901
    
    
    
    56,082Total assets
    
    
    
    
    
    
    3,974,094
    
    
    
    3,435,921EQUITYCapital and reserves attributable to the Equity holdersOrdinary shares
    
    
    15
    
    
    
    518,942
    
    
    
    518,942Additional paid in capital
    
    
    
    
    
    
    28,968
    
    
    
    28,968Retained earnings
    
    
    
    
    
    
    1,564,231
    
    
    
    1,256,688Currency translations
    
    
    
    
    
    
    953
    
    
    
    6,610Fair value adjustments
    
    
    
    
    
    
    9,081
    
    
    
    7,554Total Equity
    
    
    
    
    
    
    2,122,175
    
    
    
    1,818,762LIABILITIESPayable to broker dealers and clearing organizations
    
    
    9
    
    
    
    139,965
    
    
    
    227,786Payable to customers
    
    
    
    
    
    
    1,177,517
    
    
    
    985,075Borrowings
    
    
    17
    
    
    
    3,508
    
    
    
    4,645Accounts payable, accrued expenses, and other liabilities
    
    
    19
    
    
    
    394,327
    
    
    
    351,958Employee benefit obligation
    
    
    18
    
    
    
    136,602
    
    
    
    47,695Total Liabilities
    
    
    
    
    
    
    1,851,919
    
    
    
    1,617,159Total liabilities and Equity
    
    
    
    
    
    
    3,974,094
    
    
    
    3,435,921
   For and on behalf of the Board
 Vineet Bhatnagar
  166




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MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 
 Consolidated Income Statement
 Years ended March 31,Note
    
    
    2010
    
    
    2009
    
    
    2008IncomeCommissions
    
    
    
    
    
    
    1,201,594
    
    
    
    914,969
    
    
    
    1,761,848Depository and clearing fees
    
    
    
    
    
    
    35,488
    
    
    
    34,456
    
    
    
    78,324Interest on fixed deposits with banks
    
    
    
    
    
    
    238,491
    
    
    
    325,547
    
    
    
    497,683Other Income
    
    
    23
    
    
    
    136,972
    
    
    
    138,671
    
    
    
    165,665Total Income
    
    
    
    
    
    
    1,612,545
    
    
    
    1,413,643
    
    
    
    2,503,520ExpensesEmployee compensation and benefits
    
    
    21
    
    
    
    607,775
    
    
    
    515,234
    
    
    
    745,773Exchange expenses and clearance fees
    
    
    
    
    
    
    165,769
    
    
    
    130,904
    
    
    
    253,658Brokerage to other broker-dealers
    
    
    
    
    
    
    152,002
    
    
    
    95,859
    
    
    
    177,795Communications and data processing
    
    
    
    
    
    
    28,168
    
    
    
    27,585
    
    
    
    24,707Bank Interest and guarantee commission
    
    
    
    
    
    
    7,616
    
    
    
    28,883
    
    
    
    42,522Depreciation and amortization
    
    
    
    
    
    
    37,398
    
    
    
    38,348
    
    
    
    36,086Occupancy
    
    
    
    
    
    
    75,210
    
    
    
    69,933
    
    
    
    37,990Write back of provision
    
    
    22
    
    
    
    (57,500
    )
    
    
    
    
    
    
    Provision for receivable from customers
    
    
    
    
    
    
    
    
    
    
    2,925
    
    
    
    675Advertisement and business promotion
    
    
    
    
    
    
    45,593
    
    
    
    34,987
    
    
    
    72,426Other expenses
    
    
    20
    
    
    
    82,111
    
    
    
    125,693
    
    
    
    151,964Total Expenses
    
    
    
    
    
    
    1,144,142
    
    
    
    1,070,351
    
    
    
    1,543,596Profit before income tax
    
    
    
    
    
    
    468,403
    
    
    
    343,292
    
    
    
    959,924Income tax expense
    
    
    24
    
    
    
    160,860
    
    
    
    126,375
    
    
    
    353,669Profit for the year attributable to the Equity holders
    
    
    
    
    
    
    307,543
    
    
    
    216,917
    
    
    
    606,255
   For and on behalf of the Board
 Vineet Bhatnagar
  167




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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 31,2010
    
    
    2009
    
    
    2008Net income for the year
    
    
    307,543
    
    
    
    216,917
    
    
    
    606,255Other comprehensive incomeAvailable for sale financial assets- Net change in fair value
    
    
    1,527
    
    
    
    (10,473
    )
    
    
    (7,885
    )- Transfer to consolidated statement of income
    
    
    
    
    
    
    
    
    
    
    (22,387
    )Foreign currency translation differencesCurrency translation differences
    
    
    (5,657
    )
    
    
    9,257
    
    
    
    (1,586
    )(4,130
    )
    
    
    (1,216
    )
    
    
    (31,858
    )Total comprehensive income for the year
    
    
    303,413
    
    
    
    215,701
    
    
    
    574,397
   For and on behalf of the Board
 Vineet Bhatnagar
  168




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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
    
    
    
    
    
    
    
    
    
    
    Additionalordinary
    
    
    Par
    
    
    Share
    
    
    paid-in
    
    
    Retained
    
    
    Currency
    
    
    Fair Value
    
    
    Totalshares
    
    
    value
    
    
    capital
    
    
    capital
    
    
    earnings
    
    
    translations
    
    
    adjustment
    
    
    EquityBalance at April 1, 2007
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    433,516
    
    
    
    (1,061
    )
    
    
    48,299
    
    
    
    1,028,664Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,586
    )
    
    
    
    
    
    
    (1,586
    )Transfer to income statement on sale of available-for-sale
securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,387
    )
    
    
    (22,387
    )Fair value loss on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,885
    )
    
    
    (7,885
    )Net income directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,586
    )
    
    
    (30,272
    )
    
    
    (31,858
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606,255
    
    
    
    
    
    
    
    
    
    
    
    606,255Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606,255
    
    
    
    (1,586
    )
    
    
    (30,272
    )
    
    
    574,397Balance at March 31, 2008
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    1,039,771
    
    
    
    (2,647
    )
    
    
    18,027
    
    
    
    1,603,061Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,257
    
    
    
    
    
    
    
    9,257Fair value loss on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,473
    )
    
    
    (10,473
    )Net loss directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,257
    
    
    
    (10,473
    )
    
    
    (1,216
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216,917
    
    
    
    
    
    
    
    
    
    
    
    216,917Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216,917
    
    
    
    9,257
    
    
    
    (10,473
    )
    
    
    215,701Balance at March 31, 2009
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    1,256,688
    
    
    
    6,610
    
    
    
    7,554
    
    
    
    1,818,762Currency translation differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,657
    )
    
    
    
    
    
    
    (5,657
    )Fair value loss on available-for-sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,527
    
    
    
    1,527Net loss directly recognised in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,657
    )
    
    
    1,527
    
    
    
    (4,130
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307,543
    
    
    
    
    
    
    
    
    
    
    
    307,543Total recognised income and expense for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307,543
    
    
    
    (5,657
    )
    
    
    1,527
    
    
    
    303,413Balance at March 31, 2010
    
    
    51,894,182
    
    
    
    10
    
    
    
    518,942
    
    
    
    28,968
    
    
    
    1,564,231
    
    
    
    953
    
    
    
    9,081
    
    
    
    2,122,175
   For and on behalf of the Board
 Vineet Bhatnagar
  169




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MF Global Sify Securities India Private Limited
 (All amounts in Indian Rupees thousands, except as otherwise stated)
 
 Consolidated Statement of Cash Flow
 Years ended March 31,Note
    
    
    2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesProfit before income tax
    
    
    
    
    
    
    468,403
    
    
    
    343,292
    
    
    
    959,924Adjustments forDepreciation and amortization
    
    
    
    
    
    
    37,398
    
    
    
    38,348
    
    
    
    35,980Profit on sale of Available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    (6,724
    )
    
    
    (51,816
    )Provision on receivable from customers
    
    
    8
    
    
    
    (57,700
    )
    
    
    2,925
    
    
    
    675Interest on fixed deposits with banks
    
    
    
    
    
    
    (238,491
    )
    
    
    (325,547
    )
    
    
    (497,683
    )Loss on Sale of Property,plant and equipment
    
    
    6
    
    
    
    13
    
    
    
    
    
    
    
    Interest income
    
    
    
    
    
    
    (5,566
    )
    
    
    (5,174
    )
    
    
    (11,160
    )Dividend income
    
    
    
    
    
    
    (283
    )
    
    
    (167
    )
    
    
    (548
    )Others
    
    
    
    
    
    
    3,963
    
    
    
    (2,617
    )
    
    
    (33
    )Movements in working capitalCash-restricted
    
    
    12
    
    
    
    (141,985
    )
    
    
    3,066,861
    
    
    
    (2,852,691
    )Interest bearing deposits with banks
    
    
    
    
    
    
    (188,164
    )
    
    
    (90,995
    )
    
    
    113,924Deposits with clearing organizations
    
    
    
    
    
    
    9,896
    
    
    
    30,650
    
    
    
    (31,467
    )Receivable from broker-dealers and clearing organizations
    
    
    9
    
    
    
    (23,656
    )
    
    
    312,213
    
    
    
    (293,525
    )Receivable from customers
    
    
    8
    
    
    
    (207,514
    )
    
    
    755,753
    
    
    
    (314,554
    )Other assets
    
    
    10
    
    
    
    (3,857
    )
    
    
    5,237
    
    
    
    (19,620
    )Payable to broker dealers and clearing organizations
    
    
    9
    
    
    
    (87,821
    )
    
    
    (2,756,446
    )
    
    
    1,788,638Payable to customers
    
    
    
    
    
    
    192,442
    
    
    
    (1,509,559
    )
    
    
    697,534Accounts payable, accrued expenses, and other liabilities
    
    
    19
    
    
    
    42,370
    
    
    
    (330,331
    )
    
    
    321,549Stock appreciation rights
    
    
    18
    
    
    
    88,907
    
    
    
    23,973
    
    
    
    15,218Cash provided by operations
    
    
    
    
    
    
    (111,645
    )
    
    
    (448,308
    )
    
    
    (367,503
    )Interest received
    
    
    
    
    
    
    5,566
    
    
    
    5,174
    
    
    
    11,160Interest received on fixed deposits placed
    
    
    
    
    
    
    269,218
    
    
    
    457,503
    
    
    
    325,282Income taxes paid
    
    
    
    
    
    
    (149,524
    )
    
    
    (151,697
    )
    
    
    (389,865
    )Net cash provided by/(used in) operating activities
    
    
    
    
    
    
    13,615
    
    
    
    (137,328
    )
    
    
    (420,926
    )Cash flows from investing activitiesPurchase of Available for Sale Securities: Marketable, At Market Value
    
    
    
    
    
    
    (877
    )
    
    
    168,004
    
    
    
    72,325Available for Sale Securities: Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,722Dividend income
    
    
    
    
    
    
    283
    
    
    
    167
    
    
    
    548Expenditure on Property, plant and equipment
    
    
    6
    
    
    
    (14,288
    )
    
    
    (35,695
    )
    
    
    (36,840
    )Expenditure on computer software
    
    
    5.1
    
    
    
    (25,342
    )
    
    
    (12,118
    )
    
    
    (7,265
    )Sale of Property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    2,278
    
    
    
    205Net cash (Used in) / provided by investing activities
    
    
    
    
    
    
    (40,224
    )
    
    
    122,636
    
    
    
    52,695Cash flows from financing activitiesProceeds from loan from associate company
    
    
    
    
    
    
    383,700
    
    
    
    270,000
    
    
    
    Repayment of loan to associate company
    
    
    
    
    
    
    (383,700
    )
    
    
    (270,000
    )
    
    
    (Repayment of) / Proceeds from borrowings
    
    
    17
    
    
    
    (1,137
    )
    
    
    (100,414
    )
    
    
    105,059Net cash ( Used in ) / provided by financing activities
    
    
    
    
    
    
    (1,137
    )
    
    
    (100,414
    )
    
    
    105,059Effect of foreign exchange fluctuation (Unrealised)
    
    
    
    
    
    
    (5,657
    )
    
    
    9,257
    
    
    
    (1,586
    )Net (decrease) in cash and bank balance
    
    
    
    
    
    
    (33,403
    )
    
    
    (105,849
    )
    
    
    (36,910
    )Cash and bank balance at beginning of the year
    
    
    11
    
    
    
    181,616
    
    
    
    287,465
    
    
    
    324,375Cash and Bank balance at end of year
    
    
    11
    
    
    
    148,213
    
    
    
    181,616
    
    
    
    287,465
   For and on behalf of the Board
 Vineet Bhatnagar
Managing Director
  170




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##### Table of Contents



Notes to the consolidated financial statements
 1.
    
    General information
  nd
   2.
    
    Summary of significant accounting policies
 2.1.
    
    Basis of preparation
    2.1.1.
    
    Standards, amendments and interpretations effective as at 31 March 2010
 
    
    IAS 1 (revised), Presentation of financial statements. The revised standard
prohibits the presentation of items of income and expenses (that is non-owner changes
in equity) in the statement of changes in equity, requiring non-owner changes in
equity to be presented separately from owner changes in equity. All non-owner changes
in equity are required to be shown in a performance statement.
   
    
    IFRS 2 (Amendment), Share-based payment. It clarifies that only service conditions
and performance conditions are vesting conditions. All other features need to be
included in the grant date fair value and do not impact the number of awards expected
to vest or the valuation subsequent to grant date. The amendment also specifies that
all cancellations, whether by the entity or by other parties, should receive the same
accounting treatment. The group will apply the amendment from 1 April 2009. The Group
has applied amendments from April 1, 2009, however this does not have any significant
impact on consolidated statements.
 
    
    IFRS 7 Financial instruments  Disclosures (amendment)  effective 1 January 2009,
the amendment requires enhanced disclosures about fair value measurement and liquidity
risk. In particular, the amendment requires disclosure of fair value measurements by
level of a fair value measurement hierarchy. As the change in accounting policy only
results in additional disclosures, there is no impact on earnings per share.
 
    
    IFRIC 14, IAS 19  The limit on a defined benefit asset, minimum funding
requirements and their interaction; IFRIC 14 provides guidance on assessing the limit
in IAS 19 on the amount of the surplus that can be recognized as an asset. It also
explains how the pension asset or liability may be affected by a statutory or
contractual minimum-funding requirement. The Group has applied IFRIC14, IAS 19
effective April 1, 2008.
  171




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2.1.2.
    
    Amendments and interpretations effective as at 31 March 2010 but not relevant
  
    
    IFRS 8 Operating Segments
 
    
    IAS 23 (amendment), Borrowing costs.
 
    
    IFRIC 13, Customer loyalty programmes.
 
    
    IFRIC 15, Agreements for the construction of real estate.
 
    
    IFRIC 16, Hedges of a net investment in a foreign operation.
 2.1.3.
    
    Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the group
  
    
    IAS 27 (Revised), Consolidated and Separate Financial Statements. It requires a
mandatory adoption of the economic entity model which treats all providers of equity
capital as shareholders of the entity. Consequently, a partial disposal of interest in
a subsidiary in which the parent company retains control does not result in a gain or
loss but in an increase or decrease in equity. Purchase of some or all of the
non-controlling interests (also known as minority interests) (NCI) is treated as a
treasury transaction and accounted for in equity. A partial disposal of interest in a
subsidiary in which the parent company loses control triggers recognition of gain or
loss on the entire interest. A gain or loss is recognised on the portion that has been
disposed of; a further holding gain is recognised on the interest retained, being the
difference between the fair value of the interest and book value of the interest.
   
    
    IFRS 3 (Revised), Business Combinations. It has expanded the scope to include
combinations by contract alone and combination of mutual entities and slightly amended
the definition of business as capable of being conducted rather than are conducted
and managed. All the acquisition-related costs are to be recognised as period expenses
in accordance with the appropriate IFRS. Costs incurred to issue debt or equity
securities will be recognised in accordance with IAS 39.
    
    
    IFRS 9 Financial Instruments introduces new requirements for classifying and
measuring financial assets. IFRS 9 specifies how an entity should classify and measure
its financial assets. It requires all financial assets to be classified in their
entirety on the basis of the entitys business model for managing the financial assets
and the contractual cash flow characteristics of the financial assets.
  
    
    Revised IAS 24 (revised), Related party disclosures, issued in November 2009. It
supersedes IAS 24, Related party disclosures, issued in 2003. The revised standard
clarifies and simplifies the definition of a related party and removes the requirement
for government-related entities to disclose details of all transactions with the
government and other government-related entities. When the revised standard is applied,
the group and the parent will need to disclose any transactions between its
subsidiaries and its associates.
   172




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
    
    IFRS 5 (Amendment), Non-current assets held-for-sale and discontinued operations
(and consequential amendment to IFRS 1, First-time adoption). The amendment clarifies
that all of a subsidiarys assets and liabilities are classified as held for sale if a
partial disposal sale plan results in loss of control. The group will apply the IFRS 5
(Amendment) prospectively to all partial disposals of subsidiaries from 1 April 2010.
 
    
    IFRIC 17, Distributions of non-cash assets to owners.IFRIC 17 clarifies how an
entity should measure distributions of assets, other than cash, when it pays dividends
to its owners. The group will apply IFRIC 17 from 1 April 2010.
 
    
    IAS 1 (Amendment), Presentation of financial statements. The amendment clarifies
that classification of a liability, that can at the option of the counterparty be
settled by the issue of the entitys equity instruments, on the basis of the
requirements to transfer cash or other assets rather than on settlement better reflects
the liquidity and solvency position of an entity. The group will apply the IAS 1
(Amendment) from 1 April 2010. It is not expected to have an impact on the groups
financial statements.
 
    
    IAS 7 (Amendment), Statement of cash flows is part of the IASBs annual
improvements project published in April 2009. The amendment clarifies that only an
expenditure that results in a recognised asset can be classified as a cash flow from
investing activities. The group will apply the IAS 1 (Amendment) from 1 April 2010. It
is not expected to have an impact on the groups financial statements.
 
    
    IAS 17 (Amendment), Leases.The amendment modified the criteria for classification
of lease that includes both land and buildings elements requiring an entity to assess
the classification of each element as a finance or an operating lease separately in the
same way as leases of other assets. The group will apply the IAS 17 (Amendment) from
April 1, 2010. The Company is in process of assessing the impact, if any.
 2.1.4.
    
    Amendments and interpretations to existing standards that are not yet effective and not
relevant for the groups operations
  
    
    IFRIC 13, Customer loyalty programmes,clarifies that where goods or services are
sold together with a customer loyalty incentive, the arrangement is a multiple-element
arrangement and the consideration receivable from the customer is allocated between the
components of the arrangement using fair values.
 
    
    IFRIC 15, Agreements for construction of real estates,clarifies whether IAS 18,
Revenue, or IAS 11, Construction contracts, should be applied to particular
transactions.
 
    
    IFRIC 16, Hedges of a net investment in a foreign operation, clarifies the
accounting treatment in respect of net investment hedging. This includes the fact that
net investment hedging relates to differences in functional currency not presentation
currency, and hedging instruments may be held anywhere in the group. The requirements
of IAS 21, The effects of changes in foreign exchange rates, do apply to the hedged
item.
 
    
    IFRIC 18, Transfers of assets from customers. IFRIC 18 clarifies the accounting for
arrangements where an item of property, plant and equipment, which is provided by the
customer, is used to provide an ongoing service. The interpretation applies
prospectively to transfers of assets from customers received on or after 1 July 2009,
although some limited retrospective application is permitted.
 
    
    IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments addresses
the accounting by an entity when the terms of a financial liability are renegotiated
and result in the entity issuing equity instruments to a creditor of the entity to
extinguish all or part of the financial liability.
 
    
    IAS 38 (Amendment), Intangible assets. The amendment deletes the wording that states
that there is rarely, if ever support for use of a method that results in a lower
rate of amortisation than the straight-line method. The amendment did not have an
impact on the groups operations, as all intangible assets are amortised using the
straight-line method.
  173




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2.2.
    
    Consolidation
   Percentage of
    
    
    Percentage ofCountry of
    
    holding as at
    
    
    holding as atincorporation
    
    March 31, 2010
    
    
    March 31, 2009Direct subsidiaries1)MF Global Commodities India Private Limited
    
    India
    
    
    100
    %
    
    
    100
    %2)MF Global Capital India Private Limited
    
    India
    
    
    100
    %
    
    
    100
    %Indirect Subsidiary1)MF Global Middle East DMCC
    
    Dubai
    
    
    100
    %
    
    
    100
    %
    2.3.
    
    Foreign currency translation
 a)
    
    Functional and presentation currency
  
    
    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.
 b)
    
    Transactions and balances
  2.4.
    
    Property, plant and equipment
   Furniture and fixtures
    
    
    18.10
    %Computer systems
    
    
    40.00
    %Office equipments
    
    
    13.91
    %Vehicles
    
    
    25.89
    %
    174




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2.5.
    
    Intangible assets
  a)
    
    Software
  b)
    
    Trading rights in Stock Exchange
 BSE membership
   DGCX membership
   2.6.
    
    Impairment of non-financial assets
  2.7.
    
    Financial instruments
    2.8.
    
    Financial assets
  a)
    
    Loans and Receivables
   175




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b)
    
    Available for sale
    2.9.
    
    Derivatives and Trading
  2.10.
    
    Receivables
  2.11.
    
    Interest bearing deposits with banks
  2.12.
    
    Cash and bank balance
  2.13.
    
    Restricted Cash
   2.14.
    
    Payables
   176




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2.15.
    
    Borrowings  Bank overdraft
  2.16.
    
    Provisions
  2.17.
    
    Current and deferred income tax
      2.18.
    
    Employee benefits
  a)
    
    Provident Fund
  b)
    
    Gratuity
   c)
    
    Share-based payment
 Share Based Payment
   177




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##### Table of Contents



2.19.
    
    Revenue Recognition
 a)
    
    Commission, clearing fees, depository fee income
  b)
    
    Dividend and Interest Income
  2.20.
    
    Leases
    3.
    
    Financial risk management objectives and policies
 3.1.
    
    Financial risk factors
  Business Risk
  Interest rate Risk
     178




---



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Price Risk
  Foreign Exchange Risk
  Credit Risk
    % of fixed depositsInvestment grade
    
    2010
    
    
    2009Highest safety
    
    
    100
    
    
    
    100High safety
    
    
    
    
    
    
    Adequate safety
    
    
    
    
    
    
    100
    
    
    
    100
    Risk Management Process and Mitigation
   
    
    establishing risk parameters based on analysis of current and historical prices and
price volatility;
 
    
    intra-day and end of day risk limit monitoring, including intra-day position and
trade monitoring to identify any accounts trading beyond pre-set limits and parameters;
 
    
    market risk analysis and evaluation of adequacy of margin requirements for traded
products;
 
    
    intra-day stress analysis for material market moves or accounts with material
position taking and
 
    
    approval of margin requirements, limits and risk control of new instruments
 Cash Liquidity Risk
   179




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Year ended March 31, 2010
 Within 6
    
    
    6 months to
    
    
    2 to 3
    
    
    After 3months
    
    
    1 Year
    
    
    years
    
    
    years
    
    
    TotalFinancial LiabilitiesPayable to broker dealers and clearing organizations
    
    
    139,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,965Payable to customers
    
    
    1,177,517
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,177,517Borrowings
    
    
    3,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,508Accounts payable, accrued expenses, and other liabilities
    
    
    394,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394,3271,715,317
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,715,317
 Within 6
    
    
    6 months to
    
    
    2 to 3
    
    
    After 3months
    
    
    1 Year
    
    
    years
    
    
    years
    
    
    TotalThe group has at its disposal following financial assets in
addition to unused lines of credit.Cash and bank balance
    
    
    148,213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,213Cash-restricted
    
    
    2,179,803
    
    
    
    310,044
    
    
    
    
    
    
    
    
    
    
    
    2,489,847Interest bearing deposits with bank
    
    
    107,445
    
    
    
    188,214
    
    
    
    
    
    
    
    
    
    
    
    295,659Deposits with clearing organizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,969
    
    
    
    110,969Receivable from broker-dealers and clearing organizations
    
    
    65,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,884Receivable from customers
    
    
    437,207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    437,207Available-for-sale securities Marketable, at market value
    
    
    877
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    877Available-for-sale securities not readily marketable, at fair value
    
    
    11,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,447Interest accrued but not due
    
    
    71,443
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,4433,022,319
    
    
    
    498,258
    
    
    
    
    
    
    
    110,969
    
    
    
    3,631,546
 Year ended March 31, 2009
 Within 6
    
    
    6 months to
    
    
    2 to 3
    
    
    After 3months
    
    
    1 Year
    
    
    years
    
    
    years
    
    
    TotalFinancial LiabilitiesPayable to broker dealers and clearing organizations
    
    
    227,786
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,786Payable to customers
    
    
    985,075
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    985,075Borrowings
    
    
    781
    
    
    
    781
    
    
    
    2,302
    
    
    
    781
    
    
    
    4,645Accounts payable, accrued expenses, and other liabilities
    
    
    351,958
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351,9581,565,600
    
    
    
    781
    
    
    
    2,302
    
    
    
    895
    
    
    
    1,569,464
 Within 6
    
    
    6 months to
    
    
    2 to 3
    
    
    After 3months
    
    
    1 Year
    
    
    years
    
    
    years
    
    
    TotalThe group has at its disposal following financial assets
in addition to unused lines of credit.Cash and Bank balance
    
    
    181,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,616Cash-restricted
    
    
    1,081,574
    
    
    
    1,266,288
    
    
    
    
    
    
    
    
    
    
    
    2,347,862Interest bearing deposits with bank
    
    
    87,495
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    107,495Deposits with clearing organizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,865
    
    
    
    120,865Receivable from broker-dealers and clearing organizations
    
    
    42,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,228Receivable from customers
    
    
    171,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,993Available-for-sale securities Marketable, at market value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest accrued but not due
    
    
    102,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,1701,667,076
    
    
    
    1,286,288
    
    
    
    
    
    
    
    120,865
    
    
    
    3,074,229
  As at March 31,2010
    
    
    2009Fund based facilities (working capital)
    
    
    500,000
    
    
    
    350,950Non-fund facilities
    
    
    1,060,000
    
    
    
    402,148Total
    
    
    1,560,000
    
    
    
    753,098
 3.2.
    
    Capital risk management
   180




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##### Table of Contents



3.3.
    
    Fair value estimation
     4.
    
    Critical accounting estimates and judgements
 4.1.
    
    Critical accounting estimates
         4.2.
    
    Criticial accounting judgements in applying the entitys accounting policy4.2.1.
    
    Revenue recognitionMF estimates that fixed deposits placed with banks will be held till maturity while
determining the accrued interest, which is unpaid on balance sheet date. In the event 1% of
such deposit is withdrawn before maturity date the Interest income will be lower by Rs. 63.
  181




---



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5.
    
    Intangible assets
 5.1.
    
    Software
 WebComputer
    
    
    DevelopmentSoftware
    
    
    Costs
    
    
    TotalCostAs at March 31, 2008
    
    
    51,446
    
    
    
    207,452
    
    
    
    258,898Additions
    
    
    12,118
    
    
    
    
    
    
    
    12,118Exchange difference
    
    
    50
    
    
    
    
    
    
    
    50As at March 31, 2009
    
    
    63,614
    
    
    
    207,452
    
    
    
    271,066Additions
    
    
    25,104
    
    
    
    
    
    
    
    25,104Disposals
    
    
    
    
    
    
    (30
    )
    
    
    (30
    )Exchange difference
    
    
    (27
    )
    
    
    
    
    
    
    (27
    )As at March 31, 2010
    
    
    88,691
    
    
    
    207,422
    
    
    
    296,113Accumulated amortisationAs at March 31, 2008
    
    
    35,766
    
    
    
    207,452
    
    
    
    243,218Charge for the year
    
    
    11,733
    
    
    
    
    
    
    
    11,733Exchange difference
    
    
    41
    
    
    
    
    
    
    
    41As at March 31, 2009
    
    
    47,540
    
    
    
    207,452
    
    
    
    254,992Charge for the year
    
    
    12,992
    
    
    
    
    
    
    
    12,992Disposals
    
    
    
    
    
    
    (30
    )
    
    
    (30
    )Exchange difference
    
    
    (27
    )
    
    
    
    
    
    
    (27
    )As at March 31, 2010
    
    
    60,505
    
    
    
    207,422
    
    
    
    267,927Net book amount as atMarch 31, 2010
    
    
    28,424
    
    
    
    
    
    
    
    28,424March 31, 2009
    
    
    16,074
    
    
    
    
    
    
    
    16,074Capital Work in Progress
    
    
    238
    
    
    
    
    
    
    
    238
 5.2.
    
    Membership in Exchanges
  a)
    
    BSE membership of Rs.1,257 and Rs 4,387 as at March 31, 2010 and 2009
respectively, and
 b)
    
    DGCX membership of Rs.4,525 and Rs. 5,108 as at March 31, 2010 and 2009,
respectively. DGCX membership value underwent a change due to foreign currency
translation.
 BSE membership
  Membership rights of BSEL
    
    On the basis of the benefits which MF Global Sify would get over the current deposit
based membership right of BSELEquity shares of BSEL
    
    On the basis of the fair value of the equity shares of BSEL determined by the management
    182




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6.
    
    Property, Plant and Equipment
 Furniture and
    
    
    Computers
    
    
    OfficeFixtures
    
    
    Systems
    
    
    equipments
    
    
    Vehicles
    
    
    TotalCostAs at March 31, 2008
    
    
    6,383
    
    
    
    147,441
    
    
    
    20,781
    
    
    
    19,110
    
    
    
    193,715Additions
    
    
    1,537
    
    
    
    18,243
    
    
    
    15,915
    
    
    
    
    
    
    
    35,695Disposals
    
    
    
    
    
    
    (813
    )
    
    
    
    
    
    
    (6,108
    )
    
    
    (6,921
    )Exchange difference
    
    
    262
    
    
    
    190
    
    
    
    165
    
    
    
    213
    
    
    
    830As at March 31, 2009
    
    
    8,182
    
    
    
    165,061
    
    
    
    36,861
    
    
    
    13,215
    
    
    
    223,319Additions
    
    
    288
    
    
    
    12,982
    
    
    
    1,018
    
    
    
    
    
    
    
    14,288Disposals
    
    
    
    
    
    
    (6
    )
    
    
    (7
    )
    
    
    
    
    
    
    (13
    )Exchange difference
    
    
    (153
    )
    
    
    (110
    )
    
    
    (92
    )
    
    
    (114
    )
    
    
    (469
    )As at March 31, 2010
    
    
    8,317
    
    
    
    177,927
    
    
    
    37,780
    
    
    
    13,101
    
    
    
    237,125Accumulated depreciationAs at March 31, 2008
    
    
    1,492
    
    
    
    106,150
    
    
    
    7,038
    
    
    
    6,153
    
    
    
    120,833Charge for the year
    
    
    1,571
    
    
    
    19,780
    
    
    
    2,401
    
    
    
    2,864
    
    
    
    26,616Disposals
    
    
    
    
    
    
    (647
    )
    
    
    
    
    
    
    (4,304
    )
    
    
    (4,951
    )Exchange difference
    
    
    107
    
    
    
    108
    
    
    
    46
    
    
    
    20
    
    
    
    281As at March 31, 2009
    
    
    3,170
    
    
    
    125,391
    
    
    
    9,485
    
    
    
    4,733
    
    
    
    142,779Charge for the year
    
    
    913
    
    
    
    17,395
    
    
    
    3,923
    
    
    
    2,175
    
    
    
    24,406Disposals
    
    
    
    
    
    
    (5
    )
    
    
    (1
    )
    
    
    
    
    
    
    (6
    )Exchange difference
    
    
    (72
    )
    
    
    (77
    )
    
    
    (32
    )
    
    
    (32
    )
    
    
    (213
    )As at March 31, 2010
    
    
    4,011
    
    
    
    142,704
    
    
    
    13,375
    
    
    
    6,876
    
    
    
    166,966Net book amount as atMarch 31, 2010
    
    
    4,306
    
    
    
    35,223
    
    
    
    24,405
    
    
    
    6,225
    
    
    
    70,159March 31, 2009
    
    
    5,012
    
    
    
    39,670
    
    
    
    27,376
    
    
    
    8,482
    
    
    
    80,540
 7.
    
    Deferred income tax
  2010
    
    
    2009At April 1
    
    
    56,082
    
    
    
    54,682Property Plant and Equipment
    
    
    (3,422
    )
    
    
    (867
    )Provision on receivable from customers
    
    
    (19,783
    )
    
    
    994Stock appreciation rights
    
    
    (8,060
    )
    
    
    8,200Provision for Bonus
    
    
    (8,593
    )
    
    
    (6,528
    )Preliminary Expenses
    
    
    
    
    
    
    (32
    )Gratuity
    
    
    59
    
    
    
    (873
    )Stamp duty
    
    
    1,618
    
    
    
    Gain on Exchange Shares
    
    
    
    
    
    
    506At March 31
    
    
    17,901
    
    
    
    56,082Comprised Of:Deferred tax assets
    
    
    18,215
    
    
    
    56,455Deferred tax liabilities
    
    
    (314
    )
    
    
    (373
    )17,901
    
    
    
    56,082
  2010
    
    
    2009Deferred tax assets:Property Plant and Equipment
    
    
    829
    
    
    
    4,251Provision on receivable from customers
    
    
    7,364
    
    
    
    27,147Stock appreciation rights
    
    
    7,477
    
    
    
    15,537Provision for Bonus
    
    
    927
    
    
    
    9,520Stamp Duty
    
    
    1,618
    
    
    
    18,215
    
    
    
    56,455Deferred tax liabilities:Gratuity
    
    
    (314
    )
    
    
    (373
    )(314
    )
    
    
    (373
    )
  183




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##### Table of Contents



Mar-10
    
    
    Mar-09Deferred tax assets: Deferred tax asset to be recovered after more than 12 months
    
    
    9,811
    
    
    
    31,398 Deferred tax asset to be recovered within 12 months
    
    
    8,404
    
    
    
    25,05718,215
    
    
    
    56,455Deferred tax liabilities: Deferred tax liability to be recovered after more than 12 months
    
    
    (314
    )
    
    
    (373
    ) Deferred tax liability to be recovered within 12 months
    
    
    
    
    
    
    (314
    )
    
    
    (373
    )Deferred tax Assets (net)
    
    
    17,901
    
    
    
    56,082
 Provision on
    
    
    
    
    
    
    
    
    
    
    PrelimiProperty
    
    
    receivable
    
    
    Stock
    
    
    
    
    
    
    naryPlant and
    
    
    from
    
    
    appreciat
    
    
    Provision
    
    
    Expend
    
    
    Stamp
    
    
    GrandEquipment
    
    
    customers
    
    
    ion rights
    
    
    for Bonus
    
    
    iture
    
    
    Duty
    
    
    TotalDeferred tax assets:Opening Balance as on April
1, 2008
    
    
    5,118
    
    
    
    26,153
    
    
    
    7,337
    
    
    
    16,048
    
    
    
    32
    
    
    
    
    
    
    
    54,688Charged / (Credited) to
Other Comprehensive Income
    
    
    (867
    )
    
    
    994
    
    
    
    8,200
    
    
    
    (6,528
    )
    
    
    (32
    )
    
    
    
    
    
    
    1,767Effect of Change in Tax rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    As at March 31, 2009
    
    
    4,251
    
    
    
    27,147
    
    
    
    15,537
    
    
    
    9,520
    
    
    
    
    
    
    
    
    
    
    
    56,455Charged / (Credited) to
Other Comprehensive Income
    
    
    (3,325
    )
    
    
    (19,166
    )
    
    
    (6,605
    )
    
    
    (8,375
    )
    
    
    
    
    
    
    1,618
    
    
    
    (35,853
    )Effect of Change in Tax rates
    
    
    (97
    )
    
    
    (617
    )
    
    
    (1,455
    )
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (2,387
    )As at March 31, 2010
    
    
    829
    
    
    
    7,364
    
    
    
    7,477
    
    
    
    927
    
    
    
    
    
    
    
    1,618
    
    
    
    18,215
 Gain onExchangeShares
    
    
    Gratuity
    
    
    Grand TotalDeferred tax liabilities:Opening Balance as on April 1, 2008
    
    
    506
    
    
    
    (500
    )
    
    
    6Charged / (Credited) to Other Comprehensive Income
    
    
    (506
    )
    
    
    873
    
    
    
    367Effect of Change in Tax ratesAs at March 31, 2009
    
    
    
    
    
    
    373
    
    
    
    373Charged / (Credited) to Other Comprehensive Income
    
    
    
    
    
    
    (53
    )
    
    
    (53
    )Effect of Change in Tax rates
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )As at March 31, 2010
    
    
    
    
    
    
    314
    
    
    
    314
 8.
    
    Receivables from customers
   As at March 31,2010
    
    
    2009Up to 6 months
    
    
    436,535
    
    
    
    162,268more than 6 months
    
    
    672
    
    
    
    9,725437,207
    
    
    
    171,993
   184




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##### Table of Contents



As at March 31,2010
    
    
    2009Up to 6 months
    
    
    5,020
    
    
    
    13,020more than 6 months
    
    
    17,280
    
    
    
    66,98022,300
    
    
    
    80,000
  As at March 31,2010
    
    
    2009437,207
    
    
    
    171,993437,207
    
    
    
    171,993
  As at March 31,2010
    
    
    2009
    
    
    2008As at the beginning of the year
    
    
    80,000
    
    
    
    77,075
    
    
    
    76,400Provision for impairment
    
    
    
    
    
    
    2,925
    
    
    
    675Write back of provision
    
    
    (57,700
    )
    
    
    
    
    
    
    As at the closing of the year
    
    
    22,300
    
    
    
    80,000
    
    
    
    77,075
  9.
    
    Receivable from and payable to broker-dealer and clearing organisations
  As of March 31,2010
    
    
    2009Receivable
    
    
    Payable
    
    
    Receivable
    
    
    PayableClearing organizations  Unsettled trade
    
    
    60,250
    
    
    
    8,327
    
    
    
    27,760
    
    
    
    29,614Broker-Dealer
    
    
    5,634
    
    
    
    131,638
    
    
    
    14,468
    
    
    
    198,17265,884
    
    
    
    139,965
    
    
    
    42,228
    
    
    
    227,786
 10.
    
    Other assets
 As at March 31,2010
    
    
    2009Prepaid expenses
    
    
    19,890
    
    
    
    28,983Advance tax (net of provisions)
    
    
    124,124
    
    
    
    97,281Deposits
    
    
    30,976
    
    
    
    29,015Loans and advances (to staff)
    
    
    22,168
    
    
    
    10,579Gratuity Trust
    
    
    3,232
    
    
    
    2,343Others*
    
    
    19,892
    
    
    
    21,380220,282
    
    
    
    189,581
 *
    
    includes Advances to vendors towards expenses, delayed payment charges from clients,
withholding tax recoverable, etc.  185




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##### Table of Contents



11.
    
    Cash and Bank Balance
  As at March 31,2010
    
    
    2009
    
    
    2008Cash in hand
    
    
    32
    
    
    
    20
    
    
    
    21Cash at bank
    
    
    148,181
    
    
    
    181,596
    
    
    
    287,444148,213
    
    
    
    181,616
    
    
    
    287,465
 12.
    
    Cash  restricted
    13.
    
    Interest bearing deposits with banks
   14.
    
    Available for Sale Securities
  As at March 31,2010
    
    
    20093,500 shares of Rural Electrification Corporation
Limited ( FV of Rs. 10 each)  Listed
    
    
    877
    
    
    
    70,694 shares of Bombay Stock Exchange Limited (FV
of Rs 1 each)  Unlisted
    
    
    11,447
    
    
    
    9,920
   15.
    
    Share capital and Dividend distribution
 As at March 31,2010
    
    
    2009Authorised capital65,000,000 ordinary shares of Rs.10/- per share
    
    
    650,000
    
    
    
    650,000
      186




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##### Table of Contents



16.
    
    Sharebased payments
 Employees Stock Appreciation Scheme
       
    
    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.
    As at March 31,2010
    
    
    2009
    
    
    2008As at the beginning of the year
    
    
    2,898,747
    
    
    
    1,512,747
    
    
    
    711,247Granted during the year
    
    
    
    
    
    
    1,386,000
    
    
    
    809,500Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (120,008
    )
    
    
    (115,500
    )
    
    
    (62,000
    )Reissued
    
    
    100,508
    
    
    
    115,500
    
    
    
    54,000Lapsed
    
    
    
    
    
    
    
    
    
    
    As at the end of the year
    
    
    2,879,747
    
    
    
    2,898,747
    
    
    
    1,512,747Exercisable at the end of the year
    
    
    
    
    
    
    Approximate remaining vesting period in years
    
    
    1.24
    
    
    
    2.98
    
    
    
    3.92
 Co-investment plan
     187




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##### Table of Contents



17.
    
    Borrowings
 Effective interest
    
    
    As at March 31,rate
    
    
    2010
    
    
    2009Car Loan (Secured)
    
    
    10
    %
    
    
    3,508
    
    
    
    4,6453,508
    
    
    
    4,645
  As at March 31,2010
    
    
    2009On demand or within one year
    
    
    1,266
    
    
    
    1,156In one to three years
    
    
    2,242
    
    
    
    2,622In three to five years
    
    
    
    
    
    
    8673,508
    
    
    
    4,645
 18.
    
    Employee benefit obligation
 Years ended March 31,2010
    
    
    2009
    
    
    2008Gratuity
    
    
    856
    
    
    
    844
    
    
    
    1,772Stock appreciation rights
    
    
    135,746
    
    
    
    46,851
    
    
    
    22,616136,602
    
    
    
    47,695
    
    
    
    24,388
  Years ended March 31,2010
    
    
    2009
    
    
    2008Opening defined benefit obligation
    
    
    9,700
    
    
    
    9,458
    
    
    
    6,287Current service cost
    
    
    2,853
    
    
    
    3,000
    
    
    
    3,110Interest cost
    
    
    679
    
    
    
    755
    
    
    
    505Actuarial losses/ (gains)
    
    
    (3,373
    )
    
    
    (3,471
    )
    
    
    (444
    )Benefits paid
    
    
    
    
    
    
    (42
    )
    
    
    Closing defined benefit obligation
    
    
    9,859
    
    
    
    9,700
    
    
    
    9,458
  Years ended March 31,2010
    
    
    2009
    
    
    2008Beginning of year
    
    
    11,200
    
    
    
    7,686
    
    
    
    4,027Expected return on plan assets
    
    
    1,025
    
    
    
    832
    
    
    
    321Actuarial (losses)/gains
    
    
    11
    
    
    
    (129
    )
    
    
    32Employer contributions
    
    
    
    
    
    
    2,853
    
    
    
    3,306Benefits paid
    
    
    
    
    
    
    (42
    )
    
    
    Closing fair value of plan assets
    
    
    12,236
    
    
    
    11,200
    
    
    
    7,686
  Years ended March 31,2010
    
    
    2009
    
    
    2008Current service cost
    
    
    2,853
    
    
    
    3,000
    
    
    
    3,153Interest cost
    
    
    679
    
    
    
    755
    
    
    
    505Actuarial loss
    
    
    (3,384
    )
    
    
    (3,342
    )
    
    
    (537
    )Expected return on plan asset
    
    
    (1,025
    )
    
    
    (832
    )
    
    
    (321
    )(877
    )
    
    
    (419
    )
    
    
    2,800
  Years ended March 31,2010
    
    
    2009
    
    
    2008Discount rate
    
    
    7
    %
    
    
    8
    %
    
    
    8
    %Expected return on plan assets
    
    
    9.25
    %
    
    
    9.15
    %
    
    
    8
    %Long term rate of compensation increase
    
    
    6
    %
    
    
    6
    %
    
    
    6
    %
   188




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##### Table of Contents



19.
    
    Accounts payables, accrued expenses and other liabilities
 As at March 31,2010
    
    
    2009
    
    
    2008Accruals
    
    
    41,489
    
    
    
    35,541
    
    
    
    42,205Withholding tax payable
    
    
    71,382
    
    
    
    52,060
    
    
    
    147,729Bonus Payable
    
    
    157,410
    
    
    
    126,350
    
    
    
    307,076Other payables
    
    
    124,046
    
    
    
    138,007
    
    
    
    185,279Total
    
    
    394,327
    
    
    
    351,958
    
    
    
    682,289
 20.
    
    Other Expenses
 Years ended March 31,2010
    
    
    2009
    
    
    2008Professional Fees
    
    
    11,059
    
    
    
    10,590
    
    
    
    17,562Travelling and conveyance
    
    
    16,068
    
    
    
    15,872
    
    
    
    18,844Books & Periodicals, Postage, printing and stationary
    
    
    25,817
    
    
    
    33,466
    
    
    
    46,284Loss on sale of available-for-sale securities (net)
    
    
    12,602
    
    
    
    12,452
    
    
    
    30,818Repairs & maintenance
    
    
    145
    
    
    
    2,717
    
    
    
    708Service fee expenses
    
    
    
    
    
    
    15,735
    
    
    
    22,222Insurance Premium
    
    
    963
    
    
    
    19,801
    
    
    
    3,632Others
    
    
    15,457
    
    
    
    15,060
    
    
    
    11,894Total
    
    
    82,111
    
    
    
    125,693
    
    
    
    151,964
  21.
    
    Employee benefit expense
 Years ended March 312010
    
    
    2009
    
    
    2008Salaries and bonus
    
    
    508,264
    
    
    
    483,382
    
    
    
    720,070Defined contribution plans
    
    
    3,452
    
    
    
    3,968
    
    
    
    3,828Defined benefit plans
    
    
    159
    
    
    
    285
    
    
    
    2,800Staff welfare expenses
    
    
    6,796
    
    
    
    2,896
    
    
    
    3,688Sharebased compensation expense
    
    
    89,104
    
    
    
    23,973
    
    
    
    15,218Fringe benefit tax
    
    
    
    
    
    
    730
    
    
    
    169Total
    
    
    607,775
    
    
    
    515,234
    
    
    
    745,773
  22.
    
    Write back of provision
  23.
    
    Other income
 Years ended March 31,2010
    
    
    2009
    
    
    2008Profit on sale of available-for-sale securities
    
    
    
    
    
    
    6,724
    
    
    
    51,816Delayed payment charges(*)
    
    
    24,999
    
    
    
    39,215
    
    
    
    52,622Research fees
    
    
    3,072
    
    
    
    2,824
    
    
    
    7,861Referral fees(**)
    
    
    51,160
    
    
    
    51,990
    
    
    
    20,527Interest
    
    
    5,566
    
    
    
    5,174
    
    
    
    11,160Dividend
    
    
    283
    
    
    
    167
    
    
    
    548Currency fluctuation gain
    
    
    7,960
    
    
    
    
    
    
    
    Expenses Reversal(***)
    
    
    17,567
    
    
    
    
    
    
    
    Miscellaneous income
    
    
    26,365
    
    
    
    32,577
    
    
    
    21,131Total
    
    
    136,972
    
    
    
    138,671
    
    
    
    165,665
 (*)
    
    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 current year on account of mutual agreement between the stakeholders.  189




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##### Table of Contents



24.
    
    Income tax expense
 Years ended March 31,2010
    
    
    2009
    
    
    2008Current tax
    
    
    122,679
    
    
    
    127,269
    
    
    
    360,626Deferred tax
    
    
    38,181
    
    
    
    (894
    )
    
    
    (6,957
    )160,860
    
    
    
    126,375
    
    
    
    353,669
  Years ended March 31,2010
    
    
    2009
    
    
    2008Net income before taxes
    
    
    468,403
    
    
    
    343,292
    
    
    
    959,924Enacted tax rates in India
    
    
    33.99
    %
    
    
    33.99
    %
    
    
    33.99
    %Computed tax expense
    
    
    159,210
    
    
    
    116,685
    
    
    
    326,278Income exempt from tax:Dividend
    
    
    (96
    )
    
    
    (57
    )
    
    
    (198
    )Non-deductible expenses:Contribution to co-investment plan
    
    
    751
    
    
    
    751
    
    
    
    751Security transaction tax not allowable
    
    
    
    
    
    
    
    
    
    
    3,022Others including donations, FBT, etc.
    
    
    1,228
    
    
    
    1,275
    
    
    
    1,335Recharges by parent and affiliate companies
    
    
    980
    
    
    
    8,498
    
    
    
    Provision for disallowance of previous year expenses
    
    
    
    
    
    
    
    
    
    
    26,675Income charged at lower rate
    
    
    
    
    
    
    
    
    
    
    (2,536
    )(Gain) / Loss in Subsidiaries
    
    
    (3,294
    )
    
    
    (1,123
    )
    
    
    491Others
    
    
    2,081
    
    
    
    346
    
    
    
    (2,149
    )Income taxes recognized in the statement of income
    
    
    160,860
    
    
    
    126,375
    
    
    
    353,669
 25.
    
    Financial instruments by category
  Loans and
    
    
    AvailableMarch 31, 2010
    
    receivables
    
    
    for sale
    
    
    TotalAssets as per balance sheetCash and Bank balance
    
    
    148,213
    
    
    
    
    
    
    
    148,213Cash-restricted
    
    
    2,489,847
    
    
    
    
    
    
    
    2,489,847Interest bearing deposits with bank
    
    
    295,659
    
    
    
    
    
    
    
    295,659Deposits with clearing organizations and others
    
    
    110,969
    
    
    
    
    
    
    
    110,969Receivable from broker-dealers and clearing organizations
    
    
    65,884
    
    
    
    
    
    
    
    65,884Receivable from customers
    
    
    437,207
    
    
    
    
    
    
    
    437,207Available-for-sale securities:Marketable, at market value
    
    
    
    
    
    
    877
    
    
    
    877Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    11,447
    
    
    
    11,447Interest accrued but not due
    
    
    71,443
    
    
    
    
    
    
    
    71,443Other assets
    
    
    203,982
    
    
    
    
    
    
    
    203,9823,823,204
    
    
    
    12,324
    
    
    
    3,835,528
 OtherfinancialMarch 31, 2010
    
    
    
    
    
    liabilities
    
    
    TotalLiabilities as per balance sheetPayable to broker dealers and clearing organizations
    
    
    
    
    
    
    139,965
    
    
    
    139,965Payable to customers
    
    
    
    
    
    
    1,177,517
    
    
    
    1,177,517Borrowings
    
    
    
    
    
    
    3,508
    
    
    
    3,508Accounts payable, accrued expenses, and other liabilities
    
    
    
    
    
    
    394,327
    
    
    
    394,3271,715,317
    
    
    
    1,715,317
  190




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##### Table of Contents



Loans and
    
    
    AvailableMarch 31, 2009
    
    receivables
    
    
    for sale
    
    
    TotalAssets as per balance sheetCash and Bank balance
    
    
    181,616
    
    
    
    
    
    
    
    181,616Cash-restricted
    
    
    2,347,862
    
    
    
    
    
    
    
    2,347,862Interest bearing deposits with bank
    
    
    107,495
    
    
    
    
    
    
    
    107,495Deposits with clearing organizations and others
    
    
    120,865
    
    
    
    
    
    
    
    120,865Receivable from broker-dealers and clearing organizations
    
    
    42,228
    
    
    
    
    
    
    
    42,228Receivable from customers
    
    
    171,993
    
    
    
    
    
    
    
    171,993Available-for-sale securities:Marketable, at market value
    
    
    
    
    
    
    
    
    
    
    Not readily marketable (at estimated fair value)
    
    
    
    
    
    
    9,920
    
    
    
    9,920Interest accrued but not due
    
    
    102,170
    
    
    
    
    
    
    
    102,170Other assets
    
    
    189,581
    
    
    
    
    
    
    
    189,5813,263,810
    
    
    
    9,920
    
    
    
    3,273,730
 OtherfinancialMarch 31, 2009
    
    
    
    
    
    liabilities
    
    
    TotalLiabilities as per balance sheetPayable to broker dealers and clearing organizations
    
    
    
    
    
    
    227,786
    
    
    
    227,786Payable to customers
    
    
    
    
    
    
    985,075
    
    
    
    985,075Borrowings
    
    
    
    
    
    
    4,645
    
    
    
    4,645Accounts payable, accrued expenses, and other liabilities
    
    
    
    
    
    
    351,958
    
    
    
    351,9581,569,464
    
    
    
    1,569,464
  26.

    
    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.
43,478,911 and March 31, 2009 aggregating to Rs. 15,374,528. 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.
 27.
    
    Commitments and contingencies
 Operating lease commitments  MF as lessee
  As at March 31,2010
    
    
    2009Not later than 1 year
    
    
    
    
    
    
    Later than 1 year and not later than 5 years
    
    
    59,087
    
    
    
    61,067Later than 5 years
    
    
    13,771
    
    
    
    71,636Total minimum lease commitments
    
    
    72,858
    
    
    
    132,703
  Contingencies
   191




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##### Table of Contents



28.
    
    Related party transactions
  a) Related Party Relationship
 Related parties where control exists:
 Nature of Relationship
    
    Related PartyHolding enterprises:
    
    MF Global Overseas LimitedUltimate Holding company:
    
    MF Global Holdings Limited (Formerly known as MF Global Limited)
 Other related parties with whom
transactions have taken place:
 Party having substantial interest
    
    Sify Technologies Limited
 Nature of Relationship
    
    Related PartySubsidiary companies:
    
    MF Global Commodities India Private LimitedMF Global Middle East DMCCMF Global Capital India Private LimitedFellow subsidiary companies:
(where transactions exist)
    
    MF Global India Private Limited
MF Global Holdings HK LimitedMF Global Finance & Investment Services India Private LimitedMF Global Centralised Services India Private LimitedMF Global UK LimitedMF Global DEKey management personnel:
    
    Mr. Vineet BhatnagarMr. Rajendra BhambaniOther enterprises under control of the
key management personnel and their
relatives:
    
    Mr. Laurence Oconnell*
(* resigned with effect from May 25, 2010)
 MF Global Capital Services India Private Limited
 b) Transactions involving services
 Years ended March 31,2010
    
    
    2009
    
    
    2008Services provided by MF to:Holding companiesReimbursement of Expenses
    
    
    539
    
    
    
    3,205
    
    
    
    Fellow Subsidiary CompaniesReferral Fees
    
    
    51,162
    
    
    
    51,992
    
    
    
    20,527Reimbursement of Expenses
    
    
    5,646
    
    
    
    5,185
    
    
    
    Service Fees
    
    
    
    
    
    
    8,715
    
    
    
    57,347
    
    
    
    69,097
    
    
    
    20,527Services received by MF from:Holding companiesReimbursement of Expenses
    
    
    
    
    
    
    
    
    
    
    Service Fees
    
    
    
    
    
    
    9,349
    
    
    
    8,263Bank Guarantee Commission
    
    
    497
    
    
    
    1,692
    
    
    
    14,616Insurance Premium
    
    
    (17,567
    )
    
    
    17,842
    
    
    
    Purchase / AMC of Computer Hardware
    
    
    
    
    
    
    6,600
    
    
    
    Fellow Subsidiary CompaniesReimbursement of Expenses
    
    
    
    
    
    
    
    
    
    
    2,780Service Fees
    
    
    
    
    
    
    6,386
    
    
    
    13,998
  192




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##### Table of Contents



Years ended March 31,2010
    
    
    2009
    
    
    2008Membership & Subscription
    
    
    
    
    
    
    
    
    
    
    3,447Insurance Premium
    
    
    
    
    
    
    
    
    
    
    1,809Lease Line Charges
    
    
    
    
    
    
    1,675
    
    
    
    1,346IB Commission Expense
    
    
    2,006
    
    
    
    1,454
    
    
    
    Interest Expense
    
    
    888
    
    
    
    1,039
    
    
    
    Others
    
    
    3,266
    
    
    
    247
    
    
    
    (10,910
    )
    
    
    46,284
    
    
    
    46,259Loan taken and repaid
    
    
    383,700
    
    
    
    270,000
    
    
    
    
 c) Key management compensation
 Years ended March 31,2010
    
    
    2009
    
    
    2008Salaries and other short-term employee benefits
    
    
    71,361
    
    
    
    63,112
    
    
    
    170,488Other long-term benefits (Co-Investment Plan)
    
    
    2,208
    
    
    
    2,208
    
    
    
    2,208Share-based payments
    
    
    19,653
    
    
    
    5,420
    
    
    
    6,82493,222
    
    
    
    70,740
    
    
    
    179,520
 d) Year-end balances arising from transactions involving services
 As at March 31,2010
    
    
    2009Due To Related Parties:MF Global Holdings Limited
    
    
    34,005
    
    
    
    58,139MF Global UK Limited
    
    
    19,213
    
    
    
    37,859MF Global Inc. DE
    
    
    3,504
    
    
    
    577MF Global Holdings USA Inc.
    
    
    2,036
    
    
    
    2,298MF Global Singapore Pte Limited
    
    
    1,529
    
    
    
    1,582MF Global Holdings HK Limited
    
    
    699
    
    
    
    60,986
    
    
    
    100,455
 As at March 31,2010
    
    
    2009Due from Related Parties:MF Global Inc. DE
    
    
    361
    
    
    
    2,497MF Global Mauritius Private Limited
    
    
    1,399
    
    
    
    408MF Global Singapore Pte Limited
    
    
    2,347
    
    
    
    1,427MF Global Holdings HK Limited
    
    
    
    
    
    
    155MF Global UK Limited
    
    
    2,257
    
    
    
    1,172MF Global Overseas Limited
    
    
    3,292
    
    
    
    3,204MF Global Capital Services India Private Limited
    
    
    
    
    
    
    2,592MF Global India Private Limited
    
    
    
    
    
    
    947MF Global Centralised Services India Private Limited
    
    
    1,287
    
    
    
    6610,943
    
    
    
    12,468
 For and on behalf of the Board
 Vineet Bhatnagar
   193




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##### Table of Contents



Item 19. Exhibits
 Number
    
    Description1.1
    
    
    Amended Articles of Association of Sify Technologies Limited. (1)1.2
    
    
    Memorandum of Association of Sify Technologies Limited. (2)1.3
    
    
    Amendment of Memorandum of Association. (3)2.1
    
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American
Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (4)2.2
    
    
    Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository
Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4)2.3
    
    
    Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository
Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5)2.4
    
    
    Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9)2.5
    
    
    Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9)2.6
    
    
    Shareholders Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify
Communications Limited(erstwhile subsidiary). (10)2.7
    
    
    Shareholders Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11)4.1
    
    
    Associate Stock Option Plan 2000 (6)4.2
    
    
    Associate Stock Option Plan 2002 (6)4.3
    
    
    Associate Stock Option Plan 2005 (12)4.4
    
    
    Associate Stock Option Plan 2007 (14)4.5
    
    
    Form of Indemnification Agreement. (7)4.6
    
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies
Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom
Commission. (3)4.7
    
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.8
    
    
    Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and
Venture Tech Solutions Pvt. Ltd. (8)4.9
    
    
    Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13)4.10
    
    
    Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15)8.1
    
    
    List of Subsidiaries.11.1
    
    
    Code of Conduct and Conflict of Interest Policy (6)12.1
    
    
    Rule 13a-14(a) Certification of Chief Executive Officer12.2
    
    
    Rule 13a-14(a) Certification of Chief Financial Officer
  194




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##### Table of Contents



Number
    
    Description13.1
    
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    
    Section 1350 Certification of Chief Financial Officer15.1
    
    
    Consent of KPMG in respect of the Sify Technologies Limited15.2
    
    
    Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited15.3
    
    
    KPMG response letter.
 
 (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  195




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##### Table of Contents



SIGNATURES
  SIFY TECHNOLOGIES LIMITEDBy:
    /s/ Raju VegesnaName:
    Raju VegesnaTitle:
    Chief Executive OfficerDate: November 30, 2010
    By:
    /s/ M P Vijay KumarName:
    M P Vijay KumarTitle:
    Chief Financial Officer  196




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##### Table of Contents



Item 19. Exhibits (continued)
 Number
    
    Description1.1
    
    
    Amended Articles of Association of Sify Technologies Limited. (1)1.2
    
    
    Memorandum of Association of Sify Technologies Limited. (2)1.3
    
    
    Amendment of Memorandum of Association. (3)2.1
    
    
    Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American
Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository
Receipt). (4)2.2
    
    
    Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository
Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4)2.3
    
    
    Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository
Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5)2.4
    
    
    Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9)2.5
    
    
    Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9)2.6
    
    
    Shareholders Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify
Communications Limited(erstwhile subsidiary). (10)2.7
    
    
    Shareholders Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11)4.1
    
    
    Associate Stock Option Plan 2000 (6)4.2
    
    
    Associate Stock Option Plan 2002 (6)4.3
    
    
    Associate Stock Option Plan 2005 (12)4.4
    
    
    Associate Stock Option Plan 2007 (14)4.5
    
    
    Form of Indemnification Agreement. (7)4.6
    
    
    License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies
Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom
Commission. (3)4.7
    
    
    Bank Guarantee, dated as of November 4, 1998. (2)4.8
    
    
    Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and
Venture Tech Solutions Pvt. Ltd. (8)4.9
    
    
    Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13)4.10
    
    
    Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15)8.1
    
    
    List of Subsidiaries.11.1
    
    
    Code of Conduct and Conflict of Interest Policy (6)12.1
    
    
    Rule 13a-14(a) Certification of Chief Executive Officer12.2
    
    
    Rule 13a-14(a) Certification of Chief Financial Officer
  197




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##### Table of Contents



Number
    
    Description13.1
    
    
    Section 1350 Certification of Chief Executive Officer13.2
    
    
    Section 1350 Certification of Chief Financial Officer15.1
    
    
    Consent of KPMG in respect of the Sify Technologies Limited15.2
    
    
    Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited15.3
    
    
    KPMG response letter.
 
 (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  198