##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(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, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 OR o
    
    SHELL COMPANY REPORT 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 001-15190
 Satyam Computer Services Limited
  N/A
    
    Republic of India(Translation of Registrants Name Into English)
    
    (Jurisdiction of Incorporation or Organization)
 
 
 
 
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredAmerican Depositary Shares,
    
    The New York Stock Exchangeeach represented by two equity shares,par value Rs. 2.0 per share
  
 
    þ o
 o þ
  þ o
  þ o o
  o þ
 o þ




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TABLE OF CONTENTS
SATYAM COMPUTER SERVICES LIMITED
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    4ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
    
    4ITEM 3. KEY INFORMATION
    
    4ITEM 4. INFORMATION ON THE COMPANY
    
    22ITEM 4A. UNRESOLVED STAFF COMMENTS
    
    36ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    36ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    60ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    69ITEM 8. FINANCIAL INFORMATION
    
    70ITEM 9. THE OFFER AND LISTING
    
    70ITEM 10. ADDITIONAL INFORMATION
    
    72ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    89ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    90ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    90ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    90ITEM 15. CONTROLS AND PROCEDURES
    
    90ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
    
    91ITEM 16B. CODE OF ETHICS
    
    91ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    91ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    92ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
    
    92ITEM 17. FINANCIAL STATEMENTS
    
    92ITEM 18. FINANCIAL STATEMENTS
    
    93ITEM 19. EXHIBITS
    
    93EX-4.5 ASSOCIATE STOCK OPTIONS PLAN - RSUs.EX-8.1 LIST OF SIGNIFICANT SUBSIDIARIESEX-12.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002EX-12.2  CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANE OXLEY ACT OF 2002.EX-13.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.EX-13.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.EX-15.1 CONSENT OF PRICE WATERHOUSE, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
      FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 Selected Financial Data
  Year Ended March 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(dollars in millions, except per share and per ADS data, or as stated otherwise)Statement of operations dataRevenues:IT services
    
    $
    1,432.5
    
    
    $
    1,082.7
    
    
    $
    786.7
    
    
    $
    565.1
    
    
    $
    459.2BPO
    
    
    28.9
    
    
    
    13.6
    
    
    
    6.9
    
    
    
    1.3
    
    
    
    Total revenues
    
    $
    1,461.4
    
    
    $
    1,096.3
    
    
    $
    793.6
    
    
    $
    566.4
    
    
    $
    459.2Cost of revenues(1)
    
    
    (937.6
    )
    
    
    (689.0
    )
    
    
    (506.8
    )
    
    
    (343.6
    )
    
    
    (275.2
    )Gross profit
    
    
    523.8
    
    
    
    407.3
    
    
    
    286.8
    
    
    
    222.8
    
    
    
    184.0Operating expenses:Selling, general and
administrative expenses
(2)
    
    
    (232.2
    )
    
    
    (187.6
    )
    
    
    (124.3
    )
    
    
    (101.7
    )
    
    
    (116.9
    )Amortization of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of other
non-marketable investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.3
    )Reversal of put option charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.8Total operating expenses
    
    
    (232.2
    )
    
    
    (187.6
    )
    
    
    (124.3
    )
    
    
    (101.7
    )
    
    
    (100.4
    )Operating income/(loss)
    
    
    291.6
    
    
    
    219.7
    
    
    
    162.5
    
    
    
    121.1
    
    
    
    (83.6
    )Interest income
    
    
    37.3
    
    
    
    26.3
    
    
    
    22.3
    
    
    
    20.3
    
    
    
    7.2Interest expense
    
    
    (3.6
    )
    
    
    (1.3
    )
    
    
    (0.4
    )
    
    
    (0.5
    )
    
    
    (0.8
    )Gain on sale of shares in
associated companies/ other
investments
    
    
    
    
    
    
    43.6
    
    
    
    
    
    
    
    2.7
    
    
    
    0.8
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Year Ended March 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(dollars in millions, except per share and per ADS data, or as stated otherwise)Gain/(loss) on foreign
exchange transactions
    
    
    (3.3
    )
    
    
    0.3
    
    
    
    (4.6
    )
    
    
    (8.9
    )
    
    
    (4.8
    )Other income/(expenses), net
    
    
    6.2
    
    
    
    (0.8
    )
    
    
    0.4
    
    
    
    2.3
    
    
    
    (1.7
    )Income/(loss) before income
taxes, minority interest and
equity in earnings/ (loss) of
associated companies
    
    
    328.2
    
    
    
    287.8
    
    
    
    180.2
    
    
    
    137.0
    
    
    
    84.3Income taxes
    
    
    (30.6
    )
    
    
    (37.7
    )
    
    
    (25.3
    )
    
    
    (22.5
    )
    
    
    (9.8
    )Minority interest
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    11.1Income before equity in
earnings/(losses) of
associated companies
    
    
    297.6
    
    
    
    250.2
    
    
    
    154.9
    
    
    
    114.5
    
    
    
    85.6Equity in earnings/ (losses)
of associated companies, net
of taxes
    
    
    0.8
    
    
    
    (0.8
    )
    
    
    (1.1
    )
    
    
    (2.6
    )
    
    
    (3.3
    )Net income (loss)
    
    $
    298.4
    
    
    $
    249.4
    
    
    $
    153.8
    
    
    $
    111.9
    
    
    $
    82.3
 Year Ended March 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(dollars in millions,
except per share and per ADS data, or as stated otherwise)Earnings (loss) per share:Basic
    
    $
    0.46
    
    
    $
    0.39
    
    
    $
    0.24
    
    
    $
    0.18
    
    
    $
    0.26Diluted
    
    
    0.45
    
    
    
    0.38
    
    
    
    0.24
    
    
    
    0.18
    
    
    
    0.26Earnings (loss) per ADS:Basic
    
    
    0.92
    
    
    
    0.78
    
    
    
    0.48
    
    
    
    0.36
    
    
    
    0.52Diluted
    
    
    0.90
    
    
    
    0.75
    
    
    
    0.48
    
    
    
    0.36
    
    
    
    0.52Weighted average equity
shares used in computing
earnings per shares (in
millions):Basic
    
    
    652.5
    
    
    
    641.2
    
    
    
    632.4
    
    
    
    626.4
    
    
    
    623.6Diluted
    
    
    666.0
    
    
    
    662.8
    
    
    
    647.2
    
    
    
    634.2
    
    
    
    637.4Weighted average equity
shares used in computing
earnings per ADS:Basic
    
    
    326.3
    
    
    
    320.6
    
    
    
    316.2
    
    
    
    313.2
    
    
    
    311.8Diluted
    
    
    333.0
    
    
    
    331.4
    
    
    
    323.6
    
    
    
    317.1
    
    
    
    318.7Cash dividend per equity share
    
    
    0.13
    
    
    
    0.11
    
    
    
    0.12
    
    
    
    0.08
    
    
    
    0.03Cash dividend per ADS
    
    
    0.26
    
    
    
    0.22
    
    
    
    0.24
    
    
    
    0.17
    
    
    
    0.06
 
 (1)
    
    Inclusive of stock-based compensation expense of
$12.8 million,
$Nil, $0.8 million, $0.9 million and $1.6 million
in fiscal 2007, 2006, 2005, 2004 and 2003 respectively. 5




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(2)
    
    Inclusive of stock-based compensation expenses of $2.9
million, $0.8 million, $1.1 million, $0.8 million and $2.9 million
during the years ended March 31, 2007, 2006, 2005, 2004 and
2003 respectively. As at March 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(dollars in millions)Balance sheet dataCash and cash equivalents
    
    $
    152.2
    
    
    $
    292.8
    
    
    $
    129.8
    
    
    $
    86.7
    
    
    $
    62.2Investments in bank deposits
    
    
    767.6
    
    
    
    403.7
    
    
    
    411.6
    
    
    
    332.1
    
    
    
    259.4Total assets
    
    
    1,624.1
    
    
    
    1,181.2
    
    
    
    884.1
    
    
    
    713.8
    
    
    
    561.7Total long-term debt, excluding current
portion
    
    
    22.2
    
    
    
    17.9
    
    
    
    1.2
    
    
    
    1.8
    
    
    
    1.7Preferred stock of subsidiary(1)
    
    
    
    
    
    
    20.0
    
    
    
    20.0
    
    
    
    10.0
    
    
    
    Total shareholders equity
    
    
    1,371.0
    
    
    
    994.4
    
    
    
    767.9
    
    
    
    633.9
    
    
    
    487.7Capital stock(2)
    
    
    587.2
    
    
    
    481.5
    
    
    
    449.5
    
    
    
    431.7
    
    
    
    421.6
 
 (1)
    
    In fiscal 2007, 50% of preferred stock of subsidiary has become mandatorily
redeemable at the target date of May 21, 2007 and the balance 50% got converted into equity
shares of Nipuna based on the terms of the existing subscription agreement.(2)
    
    Includes common stock and additional paid-in capital but excludes shares held by
Satyam Associate Trust or SC Trust
 Risk Factors
 The following factors , together with the other information contained in this Annual Report and
other reports and documents submitted to, or filed with, the SEC, could affect our results. If any
of the following risks actually occur, our company could be seriously harmed, and the market price
of our ADSs could decline.
 Risks Related to Our Overall Operations
 Our revenues and profitability are difficult to predict and can vary significantly from period to
period which could cause our share price to decline significantly.
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Any inability to manage our rapid growth could disrupt our business and reduce our profitability.
   
    
    recruiting and retaining sufficiently skilled technical, marketing and management personnel
    
    providing adequate training and supervision to maintain our high quality standards;
    
    preserving our culture and values and our entrepreneurial environment; and
    
    developing and improving our internal administrative infrastructure, particularly our
financial, operational, communications and other internal systems
  The current economic environment, pricing pressure and rising wages in India have negatively
impacted our revenues and operating results.
   7




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Our business will suffer if we fail to anticipate and develop new services and enhance existing
services in order to keep pace with rapid changes in technology and the industries on which we
focus.
  Our revenues are highly dependent on customers primarily located in the United States and customers
concentrated in certain industries, and economic slowdowns or factors that affect the economic
health of the United States and our customers industries may affect our business.
   We face intense competition in the IT services and BPO markets which could prevent us from
attracting and retaining customers and could reduce our revenues.
  
    
    consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;
    
    divisions of large multinational technology firms such as Hewlett-Packard and IBM;
    
    IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM Global Services; and
    
    offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy Services Limited and Wipro Limited
  8




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Our revenues are highly dependent upon a small number of customers.
   Our fixed-price contracts expose us to additional risks, many of which are beyond our control,
which may reduce the profitability of these contracts.
  9




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Our customers may terminate projects before completion or choose not to renew contracts, many of
which are terminable at will, which could adversely affect our profitability.
  A number of our customer contracts are conditioned upon our performance, which, if unsatisfactory,
could result in less revenue than previously anticipated.
  Some of our multi-year customer contracts contain certain provisions which, if triggered, could
result in lower future revenues and profitability under the contract.
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We may be unable to attract skilled professionals in the competitive labor market.
  We dedicate significant resources to develop international operations which may be more difficult
to manage and operate.
 We are investing substantial cash assets in new facilities and physical infrastructure and our
profitability could be reduced if our business does not grow proportionately.
  Restrictions on immigration may affect our ability to compete for and provide services to customers
in the United States and in other countries, which could hamper our growth and cause our revenues
to decline.
  11




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We may engage in acquisitions, strategic investments, strategic partnerships or alliances or other
ventures that may or may not be successful.
    System failure could disrupt our business.
  We may be liable to our customers for damages caused by disclosure of confidential information or
system failure.
  12




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Our success depends in large part upon our management team and key personnel and our ability to
attract and retain them.
  Our insiders are significant shareholders, are able to influence the election of our board and
may have interests which conflict with those of our shareholders or holders of our ADSs.
  Our financial results are impacted by the financial results of entities that we do not control.
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The value of our interest in our subsidiaries may decline.
  Stock-based compensation expenses may significantly reduce our net income.
  a)
    
    compensation expense for all stock-based
compensation awards granted prior to, but not yet vested as of April 1, 2006, based on the
grant-date fair value estimated in accordance with the original provisions of SFAS No. 123,
Accounting for Stock-Based Compensation or SFAS 123 andb)
    
    Stock-based compensation expenses
for all stock-based compensation awards granted after April 1, 2006 is based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified
prospective transition method, our consolidated financial statements for the prior periods have not
been restated to reflect, and do not include, the impact of SFAS 123R. Depending on the grant date
fair value and future grants are made, amortization of deferred stock-based compensation may
contribute to reducing our operating income and net income. Our subsidiaries also have stock option
schemes which may generate stock-based compensation expenses and
which have and in the past reduced, and may in the future reduce our operating
income and net income.
 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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As a foreign private issuer, we are subject to different U.S. securities laws and rules than a
domestic issuer, which may, among other things, limit the information available to holders of our
securities.
  Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.
  Risks Related to Investments in Indian Companies
  The GoI has recently taken actions to curtail or eliminate tax benefits that we have historically
benefited from.
   15




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Foreign investment restrictions under Indian law may adversely impact the value of our ADSs,
including, for example, restrictions that limit your ability to reconvert equity shares into ADSs,
which may cause our equity shares to trade at a discount or premium to the market price of our
ADSs.
    Regional conflicts or natural disasters in South Asia and elsewhere could adversely affect the
Indian economy, disrupt our operations and cause our business to suffer.
  Political instability could seriously harm business and economic conditions in India generally and
our business in particular.
  16




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Currency exchange rate fluctuations may affect the value of our ADSs and our financial condition.
     Our ability to acquire companies organized outside India as part of our growth strategy depends on
the approval of the GoI and/or the RBI and failure to obtain this approval could negatively impact
our business.
  If we are unable to protect our intellectual property rights, or if we infringe on the intellectual
property rights of others, our business may be harmed.
   17




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Indian laws limit our ability to raise capital outside India and may limit the ability of others to
acquire us, which could prevent us from operating our business or entering into a transaction that
is in the best interests of our shareholders.
  Conditions in the Indian securities market may affect the price or liquidity of our equity shares
and our ADSs.
  High
    
    LowFiscal Year
    
    Rs.
    
    $ Equivalent
    
    Rs.
    
    $ Equivalent2003
    
    
    145.9
    
    
    
    3.1
    
    
    
    87.6
    
    
    
    1.82004
    
    
    195.5
    
    
    
    4.5
    
    
    
    63.7
    
    
    
    1.52005
    
    
    221.0
    
    
    
    5.1
    
    
    
    125.0
    
    
    
    2.92006
    
    
    431.0
    
    
    
    9.7
    
    
    
    182.2
    
    
    
    4.12007
    
    
    524.9
    
    
    
    12.2
    
    
    
    270.5
    
    
    
    6.32008(Through April
20, 2007)
    
    
    495.9
    
    
    
    11.9
    
    
    
    435.0
    
    
    
    10.2
 ,
 18




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It may be difficult for you to enforce any judgment obtained in the United States against us or our
affiliates.
  
    
    effect service of process upon us outside India or these persons outside the
jurisdiction of their residence; or
    
    enforce against us in courts outside of India or these persons outside the jurisdiction
of their residence, judgments obtained in United States courts, including judgments
predicated solely upon the federal securities laws of the United States.
  You may be subject to Indian taxes arising out of capital gains on the sale of the underlying
equity shares.
  There may be less company information available in Indian securities markets than securities
markets in other countries.
  19




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Risk Related to our ADSs and our Trading Market
 Historically, our ADSs have traded at a significant premium to the trading prices of our underlying
equity shares, a situation which may not continue.
  You may be restricted in your ability to exercise preemptive rights under Indian law and thereby
may suffer future dilution of your ownership position.
  Holders of ADSs may be restricted in their ability to exercise voting rights.
  
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An active or liquid trading market for our ADSs is not assured.
   The future sales of securities by our company or existing shareholders may harm the price of our
ADSs or our equity shares.
  21




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ITEM 4. INFORMATION ON THE COMPANY
 Business Overview
 www.satyam.com
        22




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Industry Overview
 Global IT Services Overview
    ncreased importance of IT to businesses.
  mpact of the Internet and other new technologies on business.
 23




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 Managing and upgrading existing systems.
  Increasing trend towards offshore outsourcing.
 Indian IT Services Industry Overview
    High quality delivery record.
  arge supply of English-speaking IT professionals.
  Significant cost advantage.
 Trends
   Enhanced expectations.
  Large, multi-year, end-to-end contracts.
 24




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 Relationships with customers key senior management.
  Performance measurement.
 Our Competitive Strengths
   Comprehensive range of services combined with specialized industry expertise.
  Flexible, highly evolved delivery model. , , ,
  Established leadership position in consulting and enterprise business solutions.
 25




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 Strong relationships with blue chip customers.
  Track record of high quality execution .
   Culture of innovation.
 Our Growth Strategy
   Building on our long-standing customer relationships to cross-sell our comprehensive range of
services.
  Continuing to focus on enterprise-wide business solutions and high quality value-added services.
 26




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 Expanding our presence in existing markets and penetrating new geographic markets.
  Continuing to enhance our industry expertise.
  ttracting and retaining quality technical associates and augmenting their training.
  Enhancing our capabilities through technology alliances and acquisitions.
 IT Service Offerings
  Application development and maintenance services
 Application development
  27




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Application maintenance
  Consulting and enterprise business solutions
  Extended engineering solutions
  Infrastructure management services
  Delivery of IT Services
  28




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Offshore centers
   Offsite centers
   Nearshore centers
   Onsite teams
  Quality and Project Management
  29




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Customers
    Fiscal2007
    
    2006
    
    2005No. of $1+ million customers
    
    
    116
    
    
    
    101
    
    
    
    109No. of $5+ million customers
    
    
    26
    
    
    
    22
    
    
    
    30No. of $10+ million customers
    
    
    31
    
    
    
    23
    
    
    
    19
  30




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Fiscal2007
    
    2006
    
    2005Manufacturing
    
    
    27.0
    %
    
    
    28.6
    %
    
    
    29.2
    %Banking and Finance
    
    
    17.5
    
    
    
    18.5
    
    
    
    17.8Insurance
    
    
    8.8
    
    
    
    8.8
    
    
    
    11.4TIMES
    
    
    20.3
    
    
    
    18.4
    
    
    
    17.3Healthcare
    
    
    7.2
    
    
    
    6.1
    
    
    
    6.0Retail
    
    
    3.5
    
    
    
    3.1
    
    
    
    2.8Transportation
    
    
    2.3
    
    
    
    2.6
    
    
    
    2.7Others
    
    
    13.4
    
    
    
    13.9
    
    
    
    12.8Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Sales and Marketing
     BPO Services and Nipuna
     31




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Claims administration and transaction processing services
  Customer care services
   Engineering services
  Strategic Alliances
   Employees
   32




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Recruiting
  Learning and Developmental Training
  Retention
   Competition
  33




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
    
    consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;
    
    divisions of large multinational technology firms such as Hewlett-Packard and IBM;
    
    IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM
Global Services; and
    
    offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy
Services Limited and Wipro Limited.
   Communications Infrastructure
      Facilities
  34




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##### Table of Contents



Intellectual Property
  Seasonality
  Government Regulation
   Research and Development
  35




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##### Table of Contents



ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  Overview
        36




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##### Table of Contents



Disclosures about Segments of an Enterprise and Related Information
 
    
    IT services:We provide a comprehensive range of IT services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, and infrastructure management services. We seek to be the single
service provider capable of servicing all of our customers IT requirements. Our consulting
and enterprise business solutions includes services in the area of enterprise resource
planning, customer relationship management
 37




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##### Table of Contents



and supply chain management, data warehousing and business intelligence, knowledge
management, document management and enterprise application integration. We also assist our
customers in making their existing computing systems accessible over the Internet. The
segment information includes the results of Citisoft and Knowledge Dynamics Pte Ltd,
Singapore, or Knowledge Dynamics which were acquired during 2005.
 
    
    BPO:We provide outsourced BPO services in areas such as human resources, finance and
accounting, customer care (such as voice, email and chat) besides also providing
industry-specific transaction processing services. We target our BPO services at the
insurance, healthcare, banking and financial services, transportation, tourism,
manufacturing, automotive, telecommunications, media, utilities and retail industries.
Revenues from this business segment currently do not constitute a significant proportion of
our total revenues; however, we anticipate that this proportion will increase over time. Our
BPO services are offered through our majority-owned subsidiary, Nipuna. As part of the
investor rights and securities subscription agreements which we have entered into with
Nipunas two other investors, we have agreed not to compete with Nipuna. Pursuant to these
agreements, we and our affiliates are restricted from engaging in activities that are or
could directly or indirectly be competitive with the business of Nipuna. Such activities
include among others providing BPO, soliciting existing or prospective customers of Nipuna
to obtain the services offered by Nipuna from other service providers and investing in
companies engaged in the same or similar business as Nipuna. These non-compete restrictions
apply until the investors redeem all of their preference shares in Nipuna or their equity
interest in Nipuna up to 5%.
 Revenues
   Year ended March 31,2007
    
    
    2006
    
    
    2005Segment
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)IT services
    
    $
    1,432.5
    
    
    
    98.0
    %
    
    $
    1,082.7
    
    
    
    98.8
    %
    
    $
    786.7
    
    
    
    99.1
    %BPO
    
    
    28.9
    
    
    
    2.0
    
    
    
    13.6
    
    
    
    1.2
    %
    
    
    6.9
    
    
    
    0.9Total
    
    $
    1,461.4
    
    
    
    100.0
    %
    
    $
    1,096.3
    
    
    
    100.0
    %
    
    $
    793.6
    
    
    
    100.0
    %
  Revenues by technology
  Year ended March 31,2007
    
    
    2006
    
    
    2005Technology type
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)Application development and maintenance services
    
    $
    675.2
    
    
    
    47.1
    
    
    $
    541.4
    
    
    
    50.0
    %
    
    $
    429.5
    
    
    
    54.6Consulting and enterprise business solutions
    
    
    599.8
    
    
    
    41.9
    
    
    
    429.5
    
    
    
    39.7
    
    
    
    269.7
    
    
    
    34.3Extended engineering solutions
    
    
    93.5
    
    
    
    6.5
    
    
    
    70.2
    
    
    
    6.5
    
    
    
    55.2
    
    
    
    7.0Infrastructure management services
    
    
    64.0
    
    
    
    4.5
    
    
    
    41.6
    
    
    
    3.8
    
    
    
    32.3
    
    
    
    4.1Total
    
    $
    1,432.5
    
    
    
    100.0
    %
    
    $
    1,082.7
    
    
    
    100.0
    %
    
    $
    786.7
    
    
    
    100.0
    %
 38




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Revenues by contract type
   Year ended March 31,2007
    
    
    2006
    
    
    2005Contract type
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)Time-and-material basis
    
    $
    873.2
    
    
    
    61.0
    %
    
    $
    702.8
    
    
    
    64.9
    %
    
    $
    517.3
    
    
    
    65.8
    %Fixed-price basis
    
    
    559.3
    
    
    
    39.0
    
    
    
    379.9
    
    
    
    35.1
    
    
    
    269.4
    
    
    
    34.2Total
    
    $
    1,432.5
    
    
    
    100.0
    %
    
    $
    1,082.7
    
    
    
    100.0
    %
    
    $
    786.7
    
    
    
    100.0
    %
 Revenues based on offshore and onsite/offsite
    Year ended March 31,2007
    
    
    2006
    
    
    2005Location
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)Offshore
    
    $
    704.1
    
    
    
    49.2
    %
    
    $
    496.0
    
    
    
    45.8
    %
    
    $
    327.1
    
    
    
    41.6
    %Onsite/Offsite
    
    
    728.4
    
    
    
    50.8
    
    
    
    586.7
    
    
    
    54.2
    
    
    
    459.6
    
    
    
    58.4Total
    
    $
    1,432.5
    
    
    
    100.0
    %
    
    $
    1,082.7
    
    
    
    100.0
    %
    
    $
    786.7
    
    
    
    100.0
    %
 Revenues by top customers
  39




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Revenues based on customer location
  Year ended March 31,2007
    
    
    2006
    
    
    2005Geographic location
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)United States
    
    $
    908.7
    
    
    
    63.4
    %
    
    $
    699.0
    
    
    
    64.6
    %
    
    $
    538.2
    
    
    
    68.4
    %Europe
    
    
    274.7
    
    
    
    19.2
    
    
    
    204.8
    
    
    
    18.9
    
    
    
    130.7
    
    
    
    16.6Japan
    
    
    20.8
    
    
    
    1.5
    
    
    
    15.5
    
    
    
    1.4
    
    
    
    13.9
    
    
    
    1.8India
    
    
    63.4
    
    
    
    4.4
    
    
    
    45.2
    
    
    
    4.2
    
    
    
    25.5
    
    
    
    3.2Rest of the world
    
    
    164.9
    
    
    
    11.5
    
    
    
    118.2
    
    
    
    10.9
    
    
    
    78.4
    
    
    
    10.0Total
    
    $
    1,432.5
    
    
    
    100.0
    %
    
    $
    1,082.7
    
    
    
    100.0
    %
    
    $
    786.7
    
    
    
    100.0
    %
 Expenses
 Cost of revenues
    Selling, general and administrative expenses
  Subsidiaries
  Citisoft
  40




---



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41




---



##### Table of Contents



$ in millionsAcquisition of
    
    
    Acquisition of75% interest
    
    
    25% interestPurchase price
    
    $
    17.4
    
    
    $
    5.9Allocated to:Net current assets
    
    $
    2.2
    
    
    
    0.7Tangible assets
    
    
    0.3
    
    
    
    0.1Customer Contracts related intangibles
    
    
    0.8
    
    
    
    0.3Customer relationship related intangibles
    
    
    5.4
    
    
    
    0.7Trade name
    
    
    0.7
    
    
    
    0.1Goodwill
    
    
    10.3
    
    
    
    4.4Deferred tax liability
    
    
    (2.3
    )
    
    
    (0.4
    )Total
    
    $
    17.4
    
    
    $
    5.9
  Knowledge Dynamics
   42




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##### Table of Contents



$
in millionsPurchase price
    
    $
    3.3Allocated to:Net current assets
    
    $
    0.5Customer Contracts and Related Relationships
    
    
    1.0Trade name
    
    
    0.1Goodwill
    
    
    2.1Deferred tax liability
    
    
    (0.4
    )Total
    
    $
    3.3
  Associate  Sify
   Preferred Stock of Subsidiary
     43




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Income Taxes
   44




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##### Table of Contents



Results of Operations
  Year ended March 31,2007
    
    
    2006
    
    
    2005Statement of Operations data:
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %(in millions, except percentages)Revenues:IT services
    
    $
    1,433.2
    
    
    
    98.1
    %
    
    $
    1,083.5
    
    
    
    98.8
    %
    
    $
    787.4
    
    
    
    99.2
    %BPO
    
    
    38.0
    
    
    
    2.6
    
    
    
    19.9
    
    
    
    1.8
    
    
    
    10.0
    
    
    
    1.3Inter-segment
    
    
    (9.8
    )
    
    
    (0.7
    )
    
    
    (7.1
    )
    
    
    (0.6
    )
    
    
    (3.8
    )
    
    
    (0.5
    )Total revenues
    
    
    1,461.4
    
    
    
    100.0
    
    
    
    1,096.3
    
    
    
    100.0
    
    
    
    793.6
    
    
    
    100.0Cost of revenues: (1)IT services
    
    
    (920.0
    )
    
    
    (63.0
    )
    
    
    (678.1
    )
    
    
    (61.9
    )
    
    
    (502.2
    )
    
    
    (63.3
    )BPO
    
    
    (26.9
    )
    
    
    (1.8
    )
    
    
    (17.6
    )
    
    
    (1.6
    )
    
    
    (7.9
    )
    
    
    (1.0
    )Inter-segment
    
    
    9.3
    
    
    
    0.6
    
    
    
    6.7
    
    
    
    0.6
    
    
    
    3.3
    
    
    
    0.4Total cost of revenues
    
    
    (937.6
    )
    
    
    (64.2
    )
    
    
    (689.0
    )
    
    
    (62.8
    )
    
    
    (506.8
    )
    
    
    (63.9
    )Gross profit:IT services
    
    
    513.2
    
    
    
    35.1
    
    
    
    405.4
    
    
    
    37.0
    
    
    
    285.2
    
    
    
    35.9BPO
    
    
    11.1
    
    
    
    0.8
    
    
    
    2.3
    
    
    
    0.2
    
    
    
    2.1
    
    
    
    0.3Inter-segment
    
    
    (0.5
    )
    
    
    (0.0
    )
    
    
    (0.4
    )
    
    
    (0.0
    )
    
    
    (0.5
    )
    
    
    (0.1
    )Total gross profit
    
    
    523.8
    
    
    
    35.8
    
    
    
    407.3
    
    
    
    37.2
    
    
    
    286.8
    
    
    
    36.1Operating expenses:Selling, general and administrative expenses: (2)IT services
    
    
    (219.0
    )
    
    
    (15.0
    )
    
    
    (176.8
    )
    
    
    (16.1
    )
    
    
    (113.4
    )
    
    
    (14.3
    )BPO
    
    
    (13.7
    )
    
    
    (0.9
    )
    
    
    (11.2
    )
    
    
    (1.0
    )
    
    
    (11.4
    )
    
    
    (1.4
    )Inter-segment
    
    
    0.5
    
    
    
    0.0
    
    
    
    0.4
    
    
    
    0.0
    
    
    
    0.5
    
    
    
    0.1Total selling, general and administrative expenses
    
    
    (232.2
    )
    
    
    (15.9
    )
    
    
    (187.6
    )
    
    
    (17.1
    )
    
    
    (124.3
    )
    
    
    (15.7
    )Operating income/(loss):IT services
    
    
    294.2
    
    
    
    20.1
    
    
    
    228.6
    
    
    
    20.9
    
    
    
    171.8
    
    
    
    21.7BPO
    
    
    (2.6
    )
    
    
    (0.2
    )
    
    
    (8.9
    )
    
    
    (0.8
    )
    
    
    (9.3
    )
    
    
    (1.2
    )Inter-segment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating income/(loss)
    
    
    291.6
    
    
    
    20.0
    
    
    
    219.7
    
    
    
    20.0
    
    
    
    162.5
    
    
    
    20.5Interest income
    
    
    37.3
    
    
    
    2.6
    
    
    
    26.3
    
    
    
    2.4
    
    
    
    22.3
    
    
    
    2.8Interest expense
    
    
    (3.6
    )
    
    
    (0.2
    )
    
    
    (1.3
    )
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    (0.1
    )Gain on sale of shares in associated companies/ others
    
    
    
    
    
    
    
    
    
    
    43.6
    
    
    
    4.0
    
    
    
    
    
    
    
    0.0Gain/ (loss) on foreign exchange transactions
    
    
    (3.3
    )
    
    
    (0.2
    )
    
    
    0.3
    
    
    
    0.0
    
    
    
    (4.6
    )
    
    
    (0.6
    )Other income/(expense), net
    
    
    6.2
    
    
    
    0.4
    
    
    
    (0.8
    )
    
    
    (0.1
    )
    
    
    0.4
    
    
    
    0.0Income before income taxes and equity in earnings/(losses) of
associated companies
    
    
    328.2
    
    
    
    22.5
    
    
    
    287.8
    
    
    
    26.3
    
    
    
    180.2
    
    
    
    22.7Income taxes
    
    
    (30.6
    )
    
    
    (2.1
    )
    
    
    (37.7
    )
    
    
    (3.4
    )
    
    
    (25.3
    )
    
    
    (3.2
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    
    
    
    
    Equity in earnings/(losses) of associated companies, net of taxes
    
    
    0.8
    
    
    
    0.1
    
    
    
    (0.8
    )
    
    
    (0.1
    )
    
    
    (1.1
    )
    
    
    (0.1
    )Net income
    
    $
    298.4
    
    
    
    20.4
    
    
    $
    249.4
    
    
    
    22.7
    
    
    $
    153.8
    
    
    
    19.4Depreciation
    
    
    32.4
    
    
    
    2.2
    
    
    
    30.6
    
    
    
    2.8
    
    
    
    25.0
    
    
    
    3.2Stock-based compensation
    
    
    15.7
    
    
    
    1.1
    
    
    
    0.8
    
    
    
    0.1
    
    
    
    1.9
    
    
    
    0.2
 
 (1)
    
    Inclusive of stock-based compensation expenses of $12.8 million, $Nil and $0.8
million for the years ended March 31, 2007, 2006 and 2005 respectively in the IT services
segments.(2)
    
    Inclusive of stock-based compensation expenses of
$2.9 million, $0.8 million and $1.1 million for the
years ended March 31, 2007, 2006 and 2005 respectively, in the IT services
segments. 45




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Comparison of results for fiscal 2007 and fiscal 2006.
 Revenues.
     Cost of Revenues.
 Selling, general and administrative expenses.
 46




---



##### Table of Contents



Operating income.
 Interest income.
 Gain on sale of investments.
 Gain/(loss) on foreign exchange transactions.
 Other income/(expenses), net.
 Income taxes.
 Equity in earnings/(losses) of associated companies, net of taxes.
 Net income.
 Comparison of results for fiscal 2006 and fiscal 2005.
 Revenues.
 47




---



##### Table of Contents



Cost of Revenues.
 Selling, general and administrative expenses.
 48




---



##### Table of Contents



Operating income.
 Interest income.
 Gain on sale of investments.
 Gain/(loss) on foreign exchange transactions.
 Other income/(expenses), net.
 Income taxes.
 Equity in earnings/(losses) of associated companies, net of taxes.
 Net income.
 Liquidity and Capital Resources
 Net cash provided by operating activities
   49




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##### Table of Contents



Net cash used in investing activities
     Net cash provided by/(used in) financing activities
    50




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Amount
    
    
    Interest
    
    ComputationLoan Type
    
    Lenders
    
    outstanding
    
    
    (per annum)
    
    method(dollars in millions)Working capital term loan
    
    BNP Paribas
    
    $
    10.0
    
    
    6 month LIBOR +0.95%
    
    FloatingExternal commercial borrowing
    
    BNP Paribas
    
    
    10.6
    
    
    6 month LIBOR +0.95%
    
    FloatingOverdraft facility
    
    BNP Paribas
    
    
    10.5
    
    
    6 month LIBOR +0.25%
    
    FloatingOther loans
    
    Various other parties
    
    
    3.2
    
    
    3.0%-14.5%
    
    FixedTotal
    
    
    
    $
    34.3
   51




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##### Table of Contents



Payments due as at March 31, 2007,Within 1
    
    
    1-3
    
    
    3-5
    
    
    After 5year
    
    
    years
    
    
    years
    
    
    Years
    
    
    Total(dollars in millions)Long-term debt
    
    $
    1.6
    
    
    $
    22.0
    
    
    $
    0.2
    
    
    
    
    
    
    $
    23.8Operating leases
    
    
    4.6
    
    
    
    3.7
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    8.9Unconditional purchase obligations:Other commercial commitments
    
    
    38.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38.2Bank guarantees
    
    
    10.9
    
    
    
    0.7
    
    
    
    6.9
    
    
    
    4.6
    
    
    
    23.1Gratuity Plan
    
    
    2.1
    
    
    
    5.2
    
    
    
    8.3
    
    
    
    19.2
    
    
    
    34.8Nipuna 0.05% Cumulative convertible redeemable preference shares
    
    
    13.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.6Citisoft deferred, earn-out consideration and EBT funding (1)
    
    
    11.2
    
    
    
    9.0
    
    
    
    
    
    
    
    
    
    
    
    20.2Knowledge Dynamics deferred and earn-out consideration (2)
    
    
    2.1
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    3.3Total contractual cash obligations.
    
    $
    84.3
    
    
    $
    41.8
    
    
    $
    15.7
    
    
    $
    24.1
    
    
    
    165.9
 
 (1)
    
    The earn-out consideration and the further funding of EBT are based on fulfillment of
certain conditions.(2)
    
    Earn-out consideration of Knowledge Dynamics is based on certain conditions.(3)
    
    We anticipate to incur capital expenditure of $100 million in fiscal 2008.  Research and Development
  52




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Stock-based Compensation
 Accounting for
Stock Issued to Employees Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25, Accounting for Stock-Based Compensation Accounting
for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123
     Year endedMarch 31,2007Dividend yield
    
    
    0.78
    %Expected volatility
    
    
    59
    %Risk-free interest rate
    
    
    8
    %Expected term (in years)
    
    
    0.96
  53




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Effect of recently issued accounting pronouncements
      Critical Accounting Policies
  54




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Revenue recognition
      n
    
    We have established a direct relationship between units of input and productivity.n
    
    We evaluate each contract and apply judgment to ensure the existence of a
relationship between efforts expended and productivity.n
    
    We periodically ensure that no inefficiencies exist between the input and
productivity and that the incurrence of an input results in progress-to-completion.n
    
    We periodically review and confirm by alternative measures the acceptability of
the results provided by the input measures with the output measures.
  55




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n
    
    we do not have any arrangements where services / deliverables are for trial or
evaluation purposes and we do not grant a right of return / exchange;n
    
    the fees for these contracts are fixed and non refundable and delivery occurs on a
prorate basis as the services are rendered. The customer sign-off rights are generally
identical to those granted to all others within the same class of customer and for which
satisfaction can be generally assured without consideration of conditions specific to the
customer;n
    
    we are able to objectively demonstrate that the deliverables meet the specified
criteria and that these provisions are not different from general or specific warranties and
accordingly should be accounted for as warranties in accordance with FAS 5, Accounting for
Contingencies. We are able to reliably estimate the related warranty costs based on a
demonstrated history of substantially similar transactions; andn
    
    no uncertainty exists about customer acceptance once the services have been
rendered. We are able to reliably demonstrate that the criteria specified in the acceptance
provisions and all other revenue recognition criteria are met prior to formal customer
sign-off. We believe that we would be successful in enforcing a claim for payment even in
the absence of formal sign-off.
 Impairment of Goodwill
   n
    
    significant underperformance relative to expected historical or projected future operating results;n
    
     significant changes in the manner of our use of the acquired assets or the strategy for our overall business;n
    
     significant negative industry or economic trends;
 56




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##### Table of Contents



n
    
     significant decline in our stock price for a sustained period; andn
    
     our market capitalization relative to net book value.
     Accounts Receivable
  Accounting for income taxes
   Stock-Based Compensation Expense
  57




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##### Table of Contents



Effects of Inflation
  Exchange Rates
  Month
    
    Month end
    
    Average
    
    High
    
    Low(Rupees)April-05
    
    
    43.48
    
    
    
    43.64
    
    
    
    43.72
    
    
    
    43.48May-05
    
    
    43.62
    
    
    
    43.41
    
    
    
    43.62
    
    
    
    43.21June-05
    
    
    43.51
    
    
    
    43.52
    
    
    
    43.71
    
    
    
    43.44July-05
    
    
    43.40
    
    
    
    43.43
    
    
    
    43.59
    
    
    
    43.05August-05
    
    
    44.00
    
    
    
    43.55
    
    
    
    44.00
    
    
    
    43.36September-05
    
    
    43.94
    
    
    
    43.85
    
    
    
    43.98
    
    
    
    43.75October-05
    
    
    45.09
    
    
    
    44.76
    
    
    
    45.11
    
    
    
    44.00November-05
    
    
    45.87
    
    
    
    45.63
    
    
    
    45.87
    
    
    
    45.02December-05
    
    
    44.95
    
    
    
    45.56
    
    
    
    46.26
    
    
    
    44.94January-06
    
    
    43.96
    
    
    
    44.20
    
    
    
    44.92
    
    
    
    43.89February-06
    
    
    44.21
    
    
    
    44.23
    
    
    
    44.54
    
    
    
    44.10March-06
    
    
    44.48
    
    
    
    44.34
    
    
    
    44.58
    
    
    
    44.09April-06
    
    
    44.86
    
    
    
    44.82
    
    
    
    45.09
    
    
    
    44.39May-06
    
    
    46.22
    
    
    
    45.20
    
    
    
    46.22
    
    
    
    44.69June-06
    
    
    45.87
    
    
    
    45.89
    
    
    
    46.25
    
    
    
    45.50July-06
    
    
    46.49
    
    
    
    46.37
    
    
    
    46.83
    
    
    
    45.84August-06
    
    
    46.43
    
    
    
    46.45
    
    
    
    46.61
    
    
    
    46.32September-06
    
    
    45.95
    
    
    
    46.01
    
    
    
    46.38
    
    
    
    45.74October-06
    
    
    44.90
    
    
    
    45.36
    
    
    
    45.97
    
    
    
    44.90November-06
    
    
    44.59
    
    
    
    44.73
    
    
    
    45.26
    
    
    
    44.46December-06
    
    
    44.11
    
    
    
    44.48
    
    
    
    44.70
    
    
    
    44.11January-07
    
    
    44.07
    
    
    
    44.21
    
    
    
    44.49
    
    
    
    44.07February-07
    
    
    44.08
    
    
    
    44.02
    
    
    
    44.21
    
    
    
    43.87March-07
    
    
    43.10
    
    
    
    43.79
    
    
    
    44.43
    
    
    
    42.78
 58




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##### Table of Contents



Risk Management Policy
   Accounting for
Derivative Instruments and Hedging Activities,
  As at March 31,2007
    
    2006
    
    
    2005Amount
    
    Amount
    
    
    Amount(dollars in millions)Aggregate contracted principal amounts of contracts outstanding:Forward contracts
    
    
    $
    100.0
    
    $
    79.0
    
    
    $
    160.0Options contracts
    
    
    
    352.6
    
    
    137.0
    
    
    
    141.5Total
    
    
    $
    452.6
    
    $
    216.0
    
    
    $
    301.5Gains/(loss) on outstanding contracts:Forward contracts
    
    
    $
    2.1
    
    $
    0.4
    
    
    $
    1.0Options contracts
    
    
    
    2.4
    
    
    (1.8
    )
    
    
    0.1Total
    
    
    $
    4.5
    
    $
    (1.4
    )
    
    $
    1.1Gains/(losses) on foreign exchange forward and options contracts are included under the
heading Other income/(expense) in the statement of income and are as stated below:Year ended March 31,2007
    
    
    2006
    
    
    2005Amount
    
    
    Amount
    
    
    Amount(dollars in millions)Forward contracts
    
    $
    2.6
    
    
    $
    0.8
    
    
    $
    (0.5
    )Options contracts
    
    
    3.6
    
    
    
    (1.6
    )
    
    
    0.2Total
    
    $
    6.2
    
    
    $
    (0.8
    )
    
    $
    (0.3
    )
 Off-Balance Sheet Arrangements
  59




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##### Table of Contents



Foreign Currency Transactions/ Translation
    
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
  Directors
 Name
    
    Age
    
    PositionB. Ramalinga Raju
    
    
    51
    
    
    ChairmanB. Rama Raju
    
    
    47
    
    
    Managing Director and Chief Executive Officer(3)Ram Mynampati
    
    
    49
    
    
    President & Whole Time DirectorV.P. Rama Rao
    
    
    73
    
    
    Director(1)(2)(3)Dr. Mangalam Srinivasan
    
    
    68
    
    
    Director(1)(2)Krishna G. Palepu
    
    
    52
    
    
    DirectorVinod K. Dham
    
    
    56
    
    
    Director(2)M.Rammohan Rao
    
    
    65
    
    
    Director(1)(2)T.R.Prasad
    
    
    66
    
    
    Director(1)(3)V.S. Raju
    
    
    67
    
    
    Director(1)(2)(3)
 Key Management Personnel
 Name
    
    Age
    
    PositionAnand T. R.
    
    
    51
    
    
    Director and Senior Vice President, Vertical Business Unit  TIMESHari T.
    
    
    42
    
    
    Director & Sr. Vice President  Human ResourcesJayaraman G.
    
    
    51
    
    
    Sr. Vice President, Corporate Governance and Company SecretaryJoseph Abraham
    
    
    54
    
    
    Director and Senior Vice President, Vertical Business Unit  RetailKeshab Panda
    
    
    48
    
    
    Director and Senior Vice President, Regional Business Unit, EuropeManish Sukhlal Mehta
    
    
    50
    
    
    Director and Senior Vice President, Horizontal Competency Unit  SAP, Engineering and Spatial Services
 60




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##### Table of Contents



Name
    
    AgeMohan Eddy F.S
    
    
    56
    
    
    Director and Senior Vice PresidentV Murali
    
    
    42
    
    
    Director and Senior Vice President  Commercial and ContractMurty A.S
    
    
    48
    
    
    Director and Senior Vice President, Leadership Development GroupRavi Shanker Bommakanti
    
    
    48
    
    
    Director and Senior Vice President  Vertical Business Unit  InsuranceShailesh Shah
    
    
    46
    
    
    Director and Senior Vice President  Corporate Strategy GroupSrinivas V
    
    
    46
    
    
    Director, Senior Vice President and Chief Financial OfficerSubramanian D
    
    
    47
    
    
    Director and Senior Vice President  Vertical Business Unit  Manufacturing, Energy, Oil and Gas and
UtilitiesVijay Prasad Boddupalli
    
    
    55
    
    
    Director and Senior Vice President  Horizontal Competency Unit  Enterprise Applications and Business
Intelligence SolutionsVirender Aggarwal
    
    
    46
    
    
    Director and Senior Vice President
 Regional Business Unit-India, Middle East, Africa & Asia Pacific
 
 (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Investors Grievance Committee(4)
    
    Directors listed under key management personnel are directors of
business/support units and not members of our board of directors. B. Ramalinga Raju
 B. Rama Raju
 Ram Mynampati
 V. P. Rama Rao
 61




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##### Table of Contents



Dr. Mangalam Srinivasan
 Professor Krishna G. Palepu
 Vinod K. Dham
 M Rammohan Rao,
 Mr. T.R. Prasad
 Prof. V. S. Raju
 Anand T.R.
 62




---



##### Table of Contents



Hari
T
 Jayaraman G.
 Joseph Abraham
 Keshab Panda
 Manish Sukhlal Mehta
 Mohan Eddy F. S.
 V Murali
 Murty A. S.
 Ravi Shanker Bommakanti
 63




---



##### Table of Contents



Shailesh Shah
 Srinivas V.
 Subramanian D.
 Vijay Prasad Boddupalli
  Virender Aggarwal
 Compensation of Directors and Key Management Personnel
   64




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##### Table of Contents



Annual Compensation
 $ in millionsName and Principal Position
    
    Salary
    
    
    Bonus
    
    Others(1)B. Rama Raju, Managing
Director and Chief Executive
Officer
    
    $
    0.09
    
    
    
    
    
    
    $
    0.01
 
 (1)
    
    Includes membership fees and housing allowance. Option Grants
  Employee Benefit Plans
  Our ASOP and ESOP Plans
  ASOP
  65




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##### Table of Contents



ASOP B
   ASOP ADS
    Associate
Stock Option Plan  Restricted Stock Units (ASOP 
RSUs)
 66




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##### Table of Contents



Associate Stock Option Plan  RSUs (ADS) (ASOP  RSUs(ADS))
  Nipuna ESOP
  Board Practices
 Board Composition
  
    
    at least two-thirds of our directors shall be subject to retirement; and
    
    in any given year, at least one-third of these directors who are subject to
retirement shall retire and be eligible for re-election at the annual meeting of our
shareholders.
  Board Committees
    67




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##### Table of Contents



Directors Compensation
  Employment, Severance and Other Agreements
  Employees
  Share Ownership
  Equity SharesBeneficially OwnedBeneficial Owner
    
    Number
    
    PercentB. Rama Raju
    
    
    2,000
    (1)(2)
    
    
    0.00B. Ramalinga Raju
    
    
    0
    (2)
    
    
    0.00Ram Mynampati
    
    
    946,148
    
    
    
    0.14V.P. Rama Rao
    
    
    
    
    
    
    Dr. Mangalam Srinivasan
    
    
    
    
    
    
    Krishna G. Palepu
    
    
    
    
    
    
    Vinod K Dham
    
    
    
    
    
    
    M Rammohan Rao
    
    
    
    
    
    
    T.R. Prasad
    
    
    
    
    
    
    V.S. Raju
    
    
    
    
    
    
    All directors and executive officers as a group
    
    
    2,604,499
    
    
    
    0.39
 
 (1)
    
    Includes 1,000 equity shares held by B. Rama Rajus wife, B.
Radha Raju. B. Rama Raju disclaims beneficial ownership of any equity
shares held by B. Radha Raju.(2)
    
    B. Ramalinga Raju and B. Rama Raju control SRSR Holdings
Private Limited, which holds approximately 8.38% of our outstanding
equity shares as of March 31, 2007. 68




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##### Table of Contents



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Share Ownership
    Identity of Person or Group
    
    Number
    
    Percentage (%)FMR Corp.(1)
    
    
    59,495,832
    
    
    
    8.95
    %SRSR Holdings Private Limited(2)
    
    
    55,728,000
    
    
    
    8.38
    %
 
 (1)
    
    Information based on a report on Schedule 13G jointly filed by FMR Corp. and Edward C.
Johnson with the SEC on February 14, 2004 and as amended on February 14, 2005, February 14,
2006, August 10, 2006 and February 14, 2007. Based on Amendment No. 4 to the Schedule 13G
filed by FMR Corp. and Edward C. Johnson with the SEC on
February 14, 2007 FMR Corp. has sole voting power for
6,443,905 equity shares and sole dispositive power for
59,495,832 equity shares. Edward Johnson has sole voting and
dispositive power for 59,495,832 equity shares.(2)
    
    Information based upon a report on Schedule 13G filed by SRSR Holdings Private Limited, with
the SEC on September 21, 2006. Related Party Transactions
  69




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##### Table of Contents



ITEM 8. FINANCIAL INFORMATION
 Financial Statements
  Legal Proceedings
 Dividends
   
 ITEM 9. THE OFFER AND LISTING
 Trading Markets
    70




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##### Table of Contents



Price History
  Annual high and low market prices
 Rupee price per
    
    
    U.S. dollar priceequity share(1)
    
    
    per equity shareFiscal year ended March 31,(2)
    
    High
    
    
    Low
    
    
    High
    
    
    Low2003
    
    
    145.93
    
    
    
    87.55
    
    
    
    3.07
    
    
    
    1.842004
    
    
    195.50
    
    
    
    63.65
    
    
    
    4.50
    
    
    
    1.472005
    
    
    221.00
    
    
    
    125.00
    
    
    
    5.07
    
    
    
    2.872006
    
    
    431.00
    
    
    
    182.20
    
    
    
    9.69
    
    
    
    4.102007
    
    
    524.90
    
    
    
    270.50
    
    
    
    12.18
    
    
    
    6.282008 (through April 20, 2007)
    
    
    495.90
    
    
    
    435.00
    
    
    
    11.88
    
    
    
    10.20Fiscal 2006:First Quarter
    
    
    258.73
    
    
    
    182.20
    
    
    
    5.95
    
    
    
    4.19Second Quarter
    
    
    283.00
    
    
    
    237.20
    
    
    
    6.44
    
    
    
    5.40Third Quarter
    
    
    370.50
    
    
    
    271.50
    
    
    
    8.24
    
    
    
    6.04Fourth Quarter
    
    
    431.00
    
    
    
    356.50
    
    
    
    9.69
    
    
    
    8.01Fiscal 2007:First Quarter
    
    
    445.00
    
    
    
    270.50
    
    
    
    9.70
    
    
    
    5.90Second Quarter
    
    
    432.00
    
    
    
    325.68
    
    
    
    9.40
    
    
    
    7.09Third Quarter
    
    
    498.10
    
    
    
    396.00
    
    
    
    11.29
    
    
    
    8.98Fourth Quarter
    
    
    524.90
    
    
    
    404.00
    
    
    
    12.18
    
    
    
    9.37Fiscal 2008:First Quarter (Through April 20, 2007)
    
    
    495.90
    
    
    
    435.00
    
    
    
    11.88
    
    
    
    10.20Monthly prices:October 2006
    
    
    453.00
    
    
    
    396.00
    
    
    
    10.09
    
    
    
    8.82November 2006
    
    
    484.00
    
    
    
    412.05
    
    
    
    10.85
    
    
    
    9.24December 2006
    
    
    498.10
    
    
    
    435.30
    
    
    
    11.29
    
    
    
    9.87January 2007
    
    
    524.90
    
    
    
    454.00
    
    
    
    11.91
    
    
    
    10.30February 2007
    
    
    495.50
    
    
    
    404.00
    
    
    
    11.24
    
    
    
    9.17March 2007
    
    
    474.80
    
    
    
    409.30
    
    
    
    11.02
    
    
    
    9.50April 2007 (Though April 20, 2007)
    
    
    495.90
    
    
    
    435.00
    
    
    
    11.88
    
    
    
    10.20
 
 (1)
    
    Data derived from the BSE website. The prices and volumes quoted on the NSE may be different.(2)
    
    For comparative purposes, the price per equity share data above is adjusted for the October
10, 2006 one-for-one stock split 71




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##### Table of Contents



U.S. dollarPrice per ADSHigh
    
    
    LowFiscal2003
    
    
    6.75
    
    
    
    3.972004
    
    
    17.68
    
    
    
    3.632005
    
    
    14.25
    
    
    
    8.002006
    
    
    21.95
    
    
    
    10.502007
    
    
    25.94
    
    
    
    13.982008 (through April 20, 2007)
    
    
    26.20
    
    
    
    22.04Fiscal 2006First Quarter
    
    
    13.39
    
    
    
    10.50Second Quarter
    
    
    15.31
    
    
    
    12.88Third Quarter
    
    
    18.72
    
    
    
    14.13Fourth Quarter
    
    
    21.95
    
    
    
    18.30Fiscal 2007First Quarter
    
    
    22.25
    
    
    
    13.98Second Quarter
    
    
    20.50
    
    
    
    15.34Third Quarter
    
    
    24.50
    
    
    
    19.29Fourth Quarter
    
    
    25.94
    
    
    
    19.35Monthly pricesSeptember 2006
    
    
    20.50
    
    
    
    18.60October 2006
    
    
    22.67
    
    
    
    19.29November 2006
    
    
    24.42
    
    
    
    20.70December 2006
    
    
    24.50
    
    
    
    22.11January 2007
    
    
    25.94
    
    
    
    22.28February 2007
    
    
    24.55
    
    
    
    20.55March 2007
    
    
    23.33
    
    
    
    19.35April 2007 (through April 20, 2007)
    
    
    26.20
    
    
    
    22.04
 
 ITEM 10. ADDITIONAL INFORMATION
 Corporate Governance
   72




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##### Table of Contents



Standard for U.S. Listed Companies
    
    Our PracticeDirector Independence A majority of the board must consist
of independent directors.
    
     Six of our ten
directors, namely Mr. VP
Rama Rao, Dr. Mangalam
Srinivasan, Mr. Vinod K
Dham, Mr. M Rammohan Rao,
Mr. T.R. Prasad and Mr.
V.S. Raju are independent
within the meaning of the
NYSE standards.Independence is defined by various
criteria including the absence of a
material relationship between the
director and the listed company. For
example, directors who are employees,
are immediate family of the chief
executive officer or receive over
$100,000 per year in direct compensation
from the listed company are not
independent. Directors who are employees
of or otherwise affiliated through
immediate family with the listed
companys independent auditor are also
not independent. The non-management directors of each
company must meet at regularly scheduled
executive sessions without management.
    
     Our
non-management directors
do not meet periodically
without management
directors.Audit Committee Listed companies must have an audit
committee that satisfies the requirements of
Rule 10A-3 under the Securities Exchange Act.
The rule requires that the audit committee (i)
be comprised entirely of independent
directors; (ii) be directly responsible for
the appointment, compensation and oversight of
the independent auditor; (iii) adopt
procedures for the receipt and treatment of
complaints with respect to accounting and
auditing issues; (iv) be authorized to engage
independent counsel and other advisors it
deems necessary in performing its duties; and
(v) be given sufficient funding by the board
of directors to compensate the independent
auditors and other advisors as well as for the
payment of ordinary administrative expenses
incurred by the committee.
    
     We have an audit
committee which meets all
of the requirements of
Rule 10A-3. The audit committee must consist of at
least three members, and each member must be
independent within the meaning established by
the NYSE.
    


Our audit committee consists of four members and all the members are
independent under the NYSEs rules.
 73




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##### Table of Contents



Standard for U.S. Listed Companies
    
    Our Practice The audit committee must have a
written charter that addresses the committees
purpose and responsibilities.
    
    Our audit committee has a charter
outlining the committees purpose and responsibilities.At a minimum, the committees purpose
must be to assist the board in the
oversight of the integrity of the
companys financial statements, the
companys compliance with legal and
regulatory requirements, the independent
auditors qualifications and
independence and the performance of the
companys internal audit function and
independent auditors.The audit committee is also required to
review the independent auditing firms
annual report, describing the firms
internal quality control procedures, any
material issues raised by the most
recent internal quality control review
or peer review of the firm and any steps
taken to address such issues. The audit
committee is also to assess the
auditors independence by reviewing all
relationships between the company and
its auditor. It must establish the
companys hiring guidelines for
employees and former employees of the
independent auditor.The committee must also discuss the
companys annual audited financial
statements and quarterly financial
statements with management and the
independent auditors, the companys
earnings press releases, as well as
financial information and earnings
guidance provided to analysts and rating
agencies, and policies with respect to
risk assessment and risk management. It
must also meet periodically with the
internal auditors and the board of
directors. Each listed company must have
disclosed whether their board of directors has
identified an Audit Committee Financial
Expert, and if not the reasons why the board
has not done so.
    
     We do not have an
individual serving on out
audit committee as an
Audit Committee
Financial Expert, as
defined in applicable
rules of the Securities
and Exchange Commission.
This is because our board
of directors has
determined that no
individual audit
committee member
possesses all of the
attributes required by
the definition of Audit
Committee Financial
Expert. Each listed company must have an
internal audit function.
    
     We have a
separate department for
our internal audit
function.
 74




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##### Table of Contents



Standard for U.S. Listed Companies
    
    Our PracticeCompensation Committee Listed companies must have a
compensation committee composed entirely of
independent board members as defined by the
NYSE listing standards.
    
     Our compensation
committee has four
members, each of whom is
independent within the
meaning of the NYSE
standards. The committee must have a written
charter that addresses its purpose and
responsibilities.
These responsibilities include (i)
reviewing and approving corporate goals
and objectives relevant to CEO
compensation; (ii) evaluating CEO
performance and compensation in light of
such goals and objectives for the CEO;
(iii) based on such evaluation,
reviewing and approving CEO compensation
levels; (iv) recommending to the board
non-CEO compensation, incentive
compensation plans and equity-based
plans; and (v) producing a report on
executive compensation as required by
the Securities and Exchange Commission
to be included in the companys annual
proxy statement or annual report. The
committee must also conduct an annual
performance self-evaluation.
    
     Our compensation
committee reviews among
other things our general
compensation structure,
and reviews and
recommends the
compensation and benefits
of directors and the
chief executive officer,
subject to ratification
by the Board of
Directors.Nominating/Corporate Governance Committee Listed companies must have a
nominating/corporate governance committee
composed entirely of independent board
members.
    
     We do not have a
nominating/corporate
governance committee.The committee must have a written
charter that addresses its purpose and
responsibilities, which include (i)
identifying qualified individuals to
become board member; (ii) selecting, or
recommending that the board select, the
director nominees for the next annual
meeting of shareholders; (iii)
developing and recommending to the board
a set of corporate governance principles
applicable to the company; (iv)
overseeing the evaluation of the board
and management; and (v) conducting an
annual performance evaluation of the
committee.Equity-Compensation Plans Shareholders must be given the
opportunity to vote on all equity-compensation
plans and material revisions thereto, with
limited exceptions.
    
     The Company is in
compliance with this
requirement.Corporate Governance Guidelines Listed companies must adopt and
disclose corporate governance guidelines.
    
     We are fully
compliant with Clause 49
of the listing agreement
of Indian Stock
Exchanges, with regard to
corporate governance
guidelines. We publish a
report on corporate
governance in annual
report which is
distributed to our
domestic shareholders and
ADS holders annually.Code of Business Conduct and Ethics All listed companies, U.S. and
foreign, must adopt and disclose a code of
business conduct and ethics for directors,
officers and employees, and promptly disclose
any waivers of the code for directors or
executive officers.
    
     We have adopted a
Code of Business Conduct
and Ethics Policy, which
is available at
www.satyam.com.
 Memorandum and Articles of Association
  75




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##### Table of Contents



Objects and Purposes
  (i)
    
    manufacturing and selling computer systems, peripherals, accessories, consumables and other
computer Products(ii)
    
    designing and developing computer systems and applications software for our own use and for
sale and designing and developing systems and applications software for or on behalf of
manufacturers, owners and users of computer systems and digital or electronic
equipment; and(iii)
    
    providing electronic data processing centers, word processing, software consultancy, system
studies, management consultancy, feasibility studies and computer training
 Board of Directors
  Managerial remuneration
     Equity Shares
   76




---



##### Table of Contents



Dividends
    (i)
    
    the rate of dividend to be declared may not exceed 10.0% 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
 (ii)
    
    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 10.0% 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(iii)
    
    the balance of reserves after withdrawals shall not fall below 5.0% of its paid up capital
  Bonus Shares
  Preemptive Rights and Issue of Additional Shares
   77




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##### Table of Contents



Annual General Meetings of Shareholders
   Voting Rights
    Audit and Annual Report
  Register of Shareholders; Record Dates; Transfer of Shares
   78




---



##### Table of Contents



Disclosure of Ownership Interest
  79




---



##### Table of Contents



Company Acquisition of Equity Shares
  Liquidation Rights
  Takeover Code
    Material Contracts
  Exchange Controls
 General
  80




---



##### Table of Contents



ADR Guidelines
   Foreign Direct Investment
   Investment by Non-Resident Indians
  81




---



##### Table of Contents



Investment by Foreign Institutional Investors
  Ownership Restrictions
     82




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##### Table of Contents



Voting Rights of Deposited Equity Shares Represented by ADSs
  Taxation
  Indian Taxation
 General. shares
   
    
    a period or periods amounting to 182 days or more; or
    
    60 days or more if within the four preceding years he/she has been in India for a period
or periods amounting to 365 days or more; or
    
    182 days or more, in the case of a citizen of India or a person of Indian origin living
abroad who visits India and within the four preceding years has been in India for a period
or periods amounting to 365 days or
    
    182 days or more, in the case of a citizen of India who leaves India for the purposes of
employment outside India in any previous year and has within the four preceding years been
in India for a period or periods amounting to 365 days or more.
 83




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##### Table of Contents



Taxation of Distributions.
  Taxation of Capital Gains.
      84




---



##### Table of Contents



Capital Losses.
 Withholding Tax on Capital Gains.
 Buy-back of Securities.
 Tax Treaties.
 Stamp Duty and Transfer Tax.
 Wealth Tax.
 Gift Tax and Estate Duty.
 85




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##### Table of Contents



Service Tax.
 Recent Developments  Budget  
 
    
    Increase in Education Cess from 2% to 3%, consequently, the tax rates for domestic
companies increased from 33.66% to 33.99% and for foreign companies from 41.82% to 42.23%;
    
    Applicability Minimum Alternate Tax to Companies claiming deduction under section
10A/10B of the Income Tax Act.
    
    Increase in dividend distribution tax from 14.03% to 16.995%; and
    
    Employee stock options have been brought under net of Fringe Benefit Tax.
 U.S. Taxation
   
    
    banks;
    
    financial institutions;
    
    insurance companies;
    
    broker dealers;
    
    traders that elect to mark to market;
    
    tax-exempt entities;
    
    persons liable for alternative minimum tax;
    
    U.S. expatriates;
    
    persons holding an ADS or equity share as part of a straddle, hedging, conversion or integrated transaction;
    
    persons that actually or constructively own 10% or more of our voting stock; or
    
    persons holding ADSs or equity shares through partnerships or other pass-through entities.
 PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE
U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL AND FOREIGN
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.
  
    
    a citizen or resident of the U.S.;
    
    a corporation (or other entity taxable as a corporation for U.S. federal income tax
purposes) organized under the laws of the U.S., any State or the District of Columbia
    
    an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
    
    a trust that (1) is subject to the supervision of a court within the United States and
the control of one or more U.S. persons or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S. person.
 86




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Dividends
  Sale or Other Disposition of ADSs or Equity Shares
   87




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##### Table of Contents



Stamp Duty and Transfer Tax
  Passive Foreign Investment Company
  
    
    at least 75% of its gross income is passive income, or
    
    at least 50% of the value of its assets (determined on the basis of a quarterly average)
is attributable to assets that produce or are held for the production of passive income
  U.S. Information Reporting and Backup Withholding
   Documents On Display
  
   88




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Subsidiary Information
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   As at March 31,2007
    
    2006
    
    2005Total Recorded
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total RecordedAmount
    
    Fair Value
    
    Amount
    
    Fair value
    
    Amount
    
    Fair Value( dollars in millions)Debt:Variable rate
short-term debt
    
    $
    10.5
    
    
    
    
    
    
    $
    10.5
    
    
    $
    4.1
    
    
    
    
    
    
    $
    4.1
    
    
    $
    1.7
    
    
    
    
    
    
    $
    1.7Average interest rate
    
    
    
    
    
    
    6.71
    %
    
    
    
    
    
    
    
    
    
    
    5.33
    %
    
    
    
    
    
    
    
    
    
    
    3.61
    %Variable rate long term debt
    
    $
    20.5
    
    
    
    
    
    
    $
    20.5
    
    
    $
    16.1
    
    
    
    
    
    
    $
    16.1
    
    
    
    
    
    
    
    
    
    
    
    Average interest rate
    
    
    
    
    
    
    7.23
    %
    
    
    
    
    
    
    
    
    
    
    5.58
    %
    
    
    
    
    
    
    
    
    
    
    Fixed rate long-term
debt
    
    $
    3.3
    
    
    
    
    
    
    $
    3.3
    
    
    $
    4.2
    
    
    
    
    
    
    $
    4.2
    
    
    $
    4.3
    
    
    
    
    
    
    $
    4.3Average interest rate
    
    
    
    
    
    
    7.93
    %
    
    
    
    
    
    
    
    
    
    
    7.78
    %
    
    
    
    
    
    
    
    
    
    
    9.49
    %
 Limitations:
     89




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##### Table of Contents



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
   
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  
 ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
  
    
    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 generally accepted accounting
principles, and that our receipts and expenditures are being made only in
 90




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##### Table of Contents



accordance with authorizations of our management and members of our board of 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 our
financial statements.
  Internal Control  Integrated Framework.
   Changes in Internal Control over Financial Reporting
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
  
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  91




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Audit RelatedFiscal Year
    
    Audit Services
    
    Services
    
    Tax Services
    
    Other Services
    
    Total2007
    
    $
    873,959
    
    
    $
    342,411
    
    
    $
    328,723
    
    
    $
    257,167
    
    
    $
    1,802,2602006
    
    $
    493,120
    
    
    $
    206,010
    
    
    $
    109,717
    
    
    $
    10,245
    
    
    $
    819,092
 Audit Services
  Audit Related Services
  Tax Services
  Other Services
   
 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
   
 ITEM 17. FINANCIAL STATEMENTS
  92




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ITEM 18. FINANCIAL STATEMENTS
 Financial Statement
  Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of March 31, 2007 and 2006
    
    F-4Consolidated Statements of Income for the three years ended March 31, 2007
    
    F-5Consolidated Statements of Shareholders Equity and Comprehensive Income for the three years ended March 31, 2007
    
    F-6Consolidated Statements of Cash Flows for the three years ended March 31, 2007
    
    F-9Notes to the Consolidated Financial Statements
    
    F-10Financial Statement Schedule
    
    F-39
 
 ITEM 19. EXHIBITS
 Number
    
    Description1.1
    
    Memorandum and Articles of Association of Satyam Computer Services Limited. (1)1.2
    
    Certificate of Incorporation of Satyam Computer Services Limited. (2)2.1
    
    Specimens of Share Certificates. (2)2.2
    
    Deposit Agreement dated May 14, 2001, by and among Satyam Computer Services Limited,
Citibank, N.A. (as Depositary) and the holders from time to time of American Depositary
Receipts issued thereunder (including as an exhibit, the form of American Depositary
Receipt). (3)4.1
    
    Associate Stock Option Plan (including the Trust Deed). (2)4.2
    
    Associate Stock Option Plan B, as
amended and restated. (4)4.3
    
    Associate Stock Option Plan ADS, as
amended and restated. (4)4.4
    
    Associate Stock Option
PlanRSUs(ADS). (5)4.5
    
    Associate Stock Option
PlanRSUs. (6)8.1
    
    List of Significant Subsidiaries. (6)12.1
    
    Certification of Chief Executive
Officer under Section 302 of the Sarbanes-Oxley Act 2002. (6)12.2
    
    Certification of Chief Financial
Officer under Section 302 of the Sarbanes-Oxley Act 2002. (6)13.1
    
    Certification of Chief Executive
Officer under Section 906 of the Sarbanes-Oxley Act 2002. (6)13.2
    
    Certification of Chief Financial
Officer under Section 906 of the Sarbanes-Oxley Act 2002. (6)15.1
    
    Consent of Price Waterhouse,
Independent Registered Public Accounting Firm. (6)
 93




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##### Table of Contents



(1)
    
    Previously filed as an exhibit to our Registration Statement on Form F-3 (File No.
333-122996) filed on February 25, 2005 and incorporated herein by reference.(2)
    
    Previously filed as an exhibit to our Registration Statement on Form F-1 (File No.
333-13464) filed on May 7, 2001 and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed on August
13, 2001 and incorporated herein by reference.(4)
    
    Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed on April 28,
2006 and incorporated here in by reference.(5)
    
    Previously filed as an exhibit to our Form S-8 (File No. 333-139949) filed on January
12, 2007 and incorporated herein by reference.(6)
    
    Filed herewith. 
 SIGNATURES
  SATYAM COMPUTER SERVICES LIMITEDBy:
    /s/  B. Rama RajuName:
    B. Rama RajuTitle:
    Managing Director and Chief Executive
Officer By:

/s/ V. SrinivasName:
    Srinivas V.Title:
    Director and Senior Vice President
& Chief Financial Officer  94




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##### Table of Contents



SATYAM COMPUTER SERVICES LIMITED
 INDEX TO THE U.S. GAAP CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of March 31, 2007 and 2006
    
    F-4Consolidated Statements of Income for the three years ended March 31, 2007
    
    F-5Consolidated Statements of Shareholders Equity and Comprehensive Income for the three years ended March 31, 2007
    
    F-6Consolidated Statements of Cash Flows for the three years ended March 31, 2007
    
    F-9Notes to the Consolidated Financial Statements
    
    F-10Financial Statement Schedule
    
    F-39
 F-1




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Report of Independent Registered Public Accounting Firm
         F-2




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##### Table of Contents



F-3




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##### Table of Contents



Satyam Computer Services Limited
Consolidated Balance Sheets  (Millions of US Dollars except per share data and as stated otherwise)
 As of March 31,2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents
    
    $
    152.2
    
    
    $
    292.8Investments in bank deposits
    
    
    
    
    
    
    403.7Accounts receivable, net of allowance for doubtful debts
    
    
    364.2
    
    
    
    220.0Unbilled revenue on contracts
    
    
    38.6
    
    
    
    41.1Deferred income taxes
    
    
    17.1
    
    
    
    10.5Prepaid expenses and other receivables
    
    
    37.1
    
    
    
    48.9Total current assets
    
    
    609.2
    
    
    
    1,017.0Investments in bank deposits
    
    
    767.6
    
    
    
    Investments in associated companies
    
    
    4.6
    
    
    
    3.5Premises and equipment, net
    
    
    163.1
    
    
    
    106.6Goodwill, net
    
    
    32.7
    
    
    
    27.6Intangible assets, net
    
    
    7.4
    
    
    
    6.6Other assets
    
    
    39.5
    
    
    
    19.9Total assets
    
    
    1,624.1
    
    
    
    1,181.2Liabilities and shareholders equityCurrent liabilitiesShort-term and current portion of long-term debt
    
    
    12.1
    
    
    
    6.50.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share (45,505,000 shares as of March 31, 2007)
    
    
    13.6
    
    
    
    Accounts payable
    
    
    16.8
    
    
    
    11.9Accrued expenses and other current liabilities
    
    
    148.6
    
    
    
    104.0Unearned and deferred revenue
    
    
    20.1
    
    
    
    11.8Total current liabilities
    
    
    211.2
    
    
    
    134.2Long-term debt, excluding current portion
    
    
    22.2
    
    
    
    17.9Accrued benefit cost  Gratuity, excluding current portion
    
    
    8.1
    
    
    
    4.9Deferred income taxes
    
    
    11.6
    
    
    
    8.9Total liabilities
    
    
    253.1
    
    
    
    165.9Contingencies and Commitments (Note No.19)Minority interest
    
    
    
    
    
    
    0.9Preferred Stock of Subsidiary0.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share
(100 million preference shares authorized, Nil and 91,009,999 preference shares issued
as of March 31, 2007 and 2006 respectively)
    
    
    
    
    
    
    20.0Shareholders equityCommon stock  par value Rs.2 (US$0.05)* per equity share
(800 million and 750 million equity shares authorized as of March 31, 2007 and 2006
respectively. 667,196,009 and 648,899,078 equity shares as of March 31, 2007 and 2006
respectively)
    
    
    36.0
    
    
    
    17.6Additional paid-in capital
    
    
    552.4
    
    
    
    465.1Shares subscribed but unissued
    
    
    1.8
    
    
    
    0.4Deferred stock-based compensation
    
    
    
    
    
    
    (0.4
    )Retained earnings
    
    
    721.1
    
    
    
    497.1Accumulated other comprehensive income/(loss)
    
    
    60.9
    
    
    
    15.81,372.2
    
    
    
    995.6Shares held by the SC-Trust under associate stock option plan
(2,295,880 and 2,386,280 equity shares as of March 31, 2007 and 2006 respectively)
    
    
    (1.2
    )
    
    
    (1.2
    )Total shareholders equity
    
    
    1,371.0
    
    
    
    994.4Total liabilities and shareholders equity
    
    $
    1,624.1
    
    
    $
    1,181.2
 
 *
    
    The par value in US$ has been converted at the closing
rate as of March 31, 2007, 1US$ = Rs 43.10  F-4




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##### Table of Contents



Satyam Computer Services Limited
Consolidated Statements of Income  (Millions of US Dollars except per share data and as stated otherwise)
 Year ended March 31,2007
    
    
    2006
    
    
    2005Revenues
    
    $
    1,461.4
    
    
    $
    1,096.3
    
    
    $
    793.6Cost of
revenues(Includes stock-based compensation of US$12.8,US$Nil and US$0.8
for the three years ended March 31, 2007, 2006 and 2005
respectively)
    
    
    (937.6
    )
    
    
    (689.0
    )
    
    
    (506.8
    )Gross profit
    
    
    523.8
    
    
    
    407.3
    
    
    
    286.8Selling,
general and administrative expenses(Includes stock-based compensation of US$2.9,US$0.8 and US$1.1
for the three years ended March 31, 2007, 2006 and 2005
respectively)
    
    
    (232.2
    )
    
    
    (187.6
    )
    
    
    (124.3
    )Total operating expenses
    
    
    (232.2
    )
    
    
    (187.6
    )
    
    
    (124.3
    )Operating income
    
    
    291.6
    
    
    
    219.7
    
    
    
    162.5Interest income
    
    
    37.3
    
    
    
    26.3
    
    
    
    22.3Interest expense
    
    
    (3.6
    )
    
    
    (1.3
    )
    
    
    (0.4
    )Gain on sale of investments (Refer note 7)
    
    
    
    
    
    
    43.6
    
    
    
    Gain/(Loss) on foreign exchange transactions
    
    
    (3.3
    )
    
    
    0.3
    
    
    
    (4.6
    )Other income/(expense), net
    
    
    6.2
    
    
    
    (0.8
    )
    
    
    0.4Income before income taxes and equity in earnings/(losses) of
associated companies
    
    
    328.2
    
    
    
    287.8
    
    
    
    180.2Income taxes
    
    
    (30.6
    )
    
    
    (37.7
    )
    
    
    (25.3
    )Minority interest
    
    
    
    
    
    
    0.1
    
    
    
    Income before equity in earnings/(losses) of associated companies
    
    
    297.6
    
    
    
    250.2
    
    
    
    154.9Equity in earnings/(losses) of associated companies, net of taxes
    
    
    0.8
    
    
    
    (0.8
    )
    
    
    (1.1
    )Net income
    
    $
    298.4
    
    
    $
    249.4
    
    
    $
    153.8Earnings per share:Basic
    
    $
    0.46
    
    
    $
    0.39
    
    
    $
    0.24Diluted
    
    $
    0.45
    
    
    $
    0.38
    
    
    $
    0.24Weighted average number of shares used in computing earnings per
share (in millions)Basic
    
    
    652.5
    
    
    
    641.2
    
    
    
    632.4Diluted
    
    
    666.0
    
    
    
    662.8
    
    
    
    647.2
  F-5




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Satyam Computer Services Limited
Consolidated Statements of Shareholders Equity and Comprehensive Income  (Millions of US Dollars except per share data and as stated otherwise)
 AccumulatedAdditional
    
    
    Shares
    
    
    Deferred
    
    
    
    
    
    
    other
    
    
    Shares held
    
    
    TotalCommon Stock
    
    
    paid-in
    
    
    subscribed but
    
    
    stock-based
    
    
    Retained
    
    
    comprehensive
    
    
    by
    
    
    ShareholdersShares
    
    
    Par Value
    
    
    capital
    
    
    unissued
    
    
    compensation
    
    
    earnings
    
    
    income/(loss)
    
    
    SC-Trust
    
    
    EquityBalance as of March 31, 2004
    
    
    632,503,420
    
    
    $
    17.2
    
    
    $
    416.2
    
    
    
    
    
    
    
    
    
    
    $
    172.8
    
    
    $
    29.4
    
    
    $
    (1.7
    )
    
    $
    633.9Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153.8
    
    
    
    
    
    
    
    
    
    
    
    153.8Other comprehensive incomeGain on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2Total Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154.0Issuance of common stock
    
    
    6,027,162
    
    
    
    0.2
    
    
    
    14.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14.9Shares subscribed but unissued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Gain on dilution of interest in associate company
on its issuance of new shares, net of taxes
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    (2.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9Shares transferred by SC-Trust to employees
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.5Cash dividend paid at the rate of US$0.12 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37.6
    )
    
    
    
    
    
    
    
    
    
    
    (37.6
    )Balance as of March 31, 2005
    
    
    638,530,582
    
    
    $
    17.4
    
    
    $
    433.6
    
    
    $
    0.1
    
    
    $
    (0.3
    )
    
    $
    289.0
    
    
    $
    29.6
    
    
    $
    (1.5
    )
    
    $
    767.9
  F-6




---



##### Table of Contents



Satyam Computer Services Limited
Consolidated Statements of Shareholders Equity and Comprehensive Income  (Millions of US Dollars except per share data and as stated otherwise)
 AccumulatedAdditional
    
    Shares
    
    Deferred
    
    
    
    
    
    other
    
    Shares held
    
    TotalCommon Stock
    
    paid-in
    
    subscribed but
    
    stock-based
    
    Retained
    
    comprehensive
    
    by
    
    ShareholdersShares
    
    Par Value
    
    capital
    
    unissued
    
    compensation
    
    earnings
    
    income/(loss)
    
    SC-Trust
    
    EquityBalance as of March 31, 2005
    
    
    638,530,582
    
    
    $
    17.4
    
    
    $
    433.6
    
    
    $
    0.1
    
    
    $
    (0.3
    )
    
    $
    289.0
    
    
    $
    29.6
    
    
    $
    (1.5
    )
    
    $
    767.9Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249.4
    
    
    
    
    
    
    
    
    
    
    
    249.4Other comprehensive incomeLoss on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13.8
    )
    
    
    
    
    
    
    (13.8
    )Total Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    235.6Issuance of common stock
    
    
    10,368,496
    
    
    
    0.2
    
    
    
    30.3
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.4Shares subscribed but unissued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Shares transferred by SC-Trust to employees
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    0.6Cash dividend paid at the rate of US$0.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41.3
    )
    
    
    
    
    
    
    
    
    
    
    (41.3
    )Balance as of March 31, 2006
    
    
    648,899,078
    
    
    $
    17.6
    
    
    $
    465.1
    
    
    $
    0.4
    
    
    
    ($0.4
    )
    
    $
    497.1
    
    
    $
    15.8
    
    
    
    ($1.2
    )
    
    $
    994.4
  F-7




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##### Table of Contents



Satyam Computer Services Limited
Consolidated Statements of Shareholders Equity and Comprehensive Income  (Millions of US Dollars except per share data and as stated otherwise)
 AccumulatedAdditional
    
    Shares
    
    Deferred
    
    
    
    
    
    other
    
    Shares
    
    TotalCommon Stock
    
    paid-in
    
    subscribed
    
    stock-based
    
    Retained
    
    comprehensive
    
    held by
    
    ShareholdersShares
    
    Par Value
    
    capital
    
    but unissued
    
    compensation
    
    earnings
    
    income/(loss)
    
    SC-Trust
    
    EquityBalance as of March 31, 2006
    
    
    648,899,078
    
    
    $
    17.6
    
    
    $
    465.1
    
    
    $
    0.4
    
    
    $
    (0.4
    )
    
    $
    497.1
    
    
    
    $15.8
    
    
    $
    (1.2
    )
    
    
    $994.4Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298.4
    
    
    
    
    
    
    

    
    
    
    
    298.4Other comprehensive income/(loss)Gain on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46.3
    
    
    
    
    
    
    
    46.3Adjustments to initially adopt SFAS No. 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    (1.2
    )Total Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343.5Issuance of common stock
    
    
    18,296,931
    
    
    
    0.7
    
    
    
    64.1
    
    
    
    (0.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64.4Stock split (effected in the form of dividend)
    
    
    
    
    
    
    17.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17.7
    )
    
    
    
    
    
    
    
    
    
    
    Shares subscribed but unissued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    
    1.8Gain on
dilution of interest in subsidiary company on its issuance of new shares, net of taxes (Refer note 4)
    
    
    
    
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    7.9Reversal of Deferred stock based compensation on adoption
of SFAS 123R
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    15.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.7Cash dividend paid at the rate of US$0.13 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56.7
    )
    
    

    
    
    
    
    
    
    
    
    (56.7
    )Balance as of March 31, 2007
    
    
    667,196,009
    
    
    $
    36.0
    
    
    $
    552.4
    
    
    $
    1.8
    
    
    
    
    
    
    $
    721.1
    
    
    $
    60.9
    
    
    
    ($1.2
    )
    
    $
    1,371.0
  F-8




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##### Table of Contents



Satyam Computer Services Limited
Consolidated Statements of Cashflows  (Millions of US Dollars except per share data and as stated otherwise)
 Year ended March 31,2007
    
    2006
    
    2005Cash Flows From Operating ActivitiesNet income
    
    $
    298.4
    
    
    $
    249.4
    
    
    $
    153.8Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of intangible assets
    
    
    33.6
    
    
    
    31.5
    
    
    
    25.0Stock-based compensation
    
    
    15.7
    
    
    
    0.8
    
    
    
    1.9Deferred income taxes
    
    
    (6.7
    )
    
    
    (5.1
    )
    
    
    (1.9
    )Gain on sale of investments
    
    
    
    
    
    
    (43.6
    )
    
    
    Loss on sale of premises and equipment
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3Minority Interest
    
    
    
    
    
    
    (0.1
    )
    
    
    Equity in (earnings)/losses of associated companies, net of taxes
    
    
    (0.8
    )
    
    
    0.8
    
    
    
    1.1Changes in assets and liabilities:
    
    
    Accounts receivable, net and unbilled revenue on contracts
    
    
    (127.7
    )
    
    
    (81.9
    )
    
    
    (40.7
    )Prepaid expenses and other receivables, net
    
    
    13.4
    
    
    
    (31.7
    )
    
    
    16.6Other assets, net
    
    
    (17.5
    )
    
    
    (1.8
    )
    
    
    (8.0
    )Accounts payable
    
    
    3.8
    
    
    
    (2.5
    )
    
    
    2.5Accrued expenses and other current liabilities
    
    
    38.4
    
    
    
    40.1
    
    
    
    15.8Unearned and deferred revenue
    
    
    7.6
    
    
    
    6.1
    
    
    
    3.5Other liabilities non-current
    
    
    3.0
    
    
    
    0.5
    
    
    
    1.4Net cash provided by operating activities
    
    
    261.5
    
    
    
    162.7
    
    
    
    171.3Cash Flows From Investing ActivitiesProceeds from maturity of bank deposits
    
    
    408.0
    
    
    
    
    
    
    
    332.1Investment in bank deposits
    
    
    (745.6
    )
    
    
    
    
    
    
    (411.5
    )Purchase of premises and equipment
    
    
    (81.5
    )
    
    
    (54.1
    )
    
    
    (39.0
    )Proceeds from sale of premises and equipment
    
    
    0.5
    
    
    
    0.3
    
    
    
    0.3Payment for purchase of Citisoft Plc, net of cash acquired
    
    
    (3.3
    )
    
    
    (12.1
    )
    
    
    Payment for purchase of Knowledge Dynamics Pte. Ltd., net of cash acquired
    
    
    (0.8
    )
    
    
    (1.6
    )
    
    
    Purchase of investments
    
    
    
    
    
    
    
    
    
    
    (7.6
    )Proceeds from sale of investments
    
    
    
    
    
    
    62.3
    
    
    
    10.2Net cash used in investing activities
    
    
    (422.7
    )
    
    
    (5.2
    )
    
    
    (115.5
    )Cash Flows From Financing ActivitiesProceeds from short-term debt
    
    
    10.9
    
    
    
    3.6
    
    
    
    1.7Repayments of short-term debt
    
    
    (4.7
    )
    
    
    (1.2
    )
    
    
    Proceeds from long-term debt
    
    
    4.3
    
    
    
    16.3
    
    
    
    0.2Repayment of long-term debt
    
    
    (3.9
    )
    
    
    (2.7
    )
    
    
    (2.2
    )Issuance of common stock
    
    
    64.4
    
    
    
    31.0
    
    
    
    15.4Shares subscribed but unissued
    
    
    1.8
    
    
    
    0.4
    
    
    
    0.1Issuance of Preferred stock by subsidiary, net of issuance cost
    
    
    
    
    
    
    
    
    
    
    9.5Cash dividends paid
    
    
    (56.7
    )
    
    
    (41.3
    )
    
    
    (37.6
    )Net cash provided by/(used in) financing activities
    
    
    16.1
    
    
    
    6.1
    
    
    
    (12.9
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    4.5
    
    
    
    (0.6
    )
    
    
    0.2Net change in cash and cash equivalents
    
    
    (140.6
    )
    
    
    163.0
    
    
    
    43.1Cash and cash equivalents at the beginning of the year
    
    
    292.8
    
    
    
    129.8
    
    
    
    86.7Cash and cash equivalents at the end of the year
    
    $
    152.2
    
    
    $
    292.8
    
    
    $
    129.8Supplementary information:Cash paid during the year for:Income taxes
    
    $
    32.8
    
    
    $
    44.9
    
    
    $
    25.4Interest
    
    
    2.6
    
    
    
    1.3
    
    
    
    0.5Non-cash items:Capital leases and hire purchase
    
    $
    2.3
    
    
    $
    2.5
    
    
    $
    2.0Deferred consideration for purchase of Citisoft Plc
    
    
    5.9
    
    
    
    3.1
    
    
    
    Deferred consideration for purchase of Knowledge Dynamics Pte Ltd
    
    
    
    
    
    
    1.5
    
    
    
    
  F-9




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##### Table of Contents



Satyam Computer Services Limited
 1. Description of Business
 Satyam Satyam Computer Services
  2. Summary of Significant Accounting Policies
 a) Principles of Consolidation and Basis of Presentation
      b) Use of Estimates
  F-10




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##### Table of Contents



Satyam Computer Services Limited
 c) Foreign Currency Translation
   d) Revenue Recognition
      e) Cash and Cash Equivalents
  f) Premises, Equipment and Depreciation
  F-11




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##### Table of Contents



Satyam Computer Services Limited
   g) Research and development Costs
  h) Goodwill and Other Intangible Assets
   i) Impairment of Long-lived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 j) Investments
 Accounting for
Certain Investments in Debt and Equity Securities
 k) Cost of Revenues and Selling, General and Administrative Expenses
   l) Advertising Costs
  m) Employee Benefits
 i) Provident Fund
  F-12




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##### Table of Contents



Satyam Computer Services Limited
 ii) Gratuity Plan
      iii) Superannuation Plan
  iv) Other Benefit Plans
  n) Income Taxes
 Accounting for Income Taxes
 o) Earnings Per Share
 Earnings Per Share
 F-13




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##### Table of Contents



Satyam Computer Services Limited
 p) Stock-Based Compensation
 Accounting for
Stock Issued to Employees Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25, Accounting for Stock-Based Compensation Accounting
for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123
  Pro forma disclosure
  (US$ in millions except per share data)Year ended March 31,2006
    
    2005Net Income- As reported
    
    $
    249.4
    
    
    $
    153.8Add: Charge under APB25
    
    
    0.8
    
    
    
    1.9Less: Charge under FAS123
    
    
    (22.2
    )
    
    
    (22.6
    )- Pro forma
    
    $
    228.0
    
    
    $
    133.1Earnings Per Share:Basic- As reported
    
    $
    0.39
    
    
    $
    0.49- Pro forma
    
    $
    0.38
    
    
    $
    0.42Diluted- As reported
    
    $
    0.36
    
    
    $
    0.48- Pro forma
    
    $
    0.34
    
    
    $
    0.41
 Note: The pro forma disclosures shown above are not representative of the effects on net income
and earnings per share in future years.
 F-14




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##### Table of Contents



Satyam Computer Services Limited
   Year ended March 31,2006
    
    
    2005Dividend yield
    
    
    0.75
    %
    
    
    0.75
    %Expected volatility
    
    
    57
    %
    
    
    61
    %Risk-free interest rate
    
    
    7
    %
    
    
    7
    %Expected term (in years)
    
    
    1.26
    
    
    
    2.03
 q) Derivative financial instruments
 Accounting for Derivative Instruments and Hedging
Activities
 r)
Recently issued accounting pronouncements
      F-15




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##### Table of Contents



Satyam Computer Services Limited
 
  s) Reclassifications
  3. Acquisitions
 a) Citisoft Plc.
       F-16




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##### Table of Contents



Satyam Computer Services Limited
 
  US$ in millionsAcquisition of
    
    
    Acquisition of75% interest
    
    
    25% interestPurchase price
    
    $
    17.4
    
    
    $
    5.9Allocated to:Net current assets
    
    $
    2.2
    
    
    
    0.7Tangible assets
    
    
    0.3
    
    
    
    0.1Customer Contracts related intangibles
    
    
    0.8
    
    
    
    0.3Customer relationship related intangibles
    
    
    5.4
    
    
    
    0.7Trade name
    
    
    0.7
    
    
    
    0.1Goodwill
    
    
    10.3
    
    
    
    4.4Deferred tax liability
    
    
    (2.3
    )
    
    
    (0.4
    )Total
    
    $
    17.4
    
    
    $
    5.9
  b) Knowledge Dynamics Pte Ltd (Knowledge Dynamics).
    US$ in millionsPurchase price
    
    $
    3.3Allocated to:Net current assets
    
    $
    0.5Customer Contracts and Related Relationships
    
    
    1.0Trade name
    
    
    0.1Goodwill
    
    
    2.1Deferred tax liability
    
    
    (0.4
    )Total
    
    $
    3.3
  F-17




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##### Table of Contents



Satyam Computer Services Limited
 
 4. Preferred Stock of Subsidiary
        F-18




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##### Table of Contents



Satyam Computer Services Limited
 
 5. Investments
  (US$ in millions)As of March 31,2007
    
    
    2006Other investments, at cost
    
    $
    3.7
    
    
    $
    3.7Less: Provision for impairment
    
    
    (3.7
    )
    
    
    (3.7
    )Investments  Non current
    
    
    
    
    
    
    
  6. Investments in bank deposits
  7. Investments in associated companies
  (US$ in millions)As of March 31,2007
    
    
    2006Satyam Venture
    
    $
    3.5
    
    
    $
    2.7CA Satyam
    
    
    1.1
    
    
    
    0.8Total
    
    $
    4.6
    
    
    $
    3.5
 Sify
    Satyam Venture
  F-19




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##### Table of Contents



Satyam Computer Services Limited
 
 CA Satyam
  8. Premises, Equipment and Depreciation
  (US$ in millions)As of March 31,2007
    
    
    2006Freehold land
    
    $
    8.9
    
    
    $
    7.0Leasehold land
    
    
    1.9
    
    
    
    1.8Premises
    
    
    24.5
    
    
    
    23.6Computers including servers
    
    
    131.2
    
    
    
    109.7System software
    
    
    24.7
    
    
    
    21.0Office equipment
    
    
    69.0
    
    
    
    61.6Furniture and fixtures
    
    
    47.4
    
    
    
    40.1Vehicles
    
    
    9.0
    
    
    
    7.0Assets under construction
    
    
    70.8
    
    
    
    19.9Total
    
    
    387.4
    
    
    
    291.7Less: Accumulated depreciation
    
    
    (224.3
    )
    
    
    (185.1
    )Premises and equipment, net
    
    $
    163.1
    
    
    $
    106.6
  Premises
    
    28 yearsComputers including servers
    
    2  5 yearsSystem Software
    
    3 yearsOffice equipment
    
    5 yearsFurniture and fixtures
    
    5 yearsVehicles
    
    5 years
  9. Goodwill
  (US$ in millions)As of March 31,2007
    
    
    2006GoodwillAcquisition of Citisoft Plc
    
    $
    15.0
    
    
    $
    10.5Acquisition of Knowledge Dynamics Pte Ltd
    
    
    2.1
    
    
    
    2.0Acquisition of minority interest inSatyam Enterprise Solutions Limited
    
    
    23.9
    
    
    
    23.1Satyam Technologies Inc.
    
    
    3.7
    
    
    
    3.6Total
    
    
    44.7
    
    
    
    39.2Less: Accumulated amortization
    
    
    (12.0
    )
    
    
    (11.6
    )Goodwill, net
    
    $
    32.7
    
    
    $
    27.6
 F-20




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##### Table of Contents



Satyam Computer Services Limited
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Goodwill at the beginning of the year
    
    $
    27.6
    
    
    $
    15.5
    
    
    $
    15.5Acquisitions during the year
    
    
    4.4
    
    
    
    12.4
    
    
    
    Impairment during the year
    
    
    
    
    
    
    
    
    
    
    Change due to foreign exchange
    
    
    0.7
    
    
    
    (0.3
    )
    
    
    Goodwill at the end of the year
    
    $
    32.7
    
    
    $
    27.6
    
    
    $
    15.5
 .
 10. Intangible assets, net
  (US$ in millions)As of March 31,2007
    
    2006Acquired andamortized intangible
    
    Weighted average
    
    Gross carrying
    
    Accumulated
    
    Net intangible
    
    Gross carrying
    
    Accumulated
    
    Net intangibleassets
    
    life (in years)
    
    amount
    
    amortization
    
    assets
    
    amount
    
    amortization
    
    assetsCitisoft PlcCustomer Relationship
    
    
    8
    
    
    $
    6.3
    
    
    
    (1.4
    )
    
    $
    4.9
    
    
    $
    4.9
    
    
    $
    (0.6
    )
    
    $
    4.3Customer Contracts
    
    
    6
    
    
    
    1.1
    
    
    
    (0.2
    )
    
    
    0.9
    
    
    
    0.8
    
    
    
    (0.1
    )
    
    
    0.7Trade name
    
    
    5
    
    
    
    0.8
    
    
    
    (0.2
    )
    
    
    0.6
    
    
    
    0.6
    
    
    
    (0.1
    )
    
    
    0.5Total
    
    
    
    
    
    $
    8.2
    
    
    
    (1.8
    )
    
    $
    6.4
    
    
    $
    6.3
    
    
    $
    (0.8
    )
    
    $
    5.5Knowledge DynamicsCustomer Contracts
and Related
Relationships
    
    
    9
    
    
    $
    1.1
    
    
    $
    (0.3
    )
    
    $
    0.8
    
    
    $
    1.0
    
    
    $
    (0.1
    )
    
    $
    0.9Trade name
    
    
    3
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Internally developed
technology
    
    
    3
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Total
    
    
    
    
    
    $
    1.3
    
    
    $
    (0.3
    )
    
    $
    1.0
    
    
    $
    1.2
    
    
    $
    (0.1
    )
    
    $
    1.1
   (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Identifiable intangibles at the beginning of the year
    
    $
    6.6
    
    
    
    
    
    
    
    Acquisitions during the year
    
    
    1.1
    
    
    $
    8.0
    
    
    
    Amortization during the year
    
    
    (1.2
    )
    
    
    (0.9
    )
    
    
    Change due to foreign exchange
    
    
    0.9
    
    
    
    (0.5
    )
    
    
    Identifiable intangibles at the end of the year
    
    $
    7.4
    
    
    $
    6.6
    
    
    
    
  US$ in millionsEstimated amortization expense:For the year ended March 31,2008
    
    $
    1.42009
    
    
    1.32010
    
    
    1.22011
    
    
    1.12012
    
    
    1.0Beyond 2012
    
    
    1.4
 F-21




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##### Table of Contents



Satyam Computer Services Limited
 11. Income Taxes
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Foreign taxesCurrent
    
    $
    10.4
    
    
    $
    15.4
    
    
    $
    18.1Deferred
    
    
    (0.7
    )
    
    
    (0.8
    )
    
    
    (0.6
    )Domestic taxesCurrent
    
    
    26.9
    
    
    
    27.4
    
    
    
    9.1Deferred
    
    
    (6.0
    )
    
    
    (4.3
    )
    
    
    (1.3
    )Aggregate taxes
    
    $
    30.6
    
    
    $
    37.7
    
    
    $
    25.3
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Net income before taxes
    
    $
    328.2
    
    
    $
    287.8
    
    
    $
    180.2Enacted tax rates in India
    
    
    33.66
    %
    
    
    33.66
    %
    
    
    36.59
    %Computed tax expense
    
    $
    110.5
    
    
    $
    96.9
    
    
    $
    65.9Tax effect due to non-taxable export income
    
    
    (98.4
    )
    
    
    (75.3
    )
    
    
    (52.7
    )Difference arising from different tax rates in other tax jurisdictions
    
    
    12.0
    
    
    
    10.2
    
    
    
    5.5Difference arising from different tax rates on gain on sale of
investment
    
    
    
    
    
    
    (7.0
    )
    
    
    Stock- based compensation (non-deductible)
    
    
    4.0
    
    
    
    0.3
    
    
    
    0.7Changes in valuation allowance, including losses of subsidiaries
    
    
    1.7
    
    
    
    5.4
    
    
    
    3.5Effect of tax rate change
    
    
    
    
    
    
    0.1
    
    
    
    Others
    
    
    0.8
    
    
    
    7.1
    
    
    
    2.4Income taxes recognized in the statement of income
    
    $
    30.6
    
    
    $
    37.7
    
    
    $
    25.3
   F-22




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##### Table of Contents



Satyam Computer Services Limited
  (US$ in millions)As of March 31,2007
    
    
    2006Deferred tax assets:Operating loss carry forwards
    
    $
    26.6
    
    
    $
    24.0Provision for accounts receivable, advances and investments
    
    
    4.2
    
    
    
    5.7Premises and equipment
    
    
    3.3
    
    
    
    0.5Provision for gratuity and unutilized leaves
    
    
    12.8
    
    
    
    6.5Gross deferred tax assets
    
    
    46.9
    
    
    
    36.7Less: Valuation allowance
    
    
    (26.6
    )
    
    
    (24.0
    )Total deferred tax assets
    
    
    20.3
    
    
    
    12.7Deferred tax liabilities:Premises and equipment
    
    
    (6.3
    )
    
    
    (6.4
    )Provision for accounts receivable and advances
    
    
    (3.0
    )
    
    
    (2.8
    )Intangible assets
    
    
    (2.5
    )
    
    
    (2.2
    )Investments in associated companies and gain on dilution
    
    
    (2.8
    )
    
    
    (0.3
    )Total deferred tax liabilities
    
    
    (14.6
    )
    
    
    (11.7
    )Net deferred tax assets/ (liabilities)
    
    $
    5.7
    
    
    $
    1.0
    (US$ in millions)As of March 31,2007
    
    
    2006Current assets  deferred income taxes
    
    $
    17.1
    
    
    $
    10.5Non-current assets  other assets*
    
    
    3.3
    
    
    
    2.2Current liabilities  accrued expenses and other liabilities*
    
    
    (3.1
    )
    
    
    (2.8
    )Long-term liabilities  deferred income taxes
    
    
    (11.6
    )
    
    
    (8.9
    )Net deferred tax asset/ (liabilities)
    
    $
    5.7
    
    
    $
    1.0
 
 *
    
    Included in other assets and accrued expenses and other liabilities respectively. 12. Borrowings
 Short-term debt
  F-23




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##### Table of Contents



Satyam Computer Services Limited
 Long-term debt
  (US$ in millions)As of March 31,2007
    
    
    2006Secured debts,representing obligation principally to banks and financial
institutions 10.25% Rupee loans of SC-Trust, maturing serially through fiscal 2008
    
    
    
    
    
    $
    1.3 0.95% above 6 month LIBOR working capital term loan maturing serially through
fiscal 2009
    
    
    10.0
    
    
    
    5.6 0.95% above 6 month LIBOR external commercial borrowing maturing serially
through fiscal 2009
    
    
    10.6
    
    
    
    10.5Hire Purchase Loans
    
    
    3.2
    
    
    
    2.9Total Debt
    
    
    23.8
    
    
    
    20.3Less: Current portion of long-term debt
    
    
    (1.6
    )
    
    
    (2.4
    )Long-term debt, net of current portion
    
    $
    22.2
    
    
    $
    17.9
    Unused lines of credit
  (US$ in millions)As of March 31,2007
    
    
    2006Short-term debt
    
    $
    9.0
    
    
    $
    3.8Long-term debt
    
    
    
    
    
    
    3.9Non-fund facilities  Bank Guarantees
    
    
    16.2
    
    
    
    4.4Total Unused lines of credit
    
    $
    25.2
    
    
    $
    12.1
 F-24




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##### Table of Contents



Satyam Computer Services Limited
 13. Employee Benefits
 The Gratuity Plan
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Accumulated benefit obligation
    
    $
    7.6
    
    
    $
    5.7
    
    
    $
    2.6Change in projected benefit obligationProjected benefit obligation at beginning of the year
    
    $
    7.8
    
    
    $
    5.2
    
    
    $
    4.0Service cost
    
    
    2.1
    
    
    
    1.9
    
    
    
    1.5Interest cost
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.3Actuarial loss/(gain)
    
    
    0.6
    
    
    
    0.9
    
    
    
    (0.3
    )Benefits paid
    
    
    (1.2
    )
    
    
    (0.5
    )
    
    
    (0.3
    )Effect of exchange rate changes
    
    
    0.3
    
    
    
    (0.1
    )
    
    
    Projected benefit obligation at end of the year
    
    
    10.2
    
    
    
    7.8
    
    
    
    5.2Change in plan assetsEmployer contribution
    
    
    1.2
    
    
    
    0.5
    
    
    
    0.3Benefits paid from plan assets
    
    
    (1.2
    )
    
    
    (0.5
    )
    
    
    (0.3
    )Fair value of plan assets at end of the year
    
    
    
    
    
    
    
    
    
    
    Funded status of the plans
    
    
    (10.2
    )
    
    
    (7.8
    )
    
    
    (5.2
    )Unrecognized net actuarial loss
    
    
    
    
    
    
    1.3
    
    
    
    0.4Accrued benefit cost
    
    $
    (10.2
    )
    
    $
    (6.5
    )
    
    $
    (4.8
    )The components of net gratuity costs are reflected below:Service cost
    
    $
    2.1
    
    
    $
    1.9
    
    
    $
    1.5Interest cost
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.3Amortization
    
    
    0.1
    
    
    
    
    
    
    
    Net gratuity costs
    
    $
    2.8
    
    
    $
    2.3
    
    
    $
    1.8
  Weighted-average assumptions used to determine benefit obligations:
 Year ended March 31,2007
    
    
    2006
    
    
    2005Discount rate
    
    
    9.8
    %
    
    
    8.0
    %
    
    
    8.0
    %Long-term rate of compensation increase
    
    
    7.0
    %
    
    
    7.0
    %
    
    
    7.0
    %
 Weighted-average assumptions used to determine net periodic benefit cost:
 Year ended March 31,2007
    
    
    2006
    
    
    2005Discount rate
    
    
    9.8
    %
    
    
    8.0
    %
    
    
    7.0
    %Long-term rate of compensation increase
    
    
    7.0
    %
    
    
    7.0
    %
    
    
    7.0
    %
 F-25




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##### Table of Contents



Satyam Computer Services Limited
 Cash Flows
  (US$ in millions)ExpectedFor the financial year ended March 31,
    
    contribution2009
    
    $
    2.32010
    
    
    2.92011
    
    
    3.62012
    
    
    4.62013  2016
    
    $
    19.2
  Before
    
    
    
    
    
    
    Afterapplication of
    
    
    
    
    
    
    application ofSFAS 158
    
    
    Adjustments
    
    
    SFAS 158Current assets  Deferred income taxes
    
    $
    17.0
    
    
    $
    0.1
    
    
    $
    17.1Non-current assets  Other assets
    
    
    39.0
    
    
    
    0.5
    
    
    
    39.5Total Assets
    
    
    1,623.5
    
    
    
    0.6
    
    
    
    1,624.1Current liabilities  Accrued expenses and other current liabilities
    
    
    148.4
    
    
    
    0.2
    
    
    
    148.6Long-term liabilities  Gratuity, excluding current portion
    
    
    6.5
    
    
    
    1.6
    
    
    
    8.1Total Liabilities
    
    
    251.3
    
    
    
    1.8
    
    
    
    253.1Accumulated other comprehensive income, net of tax
    
    
    62.1
    
    
    
    (1.2
    )
    
    
    60.9Total Shareholders Equity
    
    $
    1,372.2
    
    
    $
    (1.2
    )
    
    $
    1,371.0
  Provident Fund
  Superannuation Plan
  14. Earnings per Share
   F-26




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##### Table of Contents



Satyam Computer Services Limited
  (US$ in millions except per share data and as stated otherwise)Year ended March 31,2007
    
    2006
    
    2005Net income
    
    $
    298.4
    
    
    $
    249.4
    
    
    $
    153.8Equity Shares:Average outstanding shares (in millions)
    
    
    652.5
    
    
    
    641.2
    
    
    
    632.4Dilutive effect of Associate Stock Options (in millions)
    
    
    13.5
    
    
    
    21.6
    
    
    
    14.8Share and share equivalents(in millions)
    
    
    666.0
    
    
    
    662.8
    
    
    
    647.2Earnings per shareBasic
    
    $
    0.46
    
    
    $
    0.39
    
    
    $
    0.24Diluted
    
    $
    0.45
    
    
    $
    0.38
    
    
    $
    0.24
 15. Stock-based Compensation Plans
 ASOP plan
  ASOP B plan
  ASOP ADS plan
  Associate Stock Option Plan  Restricted Stock Units (ASOP  RSUs)
  F-27




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##### Table of Contents



Satyam Computer Services Limited
 Associate Stock Option Plan  RSUs (ADS) (ASOP  RSUs (ADS))
  Warrant grants
     Year ended March 31,2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Number of
    
    Average
    
    Number of
    
    Averageequity
    
    Exercise
    
    equity
    
    Exercise
    
    equity
    
    ExerciseASOP Plan
    
    shares
    
    Price
    
    shares
    
    Price
    
    shares
    
    PriceBalance at the beginning of the year
    
    
    106,600
    
    
    $
    1.42
    
    
    
    481,000
    
    
    $
    1.18
    
    
    
    116,400
    
    
    $
    1.00Granted
    
    
    130,000
    
    
    $
    1.67
    
    
    
    88,000
    
    
    $
    1.37
    
    
    
    870,680
    
    
    $
    1.12Exercised
    
    
    (90,400
    )
    
    $
    1.39
    
    
    
    (462,400
    )
    
    $
    1.13
    
    
    
    (506,080
    )
    
    $
    1.05Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lapsed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the year
    
    
    146,200
    
    
    $
    1.69
    
    
    
    106,600
    
    
    $
    1.42
    
    
    
    481,000
    
    
    $
    1.18Exercisable at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of options
granted during the year
    
    
    
    
    
    $
    10.24
    
    
    
    
    
    
    $
    6.08
    
    
    
    
    
    
    $
    3.83
  F-28




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##### Table of Contents



Satyam Computer Services Limited
 Year ended March 31,2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageNumber of
    
    Exercise
    
    Number of
    
    Exercise
    
    Number of
    
    ExerciseASOP B
    
    equity shares
    
    Price
    
    equity shares
    
    Price
    
    equity shares
    
    PriceBalance at the beginning of the year
    
    
    45,605,388
    
    
    $
    3.74
    
    
    
    53,660,630
    
    
    $
    3.57
    
    
    
    35,020,962
    
    
    $
    3.03Granted
    
    
    
    
    
    
    
    
    
    
    6,579,552
    
    
    $
    4.71
    
    
    
    28,411,514
    
    
    $
    4.03Exercised
    
    
    (17,448,659
    )
    
    $
    3.80
    
    
    
    (9,039,604
    )
    
    $
    3.05
    
    
    
    (5,274,798
    )
    
    $
    2.51Cancelled
    
    
    (8,180,519
    )
    
    $
    3.88
    
    
    
    (5,595,190
    )
    
    $
    3.77
    
    
    
    (4,497,048
    )
    
    $
    3.34Balance at the end of the year
    
    
    19,976,210
    
    
    $
    3.89
    
    
    
    45,605,388
    
    
    $
    3.74
    
    
    
    53,660,630
    
    
    $
    3.57Exercisable at the end of the year
    
    
    6,001,418
    
    
    $
    4.06
    
    
    
    10,248,808
    
    
    $
    3.43
    
    
    
    11,390,396
    
    
    $
    3.38Weighted average fair value of options
granted during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4.71
    
    
    
    
    
    
    $
    4.03
  Year ended March 31,2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageNumber of
    
    Exercise
    
    Number of
    
    Exercise
    
    Number of
    
    ExerciseASOP (ADS)
    
    equity shares
    
    Price
    
    equity shares
    
    Price
    
    equity shares
    
    PriceBalance at the beginning of the year
    
    
    3,982,684
    
    
    $
    4.12
    
    
    
    5,031,604
    
    
    $
    3.71
    
    
    
    4,725,728
    
    
    $
    2.96Granted
    
    
    40,000
    
    
    $
    10.02
    
    
    
    640,860
    
    
    $
    5.74
    
    
    
    1,466,896
    
    
    $
    5.71Exercised
    
    
    (848,272
    )
    
    $
    2.89
    
    
    
    (1,328,892
    )
    
    $
    2.69
    
    
    
    (752,364
    )
    
    $
    2.71Cancelled
    
    
    (252,284
    )
    
    $
    4.42
    
    
    
    (360,888
    )
    
    $
    7.41
    
    
    
    (408,656
    )
    
    $
    3.91Balance at the end of the year
    
    
    2,922,128
    
    
    $
    4.89
    
    
    
    3,982,684
    
    
    $
    4.25
    
    
    
    5,031,604
    
    
    $
    3.71Exercisable at the end of the year
    
    
    1,985,282
    
    
    $
    8.33
    
    
    
    1,865,764
    
    
    $
    2.97
    
    
    
    1,427,400
    
    
    $
    2.72Weighted average fair value of options
granted during the year
    
    
    
    
    
    $
    10.02
    
    
    
    
    
    
    $
    5.74
    
    
    
    
    
    
    $
    5.71
  F-29




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##### Table of Contents



Satyam Computer Services Limited
 Year ended March 31,2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Number of
    
    Average
    
    Number of
    
    Averageequity
    
    Exercise
    
    equity
    
    Exercise
    
    equity
    
    ExerciseRSU Plan
    
    shares
    
    Price
    
    shares
    
    Price
    
    shares
    
    PriceBalance at the beginning of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    3,293,140
    
    
    $
    0.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lapsed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the year
    
    
    3,293,140
    
    
    $
    0.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of options
granted during the year
    
    
    
    
    
    $
    11.77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Year ended March 31,2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Number of
    
    Average
    
    Number of
    
    Averageequity
    
    Exercise
    
    equity
    
    Exercise
    
    equity
    
    ExerciseRSU ADS Plan
    
    shares
    
    Price
    
    shares
    
    Price
    
    shares
    
    PriceBalance at the beginning of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    473,240
    
    
    $
    0.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lapsed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the year
    
    
    473,240
    
    
    $
    0.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of options
granted during the year
    
    
    
    
    
    $
    24.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  F-30




---



##### Table of Contents



Satyam Computer Services Limited
  Outstanding
    
    ExercisableWeighted Average
    
    Weighted Average
    
    Number of equity
    
    Weighted Average
    
    Number of equityRange of Exercise
    
    Exercise Price (per
    
    remaining
    
    shares arising out
    
    Exercise Price (per
    
    shares arising outPrice (per equity share)
    
    equity share)
    
    contractual life
    
    of options
    
    equity share)
    
    of optionsRs.2.00
    
    $
    0.05
    
    
    Rs.2.25Rs.4.00
    
    $
    0.09
    
    
    $
    0.05
    
    
    7.23 Years
    
    
    3,766,380
    
    
    
    
    
    
    
    Rs.70.57
    
    $
    1.64
    
    
    Rs.148.07
    
    
    
    
    
    
    
    
    
    Rs.135.08Rs.172.68
    
    $
    4.01
    
    
    $
    3.44
    
    
    5.49 Years
    
    
    10,149,014
    
    
    $
    3.13
    
    
    
    2,593,992Rs.172.69
    
    $
    4.01
    
    
    Rs.204.72
    
    
    
    
    
    
    
    
    
    Rs.214.51Rs.430.68
    
    $
    9.99
    
    
    $
    4.75
    
    
    5.72 Years
    
    
    11,237,734
    
    
    $
    4.98
    
    
    
    4,511,728Rs.430.69
    
    $
    9.99
    
    
    Rs.521.02
    
    
    
    
    
    
    
    
    
    Rs.504.66Rs. 863.67
    
    $
    20.04
    
    
    $
    12.09
    
    
    5.84 Years
    
    
    1,657,790
    
    
    $
    11.71
    
    
    
    880,980
 The US$ numbers in the above tables have been translated using the closing exchange rate as
of March 31, 2007 1US$= Rs43.10
 There
are no grants with the exercise price in the range of Rs.4.01  Rs.70.56 (US$0.10  US$1.63).
 Stock-based compensation
   Year endedMarch 31, 2007Dividend yield
    
    
    0.78
    %Expected volatility
    
    
    59
    %Risk-free interest rate
    
    
    8
    %Expected term (in years)
    
    
    0.96
 Expected Term:
 Risk-Free Interest Rate:
 F-31




---



##### Table of Contents



Satyam Computer Services Limited
  Expected Volatility:
 Expected Dividend:
 Estimated Pre-vesting Forfeitures:
 Stock based compensation plan of Nipuna
   Year ended March 31,2007
    
    2006

    
    2005Number of
    
    Weighted
    
    Number of
    
    Weighted
    
    Number of
    
    Weightedequity
    
    Average
    
    equity
    
    Average
    
    equity
    
    AverageASOP Plan
    
    shares
    
    Exercise Price
    
    shares
    
    Exercise Price
    
    shares
    
    Exercise PriceBalance at the beginning of the year
    
    
    1,215,506
    
    
    $
    1.80
    
    
    
    813,578
    
    
    $
    1.83
    
    
    
    
    
    
    
    Granted
    
    
    324,000
    
    
    
    1.77
    
    
    
    655,000
    
    
    $
    1.77
    
    
    
    813,578
    
    
    $
    1.78Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    (540,804
    )
    
    
    1.77
    
    
    
    (253,072
    )
    
    $
    1.77
    
    
    
    
    
    
    
    Lapsed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the year
    
    
    998,702
    
    
    $
    1.86
    
    
    
    1,215,506
    
    
    $
    1.80
    
    
    
    813,578
    
    
    $
    1.83Exercisable at the end of the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of
options granted during the year
    
    
    
    
    
    $
    1.77
    
    
    
    
    
    
    $
    1.77
    
    
    
    
    
    
    $
    1.78
 16. Segmental Reporting
 Disclosures about Segments of an Enterprise and Related Information
 
    
    IT services, providing a comprehensive range of services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, infrastructure management services. Satyam provides its customers the
ability to meet all of their information technology needs from one service provider. Satyams
eBusiness services include designing, developing integrating and maintaining Internet-based
applications, such as eCommerce websites, and implementing packaged software applications,
such as customer or supply chain management software applications. Satyam also assists its
customers in making their existing computing systems accessible over the Internet. The segment
information includes the results of Citisoft and Knowledge Dynamics which were acquired during
last year.
 
    
    Business Process Outsourcing, providing BPO services covering HR, Finance & Accounting,
Customer Contact (Voice, Mail and Chat), and Transaction Processing (industry-specific
offerings).
 F-32




---



##### Table of Contents



Satyam Computer Services Limited
  
  Business Segments
 (US$ in millions)IT Services
    
    BPO
    
    Elimination
    
    Consolidated totalsFor the year ended March 31, 2007Revenue  External customers
    
    
    1,432.5
    
    
    
    28.9
    
    
    
    
    
    
    
    1,461.4Revenue  Inter-segment
    
    
    0.6
    
    
    
    9.2
    
    
    
    (9.8
    )
    
    
    Total Revenues
    
    
    1,433.1
    
    
    
    38.1
    
    
    
    (9.8
    )
    
    
    1,461.4Operating income / (loss)
    
    
    294.0
    
    
    
    (2.4
    )
    
    
    
    
    
    
    291.6Equity in earnings/(losses) of associated
companies, net of taxes
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    0.8Net income / (loss)
    
    
    302.7
    
    
    
    (4.3
    )
    
    
    
    
    
    
    298.4Segment assets
    
    
    1,605.3
    
    
    
    42.5
    
    
    
    (23.7
    )
    
    
    1,624.1Depreciation and amortization
    
    
    30.4
    
    
    
    3.2
    
    
    
    
    
    
    
    33.6Capital expenditures for long-lived assets
    
    
    79.6
    
    
    
    4.2
    
    
    
    
    
    
    
    83.8For the year ended March 31, 2006Revenue  External customers
    
    $
    1,082.7
    
    
    $
    13.6
    
    
    
    
    
    
    $
    1,096.3Revenue  Inter-segment
    
    
    0.8
    
    
    
    6.4
    
    
    
    (7.2
    )
    
    
    Total Revenues
    
    
    1,083.5
    
    
    
    20.0
    
    
    
    (7.2
    )
    
    
    1096.3Operating income / (loss)
    
    
    228.5
    
    
    
    (8.8
    )
    
    
    
    
    
    
    219.7Equity in earnings/(losses) of associated
companies, net of taxes
    
    
    (0.8
    )
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Net income / (loss)
    
    
    259.0
    
    
    
    (9.6
    )
    
    
    
    
    
    
    249.4Segment assets
    
    
    1,170.8
    
    
    
    27.7
    
    
    
    (17.3
    )
    
    
    1,181.2Depreciation
    
    
    29.0
    
    
    
    2.5
    
    
    
    
    
    
    
    31.5Capital expenditures for long-lived assets
    
    
    53.4
    
    
    
    3.2
    
    
    
    
    
    
    
    56.6For the year ended March 31, 2005Revenue  External customers
    
    $
    786.7
    
    
    $
    6.9
    
    
    
    
    
    
    $
    793.6Revenue  Inter-segment
    
    
    0.7
    
    
    
    3.1
    
    
    $
    (3.8
    )
    
    
    Total Revenues
    
    
    787.4
    
    
    
    10.0
    
    
    
    (3.8
    )
    
    
    793.6Operating income / (loss)
    
    
    171.8
    
    
    
    (9.3
    )
    
    
    
    
    
    
    162.5Equity in earnings/(losses) of associated
companies, net of taxes
    
    
    (1.1
    )
    
    
    
    
    
    
    
    
    
    
    (1.1
    )Net income
    
    
    163.7
    
    
    
    (9.9
    )
    
    
    
    
    
    
    153.8Segment assets
    
    
    885.2
    
    
    
    16.1
    
    
    
    (17.2
    )
    
    
    884.1Depreciation
    
    
    23.4
    
    
    
    1.6
    
    
    
    
    
    
    
    25.0Capital expenditures for long-lived assets
    
    
    37.4
    
    
    
    3.7
    
    
    
    
    
    
    
    41.1
 The capital expenditures for long-lived assets in the above table represent the additions to
premises and equipment (fixed assets) of each segment.
 F-33




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##### Table of Contents



Satyam Computer Services Limited
 
 Geographic Information
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Revenues from
    
    
    
    
    
    
    Revenues from
    
    
    
    
    
    
    Revenues fromexternal customers
    
    
    Long-lived assets
    
    
    external customers
    
    
    Long-lived assets
    
    
    external customers
    
    
    Long-lived assetsUnited States
    
    $
    924.0
    
    
    $
    4.1
    
    
    $
    711.2
    
    
    $
    4.0
    
    
    $
    542.4
    
    
    $
    4.0Europe
    
    
    276.5
    
    
    
    1.4
    
    
    
    206.3
    
    
    
    0.9
    
    
    
    131.7
    
    
    
    0.6India
    
    
    75.2
    
    
    
    194.8
    
    
    
    45.1
    
    
    
    133.1
    
    
    
    27.2
    
    
    
    92.2Japan
    
    
    20.8
    
    
    
    0.4
    
    
    
    15.5
    
    
    
    0.5
    
    
    
    13.9
    
    
    
    0.5Rest of the World
    
    
    164.9
    
    
    
    2.5
    
    
    
    118.2
    
    
    
    2.3
    
    
    
    78.4
    
    
    
    2.3Total
    
    $
    1,461.4
    
    
    $
    203.2
    
    
    $
    1,096.3
    
    
    $
    140.8
    
    
    $
    793.6
    
    
    $
    99.6
 The long-lived assets in the above table represent premises and equipment and intangible assets of
each segment.
 17. Related Party Transactions
  (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Infrastructure and other services provided by Satyam toSify, its subsidiaries and associated companies
    
    
    
    
    
    
    
    
    
    $
    0.1Satyam Venture
    
    $
    0.5
    
    
    $
    0.5
    
    
    
    0.3Short term advance provided by Satyam toCA Satyam
    
    
    
    
    
    
    0.1
    
    
    
    Total
    
    $
    0.5
    
    
    $
    0.6
    
    
    $
    0.4Infrastructure and other services received by Satyam fromSify, its subsidiaries and associated companies
    
    
    
    
    
    $
    2.9
    
    
    $
    1.5Satyam Venture
    
    $
    8.6
    
    
    
    8.6
    
    
    
    7.1CA Satyam
    
    
    0.2
    
    
    
    
    
    
    
    Total
    
    $
    8.8
    
    
    $
    11.5
    
    
    $
    8.6
  (US$ in millions)As of March 31,Amount due from/(to) associated companies
    
    2007
    
    
    2006Satyam Venture
    
    $
    (2.6
    )
    
    $
    (1.8
    )CA Satyam
    
    
    
    
    
    
    0.1Total
    
    $
    (2.6
    )
    
    $
    (1.7
    )
 18. Shareholders Equity and Dividends
 Increase in authorized share capital
  Stock Split (in the form of stock dividend)
  F-34




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##### Table of Contents



Satyam Computer Services Limited
 
 Dividends
    19. Contingencies and Commitments
 a) Funding and Warrant commitments  Nipuna
  b) Citisoft Plc and Knowledge Dynamics Pte Ltd.
  c) Bank guarantees
  d) Capital commitments
  e) Operating leases
   f) Venture Global Engineering LLC, USA
   F-35




---



##### Table of Contents



Satyam Computer Services Limited
 
 20. Concentration of Credit Risk
  Year ended March 31,2007
    
    
    2006
    
    
    2005Revenues generated from top two customersCustomer I
    
    
    6.34
    %
    
    
    8.80
    %
    
    
    10.81
    %Customer II
    
    
    4.41
    %
    
    
    5.14
    %
    
    
    7.35
    %Total revenues from top five customers
    
    
    21.04
    %
    
    
    24.21
    %
    
    
    29.21
    %
 21. Financial Instruments
 Forward and options contracts
   (US$ in millions)As of March 31,2007
    
    
    2006Aggregate contracted principal amounts of contracts outstanding:Forward contracts
    
    $
    100.0
    
    
    $
    79.0Options contracts
    
    
    352.6
    
    
    
    137.0Total
    
    $
    452.6
    
    
    $
    216.0Balance sheet exposure:Forward contracts
    
    $
    2.1
    
    
    $
    0.4Options contracts
    
    
    2.4
    
    
    
    (1.8
    )Total
    
    $
    4.5
    
    
    $
    (1.4
    )
   (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005Forward contracts
    
    $
    2.6
    
    
    $
    0.8
    
    
    $
    (0.5
    )Options contracts
    
    
    3.6
    
    
    
    (1.6
    )
    
    
    0.2Total
    
    $
    6.2
    
    
    $
    (0.8
    )
    
    $
    (0.3
    )
 Fair value
  F-36




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##### Table of Contents



Satyam Computer Services Limited
 22. Schedules of Balance sheet
 a)
    
    Cash and Cash Equivalents
  (US$ in millions)As of March 31,2007
    
    
    2006Cash and bank balances
    
    $
    138.2
    
    
    $
    258.9Cash equivalents
    
    
    14.0
    
    
    
    33.9Cash and cash equivalents
    
    $
    152.2
    
    
    $
    292.8
 b)
    
    Accounts receivable and allowance for doubtful debts
  (US$ in millions)As of March 31,2007
    
    
    2006Customers (trade)
    
    $
    386.9
    
    
    $
    238.1Related parties
    
    
    0.1
    
    
    
    1.0Less: Allowance for doubtful debts
    
    
    (22.8
    )
    
    
    (19.1
    )Accounts receivable, net
    
    $
    364.2
    
    
    $
    220.0
  c)
    
    Prepaid Expenses and Other Receivables
  (US$ in millions)As of March 31,2007
    
    
    2006Interest accrued on bank deposits
    
    
    
    
    
    $
    24.9Prepaid expenses
    
    $
    8.1
    
    
    
    5.3Directors liability insurance
    
    
    0.3
    
    
    
    0.4Advance for expenses
    
    
    9.3
    
    
    
    12.0Loans and advance to employees
    
    
    13.8
    
    
    
    6.2Other advances and receivables
    
    
    9.4
    
    
    
    2.4Less: Allowance for doubtful advances
    
    
    (3.8
    )
    
    
    (2.3
    )Prepaid expenses and other receivables
    
    $
    37.1
    
    
    $
    48.9
   d)
    
    Other Assets
  (US$ in millions)As of March 31,2007
    
    
    2006Interest accrued on bank deposits
    
    $
    15.1
    
    
    
    Deposits
    
    
    20.8
    
    
    $
    17.0Loans and advances to employees due after one year
    
    
    0.9
    
    
    
    0.8Deferred taxes on income
    
    
    3.3
    
    
    
    2.2Others
    
    
    1.0
    
    
    
    1.4Less: Allowance for doubtful advances
    
    
    (1.6
    )
    
    
    (1.5
    )Other Assets
    
    $
    39.5
    
    
    $
    19.9
  F-37




---



##### Table of Contents



Satyam Computer Services Limited
 e)
    
    Accrued Expenses and Other Current Liabilities
  (US$ in millions)As of March 31,2007
    
    
    2006Accrued expenses
    
    $
    99.0
    
    
    $
    79.6Unclaimed dividend
    
    
    1.5
    
    
    
    1.1Provision for taxation, net of payments
    
    
    15.5
    
    
    
    8.5Provision for gratuity and unutilised leave
    
    
    29.5
    
    
    
    12.0Deferred taxes on income
    
    
    3.1
    
    
    
    2.8Accrued expenses and other current liabilities
    
    $
    148.6
    
    
    $
    104.0
 F-38




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##### Table of Contents



Satyam Computer Services Limited
 Financial Statement Schedule -Valuation and qualifying accounts
 1. Change in valuation allowance on deferred tax assets:
 (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005At the beginning of the year
    
    $
    24.0
    
    
    $
    21.1
    
    
    $
    17.6Change during the year
    
    
    1.7
    
    
    
    3.3
    
    
    
    3.5Change due to foreign exchange
    
    
    0.9
    
    
    
    (0.4
    )
    
    
    At the end of the year
    
    $
    26.6
    
    
    $
    24.0
    
    
    $
    21.1
 2. Allowance for doubtful accounts on trade accounts receivable:
 (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005At the beginning of the year
    
    $
    19.1
    
    
    $
    17.5
    
    
    $
    13.9Additions
    
    
    3.6
    
    
    
    4.2
    
    
    
    7.5Write offs, net of recoveries
    
    
    (0.6
    )
    
    
    (2.2
    )
    
    
    (3.8
    )Change due to foreign exchange
    
    
    0.7
    
    
    
    (0.4
    )
    
    
    (0.1
    )At the end of the year
    
    $
    22.8
    
    
    $
    19.1
    
    
    $
    17.5
 3. Allowance for doubtful advances:
 a)
    
    Prepaid Expenses and Other Receivables
 (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005At the beginning of the year
    
    $
    2.3
    
    
    $
    1.7
    
    
    $
    1.6Additions
    
    
    1.3
    
    
    
    0.6
    
    
    
    0.1Write offs, net of recoveries
    
    
    
    
    
    
    
    
    
    
    Change due to foreign exchange
    
    
    0.2
    
    
    
    
    
    
    
    At the end of the year
    
    $
    3.8
    
    
    $
    2.3
    
    
    $
    1.7
 b)
    
    Other Assets
 (US$ in millions)Year ended March 31,2007
    
    
    2006
    
    
    2005At the beginning of the year
    
    $
    1.5
    
    
    $
    1.5
    
    
    $
    1.5Additions
    
    
    
    
    
    
    
    
    
    
    Write offs, net of recoveries
    
    
    
    
    
    
    
    
    
    
    Change due to foreign exchange
    
    
    0.1
    
    
    
    
    
    
    
    At the end of the year
    
    $
    1.6
    
    
    $
    1.5
    
    
    $
    1.5
 F-39