MIRA INFORM REPORT

Report Date :

07.11.2007

IDENTIFICATION DETAILS

Name :	SIFY LIMITED
Registered Office :	2^nd Floor, Tidel Park, 4, Canal Bank Road, Taramani, Chennai – 600 113, Tamilnadu
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	12.12.1995
Com. Reg. No.:	18 -22562
CIN No.: [Company Identification No.]	U72200AP1995PLC022562
IEC No.:	0497011042
TAN No.: [Tax Deduction & Collection Account No.]	CHES04930C
PAN No.: [Permanent Account No.]	AAACS9032R
Legal Form :	A Closely Held Public Limited Liability Company.
Line of Business :	Subject acts as IT Enabled Corporate Network, Data Services, Internet Services, Access Services, Online Portal and Content Offering

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small

Maximum Credit Limit :	USD 19557096
Status :	Moderate
Payment Behaviour :	No Complaints
Litigation :	Clear
Comments :	Subject is a well-established and reputed Internet Service Providers. Directors are reported as experienced, respectable and resourceful businessmen. Available information indicates satisfactory financial responsibility of the company. Trade relations are fair. Payments are usually correct and as per commitments. The company can be considered for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office/ Corporate Office :	2^nd Floor, Tidel Park, 4, Canal Bank Road, Taramani, Chennai – 600 113, Tamilnadu, India
Tel. No.:	91-44-22540770, 22540771
Fax No.:	91-44-22540771
E-Mail :	appasamy@sifycorp.com, ram_v@sifycorp.com rramaraj@sifycorp.com, david_appasamy@sifycorp.com
Website :	http://www.sifycorp.com
Area:	101704 sq. ft.
Location:	Owned
Administrative office:	II^nd Floor, Mayfair, Trade centre, 1-8-303/36, S P Road, Secunderabad – 500 003, Andhra Pradesh
Branch Offices:
Bangalore:	27, 1^st Main Road, Vasanth Nagar, Bangalore – 560 052.
Tel. No.:	91-80-22283967
Fax No.:	91-80-22250316
Area:	7556 sq. ft.
Location:	Rented
Bangalore:	Kesava Towers, 667/ 668, 11^th Main Road, 4^th Block, Jayanagar, Bangalore – 560 001.
Tel. No.:	91-80-26545873/ 4
Fax No.:	91-80-26555300
Area:	11400 sq. ft.
Location:	Rented
Kolkata:	3^rd Floor, Lansdowne Towers, No. 2/1 A, Sarath Bose Road, Kolkata – 700 019.
Tel. No.:	91-33-22893989
Fax No.:	91-33-22893990
Area:	11610 sq. ft.
Location:	Rented
Kolkata:	2^nd Floor, Lansdowne Towers, No. 2/1 A, Sarath Bose Road, Kolkata – 700 019.
Tel. No.:	91-33-22893989
Fax No.:	91-33-22893990
Area:	11610 sq. ft.
Location:	Rented
Chandigarh:	2^nd Floor, SCO No. 215 – 217, Sector 34 A, Chandigarh – 160 022.
Tel. No.:	91-172-2645550
Fax No.:	91-172-2645551
Area:	3500 Sq. ft.
Location:	Rented
Chennai:	2^nd Floor, Tidel Park No. 4, Canal Bank Road, Taramani, Chennai – 600 113.
Tel. No.:	91-44-22540770/ 777
Fax No.:	91-44-22540771
Area:	101704 sq. ft.
Location:	Owned
Chennai:	3^rd Floor, Tidel Park No. 4, Canal Bank Road, Taramani, Chennai – 600 113.
Tel. No.:	91-44-22540770/ 777
Fax No.:	91-44-22540771
Area:	4500 sq. ft.
Location:	Rented
Chennai:	PLA Complex, 35, Velachery Road, Little Mount, Saidapet, Chennai – 600 035.
Tel. No.:	91-44-22354770
Fax No.:	91-44-22354771
Area:	5208 sq. ft.
Location:	Rented
Chennai:	7^th & 1^st Floor, Khivraj Complex II, No, 480, Anna Salai, Nandanam, Chennai – 600 035.
Tel. No.:	91-44-24357610
Fax No.:	91-44-24357611
Area:	16660 sq, ft.
Location:	Rented
Chennai:	Elnet Software City, 6^th Floor, Block 2 & 9, TS 140, CPT Road, Taramani, Chennai – 600 113.
Tel. No.:	91-44-52118283
Area:	30000 sq. ft.
Location:	Rented
Mumbai:	3^rd Floor, Enterprise Center, Nehru Road, Vile Parle (East), Mumbai – 400 025.
Tel. No.:	91-22-56772424
Fax No.:	91-22-26177662
Area:	13709 sq. ft.
Location:	Owned
Mumbai:	2^nd Floor, Bengal Chemicals Bhavan, S. V. Road, Near Century Bazaar, V. S. Marg, Prabhadevi, Mumbai – 400 025.
Tel. No.:	91-22-56625402/410
Fax No.:	91-22-24368539
Area:	5864 sq. ft.
Location:	Rented
Mumbai:	D 615/316 & E 617/ 618, Floral Deck Plaza, Off. Central MIDC Road (Eats), Mumbai – 400 093.
Area:	4110 sq. ft.
Location:	Rented
New Delhi:	No. 258, Okhla Industrial Estate, Phasse – III, New Delhi – 110 020.
Tel. No.:	91-11-51017439
Fax No.:	91-11-51039445
Area:	18200 sq. ft.
Location:	Rented
New Delhi:	Upper Ground Floor, 23 – A, Kasturba Gandhi Marg, New Delhi – 110 001.
Tel. No.:	91-11-23753811/12
Fax No.:	91-11-23753818
Area:	4616 sq. ft.
Location:	Rented
Pune:	Godrej Castlemaine, 1^st Flor, Sasoon Road, Pune
Tel. No.:	91-20-26130448
Fax No.:	91-20-26119705
Area:	7072 sq. ft.
Location:	Rented
Secunderabad:	126, 1-7-289/A, 3^rd Floor, Jaya Mansion, Behind IOC Building, S.D. Road, Secunderabad – 500 003.
Tel. No.:	91-40-27841468/ 1558
Fax No.:	91-40-27841233
Area:	4600 sq. ft.
Location:	Rented

DIRECTORS

Name :	Mr. Raju Vegesna
Designation :	Chairman, Managing Director & Chief Executive Officer
Address:	5808, Trow bridge Dr Sanjose, California- 95138, NA, US
Date of Birth/Age :	10.08.1959
Date of Appointment :	10.11.2005
Directorship in other Companies:	· CIN of the Company U22100AP1993PTC016651 Name Of The Company: Raju Vegesna Infotech And Industries Private Limited Designation : Director · CIN of the Company: U72400AP2005PTC046031 Name Of The Company: Serverengines (India) Private Limited Designation : Director
Name :	Mr. T. Hanuman Chowdary
Designation :	Director
Address:	Plot No. 8, P & T Colony, Karkhana, Secundarabad – 500 009.
Date of Birth/Age :	18.10.1931
Date of Appointment :	22.02.1996
Name :	Mr. S. Srinivasan
Designation :	Director
Name :	Mr. Donald Macinnes Peck
Designation :	Director
Name :	Mr. Eric Hsia
Designation :	Director
Name :	Mr. Ravi Chandra Adusumalli
Designation :	Director
Address:	Siutes 2115 -228, Two Pacific Place, 88, Queensway, Hong Kong
Date of Birth/Age :	14.01.1976
Date of Appointment :	16.12.2002
Date of Ceasing:	19.04.2005
Name :	Mr. K Thiagarajan
Designation :	Director
Name :	Mr. Sandeep Reddy
Designation :	Director
Address:	12 Subba Rao Avenue, Chennai – 600 006, Tamil Nadu
Date of Birth/Age :	22.07.1968
Date of Appointment :	16.12.2002
Date of Ceasing:	21.07.2005
Name :	Mr. V. Srinivas
Designation :	Director
Address:	2-62/A, Block N /5 Road No. 3, Kakatiya Nagar Habsiguda, Hyderabad – 500 007, Andhra Pradesh
Date of Birth/Age :	14.07.1960
Date of Appointment :	16.12.2002
Name :	Mr. Chodavarapu Balamouli Mouli
Designation :	Director
Address:	1-2-412/18 A, Bharathi Nivas, Gaganmahal Colony, Domalguda, Hyderabad – 500 029.
Date of Birth/Age :	13.08.1946
Date of Appointment :	15.07.2005
Name :	Mr. Siripurapu Kesava Rao
Designation :	Director
Address:	Plot No. 839 P, P Road No. 44 A, Jubilee Hills, Hyderabad – 500 033.
Date of Birth/Age :	14.09.1943
Date of Appointment :	15.07.2005
Name :	Mr. R D Thulasiraj
Designation :	Director
Address:	Plot No. 319, Anna Nagar, Madhuri – 625 020.
Date of Birth/Age :	26.08.1951
Date of Appointment :	15.07.2005
Name :	Mr. P S Raju
Designation :	Director
Address:	Flat No. PH – 1, Lakshmi Apartments, Kailash Metta, Waltair Uplands, Vishkhapatnam – 560 003.
Name :	Mr. Ramaraj Rajasekhar
Designation :	Managing Director
Address :	1-D, Aum Apartments, 26, Kothari Road, Nungambakkam – 600 034, Tamil Nadu
Date of Birth/Age :	16.02.1950
Date of Appointment :	09.12.2002
Name :	Mr. Thulasiraj Duraisamy
Designation :	Director
Address :	Plot No. 319, Anna Nagar, Madhuri – 625 020.
Date of Birth/Age :	26.08.1951
Date of Appointment :	15.07.2005
Name :	Mr. Pusapati Raju Sitarama
Designation :	Director
Address :	PH- 1, Lakshmi apartment, Kailash Metta, Waltair Uplands, Visakhapatnam – 530 003, Andhra Pradesh
Date of Birth/Age :	18.05.1953
Date of Appointment :	28.02.2006
Name :	Mr. Srinivasa C Raju
Designation :	Director
Address :	Plot No. 97 Road No. 3, Banjara Hills, Hyderabad – 500 034, Andhra Pradesh
Date of Birth/Age :	15.07.1961
Date of Appointment :	16.10.2003
Name :	Mr. Prasad Rayaprolu
Designation :	Alternate director
Address :	Flat No. B -3, Kankadhara Apartments, United India Colony, Kodambakkam, Chennai – 600 024, Tamil Nadu
Date of Birth/Age :	24.07.1972
Date of Appointment :	11.11.2004
Name :	Mr. Rama B Raju
Designation :	Director
Address :	Plot No. 1326 Road No. 66, Jubilee Hills, Hyderabad – 500 034
Date of Birth/Age :	24.07.1972
Date of Appointment :	11.11.2004
Name :	Mr. C Venugopala Rao
Designation :	Alternate Director
Address :	Plot No. 8, 6^th Main Road, 10^th Cross Road, AGS Colony, Velachery, Chennai, Tamil Nadu
Date of Birth/Age :	18.03.1968
Date of Appointment :	11.11.2004
Date of Ceasing:	18.01.2005
Name :	Mr. S K Rao
Designation :	Director
Address :	Plot No. 839 P Road No. 44 A Jubilee Hills, Hyderabad -, Andhra Pradesh
Date of Birth/Age :	14.09.1943
Date of Appointment :	15.07.2005

KEY EXECUTIVES

Name :	Mr. Durgesh Mehta
Designation :	Chief Financial Officer
Name :	Mr. V Ramasubramanian
Designation :	Company Secretary
Address :	A -1, Anand Prasad Apartment 105, Varadarajapuram Main road, Alwarpet – 600 018, Chennai , Tamil Nadu
Date of Birth/Age :	17.02.1953
Date of Appointment :	22.10.2003

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders		No. of Shares
Mr. B Ramalinga Raju		100
Mr. B Rama Raju		100
Satyam Computer Services Limited		11182600
Mr. R Ramaraj		370000
Citibank N A New York NYADR Department		23541468
Mr. Rajesh Jain		2630
Ms. Bhavana Jain		2630
C M Jain Impex and Investment Private limited		263240
Mr. Cherag Ramakrishnan		3969
Mr. S M Ramakrishnan		3969
Mr.Geet Sethi		7938
Mr. Bhaskar Menon		1764
Mr. Tozar Heerzee		197
Mr. Ravi Pochiraju		197
Mr. Anand Philar		145
Mr. Sidhharth Rao		63
Mr. Prakash Padukone		415
Mrs. Ashwini Nachappa		104
Mr. Dhanraj Pillay		156
Mr. Jaspal Rana		156
	Total	35381841

Equity Shares Breakup (Percentage of Total Equity):

Sr No.	Category	Percentage
1	Foreign Holdings (Foreign Institutional Investor(s), Foreign Companie(s), Foreign Financial Institution(s), Non Resident Indian(s) Or Overseas Corporate Bodies Or Others	100.00

BUSINESS DETAILS

Line of Business :	Subject acts as IT Enabled Corporate Network, Data Services, Internet Services, Access Services, Online Portal and Content Offering
Products :	Internet Service Provider
Terms :
Selling :	Credit (30 Days)
Purchasing :	Credit (30 Days)

GENERAL INFORMATION

Customers:	Wholesalers, Retailers and End Users
No. of Employees :	1910
Bankers :	v ABN Amro Bank v Citibank N.A. v ICICI Bank Limited v IDBI Bank Limited v State Bank of India, Leather International Branch, MVJ Towers, 177/1 Poonamalee High Road, Kilpauk, Chennai – 600 010. Non Fund Based Limit of Rs. 250.000 Millions v HDFC Bank Limited v Axis Bank Limited Address: 82, Dr. Radhakrishnan Salai, Mylapore – 600 004, Chennai
Facilities :	Secured Loans : Vehicles purchased under finance lease : Rs.5.305 millions

Banking Relations :	Satisfactory
Auditors :	BSR & Company Chartered Accountants
Address1:	16, Conoliph Road, Teynamplt, Chennai – 600 018. India
Address 2:	No.10, Mahatama Gandhi Road, Nungambakkam – 600034, Chennai, Tamil Nadu
Tel. No.:	91-44-24332533
Fax No.:	91-44-24348856
Parent Company:	Satyam Computer Services Limited
Associates:	v Cricinfo Limited v Msn Financial-Sify Securities India Private Limited v Placements.com Private Limited
Subsidiaries:	v FifteentoTwentyone.com Limited v Sify International Inc. v India World Communications Private Limited v Safescrypt Limited v Satyam e-Learning Limited v Satyam Gateway Services Limited v Satyam Infrastructure Services Limited v Satyam Institute of E-Business Limited v Satyam Serwiz.com Limited v Satyam Webexchange Limited v Sify Baron New Devices Limited v Sify Innovations Private Limited v Sify Plastics Commerce Limited v Ties India.com Limited v Sify Network Private Limited
Sister Concern:	Sify Communication Limited
	Address: 3^rd Floor, Tidel Park, 4, Canal Bank Road, Taramani, Chennai – 600 113, Tamilnadu, India Activity: Web Services,Enterprise Sales, Trainning, Security Products, Mass Markets Products

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
50000000	Equity shares	Rs. 10/- each	Rs. 500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
42800265	Equity shares	Rs. 10/- each	Rs. 428.002 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2007	31.03.2006	31.03.2005
SHAREHOLDERS FUNDS
1] Share Capital		428.003	423.895	353.803
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		16087.672	16009.239	14375.324
4] (Accumulated Losses)		(11626.401)	(12321.194)	(12261.079)
NETWORTH		4889.274	4111.940	2468.048
LOAN FUNDS
1] Secured Loans		806.146	5.305	9.903
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		806.146	5.305	9.903
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		5695.420	4117.245	2477.951
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		1763.723	1454.463	1358.283
Capital work-in-progress		23.410	19.368	20.811
INVESTMENT		739.508	695.993	194.993
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	24.239	29.224	28.080
	Sundry Debtors	762.949	831.236	636.241
	Cash & Bank Balances	2884.705	2691.281	1349.797
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	1072.038	635.279	374.416
Total Current Assets		4743.931	4187.020	2388.534
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	1538.155	2184.219	1444.530
	Provisions	36.997	55.380	40.140
Total Current Liabilities		1575.152	2239.599	1484.670
Net Current Assets		3168.779	1947.421	903.864
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		5695.420	4117.245	2477.951

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
Sales Turnover		4429.346	4279.148	3569.200
Other Income		432.629	201.646	140.356
Total Income		4861.975	4480.794	3709.556
Profit/(Loss) Before Tax		275.826	[96.411]	[260.672]
Provision for Taxation		0.000	20.895	0.000
Profit/(Loss) After Tax		275.826	[117.306]	[260.672]
Export Value		580.268	359.547	0.000
Expenditures :
	Purchases made for re-sale	412.893	320.136	0.000
	Consumption of stores and spares parts	0.000	0.000	0.000
	Increase/(Decrease) in Finished Goods	0.000	0.000	0.000
	Salaries, Wages, Bonus, etc.	935.438	942.962	699.218
	Managerial Remuneration	2.617	8.100	0.000
	Payment to Auditors	3.240	4.537	0.000
	Interest	0.389	0.440	0.000
	Insurance Expenses	23.086	29.469	0.000
	Power & Fuel	112.843	96.614	0.000
	Depreciation & Amortization	453.275	437.563	526.750
	Other Expenditure	3222.636	3096.931	694.205
	Cost of Goods Sold	0.000	0.000	356.488
	Administrative Expenses	0.000	0.000	1680.866
	Financial Expenses	0.000	0.000	12.701
Total Expenditure		5166.417	4936.752	3970.228

KEY RATIOS

PARTICULARS		31.03.2007	31.03.2006	31.03.2005
PAT / Total Income	(%)	5.67	[2.61]	[7.03]
Net Profit Margin (PBT/Sales)	(%)	6.22	[2.25]	[7.30]
Return on Total Assets (PBT/Total Assets}	(%)	4.22	[1.51]	[6.96]
Return on Investment (ROI) (PBT/Networth)		0.05	[0.02]	[0.10]
Debt Equity Ratio (Total Liability/Networth)		0.48	0.54	0.60
Current Ratio (Current Asset/Current Liability)		3.01	1.86	1.61

LOCAL AGENCY FURTHER INFORMATION

Name of the company

SIFY LIMITED

Presented By

Mr. V Ramasubramaniam , Company Secretary

1) Date and description of instrument creating the change

· Agreement for hypothecation of current assets dated 07.09.2004

· Agreement of assignment dated 07.09.2004

· Deed of guarantee dated 07.09.2004

· General Undertaking / indemnity for letter of credit dated 07.09.2004

2) Amount secured by the charge/amount owing on the securities of charge

Particulars	Rs in millions
Cash Credit	150.000
Letter of Credit	100.000

3) Short particular of the property charged. If the property acquired is subject to charge, date of the acquired of the property should be given

Hypothecation of Current assets and assignment of receivables from the customers

4) Gist of the terms and conditions and extent and operation of the charge.

Assignment of receivables from the customers and first charge on goods purchased under LC

5) Name and Address and description of the person entitled to the charge.

Axis Bank Limited

Address: 82, Dr. Radhakrishnan Salai, Mylapore – 600 004, Chennai

6) Date and brief description of instrument modifying the charge

· Agreement for hypothecation of current assets dated 12.12.2005

· Omnibus Counter Indemnity for guarantee dated 12.12.2005

· General Undertaking / indemnity for letters of Credit dated 123.12.2005

· Letter of arrangement for cash credit advances dated 12.12.2005

7) Particulars of modifications specifying the terms and conditions or the extent of operations of the charge in which modification is made and the details of the modification.

The limits have been revised as follows:

Particulars	Existing	Revised
	(Rs in millions)
Cash credit	150.000	150.000
Over draft	0.000	150.000
Letter of credit	100.00	250.000
Bank Guarantees	0.000	250.000
Total	250.000	80.000

· Sub limit under the Cash credit

· Sub limit under the Import Letter of credit

OTHER INFORMATION:

The company was originally incorporated on 12.12.1995 at Andhra Pradesh having Com. Reg. No. 22562. Later the registered office of the company was shifted to Chennai in 2003 and a new com. Reg. No. 50809 of Chennai ROC was obtained

The Company registered revenue of Rs. 4,639 million ($ 104.3 Million) during the period under review, a 30% growth over the previous year. The net loss for the financial year was Rs 60.1 million ($ 1.35 million), a reduction of 77% from the previous year. During the fourth quarter, the company reported a net profit of Rs.56.7 million ($ 1.27 million).

As the company has incurred losses during the year, the Directors do not recommend any dividend for the year under review.

Review of business:

Enterprise Solutions

The upswing that was witnessed in IT spends in the last year by companies in India increased during this year. The Indian domestic IT Industry is estimated to have recorded growth of over 25 percent during 2005-06, touching US$ 6.1 billion in revenues.

India is regarded as the preferred destination for offshore outsourcing today. The exports of IT and IT enabled services is estimated to have grown at a very impressive 32% in 2005-06, as per NASSCOM.

Corporate Network Services accounted for 54% of total revenue, with 25% growth over the previous year. During the course of the year, Subject won multiple clients for its MPLS VPN services and continues to enjoy a dominant position in this space.

During the year, they had major gains in the BFSI (Banking, Financial Services, and Insurance) segment, in addition to the rapidly growing IT Enabled services, manufacturing and retail sectors, for corporate services. Sify’s leadership was recognized by Gartner, which put Subject on top of the table in its report in February 2006 on “comparison of IP VPN Service Providers in India”. Subject also received the Frost and Sullivan Market leadership award for IP VPN services for the second consecutive year.

The company further consolidated its position as a leading PKI and Digital certificate solutions provider in the country through the services offered under the Safescrypt brand. The Ministry of Company Affairs has mandated e-filing of all statutory returns and digital certification for all signatories. This promises a large growth opportunity for the sector.

They streamlined Application Services to include web applications, document management systems, messaging systems and online examinations. The group executed several key assignments, building applications such as sales force automation and extended supply chain solutions.

Sify Limited (formerly Satyam Infoway Limited)

Sify’s Hosting and network services have started integrating their service offerings to provide end-to-end offerings to customers including disaster recovery solutions. Subject developed a new Level IV data center in Bangalore to cater to the rising demand for hosting primary and disaster recovery data centers. This is the third data center in the country in addition to the existing ones in Mumbai and Chennai.

Forum, Subject’s supply chain solution, had major wins including Exxon Mobil and Bunge India. There are now more than 3000 installations across the country. Forum finalized a powerful marketing alliance with Intel for bundling it with their PCs in a special marketing activity targeting India’s retailing sector.

Access Media

Sify’s Access Media revenues grew by 29% over last year. This division now contributes 39% of the company’s revenue.

Cyber cafés: Adding additional services at Sify’s iways has strengthened Sify’s leadership position in the Public Internet Access business, as well as introducing new revenue streams, which contributed to their growth. In addition to browsing and Internet telephony, a large number of these cafes are enabled for gaming and e-commerce. The network has grown from 2,471 cafes last year to 3,307 this year, with more than 1.15 million unique users per quarter. The service was also expanded to over 150 cities and towns.

Broadband: Subject has now become the leader within the private sector in the provision of high speed Internet access to homes. The subscriber base doubled during the year with more than 183,000 subscribers. The service is available in more than 90 cities through a network of more than 1,600 Cable Television Operators.

VoIP for the IT / ITES segment: VOIP services were extended to the IT/ ITES segment to capitalize on the growing opportunity in this segment that has a significant spend on international calls. There are now more than 80 customers signed up with Subject and benefiting from the compelling cost advantages of Sify’s service.

Games: Over one-third of Sify’s cafes are enabled for playing games. The number of hours of games played online at iways grew by over 100% during the previous year. The number of PCs enabled for online games doubled to 6,000 during this period.

Portals

Portals revenues grew by approximately 74% driven by strong advertisement and sponsorship revenues as well as new initiatives in e-commerce.

To address the need for suitable interactive content for broadband users, they launched Sifymax.in, a complete broadband content site, last year. This portal has been enhanced with new content categories and is shaping the expectations of India’s growing base of broadband users with compelling multi-media content.

Sify Max provides live streaming and on-demand video and audio content in multiple categories, including films and music, general entertainment, lifestyle, TV reality shows, pod casts, video blogs, business, sports and national news. Sify Max also streams video content live (24 X 7) from TV channels like CNN-IBN and CNBC and hosts 15 radio stations offering Bollywood hits, latest chart-busters, Indipop and international.

The all-new Sify.com features SifyMail Service with unlimited mailbox capacity. Users can also compose and read mails in 11 Indian languages - Assamese, Bengali, Gujarati, Hindi, Kannada, Malayalam, Oriya, Punjabi, Sanskrit, Tamil, and Telugu. Enhanced features on Sify.com include easier navigation, a contemporary layout, vantage positions for advertisers to ensure that their brands are noticed without being disruptive, headlines in 5 Indian languages and a convenient mail login on the home page.

Ecommerce

Online booking of railway tickets, one of the largest online transaction activities in India, was integrated at iways to users to book tickets while making cash payment. From its introduction, the numbers of railway tickets booked online per month through the iways have grown exponentially.

Remote Management Services for enterprises in India and abroad

The Remote Management Service (RMS) for remotely managing and supporting infrastructure was commenced last year. The service delivery process for this business was made ITIL compliant. A real time reporting portal

Sify Limited (formerly Satyam Infoway Limited)

(Ionic-Information on Infrastructure) was developed to enable CIOs and operational managers of their customers to view the status of the infrastructure that they manage for them, with an ability to drill down to incident and performance details of every device under their management. IonI also enforces ITIL compliant incident and change management processes at customer end.

E Learning

Sify’s eLearning division is an end-to-end eLearning solutions provider focused on Custom Content Development services for global clients. During the course of the year, the division added UNDP and CISCO as key clients.

Innovations in this division include porting elearning content on Mobile Devices as well as creating Instructor Led Training Material creation. Sify’s successful project for CISCO, which involved porting content in PDA (HP Ipaq), has provided Subject with good visibility in the sector, which they hope will lead to additional contracts. This division is already ISO 9000 certified and is working towards CMMI Level IV certification by end of 2006-07.

New shareholder and Infusion of funds

In November 2005, Satyam Computer Services, the company’s largest shareholder divested their entire shareholding to Infinity Capital Ventures LP, USA, in which Mr Raju Vegesna, a Silicon Valley entrepreneur, holds a controlling interest. Simultaneously, Infinity also subscribed to an additional 6.7 million shares in Sify, which resulted in an additional inflow of USD 37 million. In connection with these transactions, Infinity has nominated Mr Raju Vegesna as the Chairman of the Board of Directors of the company.

Acquisition of new business

Subject acquired Globe Travels engaged in the business of online travel and travel related business, which is the highest revenue-generating category on the Internet. Besides the existing India inbound business of Globe Travels, the India domestic and outbound travel ticketing business will also be a key thrust for growth. Subject is upgrading the travel engine of Globe Travels to create a new travel page for its Sifymax.com and other portal properties.

Technology Initiatives

For the first time in India, a Carrier Supporting Carrier (CSC) mode MPLS VPN implementation was done by Subject for a customer linking seven cities across India. The customer sites were connected using Metro Ethernet access with a highly redundant network design.

In another first, Subject implemented Digital Certificate based authentication platform for a multi-location IPSEC based VPN.

Subsidiary Companies

Sify Communications Limited

Sify Communications Limited (Sify Comm) successfully broadened its solution offerings and migrated from being a Certifying Authority (CA) focused business to a Data Security solutions provider. The company also added new solution offerings in the areas of Data Protection and Privacy, Encryption Technologies, Strong Authentication and Digital Rights Management. The company forged alliances with leading players in these domains including Safe Boot, E Lock, Swivel Secure, Seclore, etc.

The CA services business also witnessed the opening up of the market by virtue of the MCA21, E – Governance project, necessitating all companies registered in India to make their filings online.

IP-VPN business

Consequent to the change in the Government regulations on Telecom services, the company decided to transfer the IP-VPN Division to Sify Comm. Sify Comm applied for the licences for provision of telecom services under Internet telephony, Internet, National Long Distance and International Long Distance to the Department of Telecommunications (DOT) and already received the Letter of Intent (LOI) from them. This has to be converted into Licence on payment of the one time entry fee and the submission of no due certificate from the company as well as the subsidiary company. The company has been taking expeditious steps to convert the LOI and enter into the Licence Agreement with DOT.

India World Communications Limited

The company did not have any business operations during the year.

Sify Limited (formerly Satyam Infoway Limited)

Sify Networks Private Limited

The company did not have any business operations during the year.

Sify International Inc.

The company did not have any commercial operations during the year under review. The loss incurred by the company due to administration and personnel expenses amounts to Rs.8.67 million.

Directors

During the year, Satyam Computer Services Limited, consequent to their divestment of their entire holding in the share capital of the company, have terminated their rights and obligations conferred under the Investor Rights Agreement dated October 7, 2002 and as a result, Mr B Rama Raju and Mr V Srinivas, their nominees, resigned from the Board. The Directors place on record their appreciation of the services rendered by Mr Rama Raju and Mr Srinivas during their tenure as Directors of the company.

Dr T H Chowdary and Dr S K Rao, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Directors recommend their re-appointment.

Mr Raju Vegesna and Mr P S Raju, who were appointed as Additional Directors on November 10, 2005 and February 28, 2006 respectively, hold office upto the ensuing Annual General Meeting. Notices have been received from members proposing their appointment as Directors of the company.

On July 18, 2006, Mr R Ramaraj has resigned from the office of CEO and Managing Director of the company, as well as his position as a member of Sify’s Board of Directors, in order to pursue his other life long ambitions. The Directors place on record their appreciation of the valuable services rendered by Mr Ramaraj during his tenure as the CEO and Managing Director of the company.

Mr Raju Vegesna, Chairman, was appointed as the Managing Director and CEO of the company effective July 18, 2006.

Mr Raju Vegesna is a highly respected Silicon Valley entrepreneur who has founded several leading edge technology companies, including ServerWorks Corporation. Mr. Vegesna founded and currently serves as CEO and Chairman of Server Engines, LLC, a rapidly growing Silicon Valley-based company engaged in the development of innovative enterprise computing products. Mr. Vegesna is widely acknowledged for his determination, management acumen, technical expertise and creativity.

Company’s fixed assets include Leasehold Land, Building, Plant and Machinery, Furniture and Fittings, Office Equipments, Motor Vehicles, System software, Web publication rights, IP VPN License fee and customer contracts.

Press Release

Sify.com to showcase Lakme Fashion Week 2007 Live

Chennai, March27th, 2007: Sify Limited, a leader in Consumer Internet and Enterprise Services in India with global delivery capabilities (Nasdaq:SIFY), announced today that Sify.com would be the official Internet partner for The Spring Summer Collection of the internationally acclaimed Lakme Fashion Week (LFW) 2007 as well as its Fall Winter collection later this year.

Commenting on Sify's association with LFW '07, Mr. V. Sivaramakrishnan, President, Portals, Sify, said, "They are honored to extend their association with Lakme Fashion Week 2007, the landmark fashion event in India. For the first time, Sify.com will provide a platform for aspiring models to participate in the fashion week. On demand availability of the show has ensured that Internet users can catch the event whenever and wherever they want."

Sify.com aims to make dreams of aspiring models come true by giving them a chance to participate at the biggest fashion event in the country through an online Model Hunt. Sify.com users will shortlist contestants from profiles submitted by aspiring models from across the country. The participants can also upload videos of themselves on to the site or from web cameras from over 3500 Sify I ways across the country.

The webcast will include interviews with models and designers as they prepare for the biggest fashion event in the country, conversations with celebrities who attend the event, after show parties and much more! There will also be show reviews, profiles of all designers and models, along with photo galleries of the show's complete collection.

Subject is among the largest Internet, network and e-Commerce services companies in India, offering end-to-end solutions with a comprehensive range of products delivered over a common Internet backbone infrastructure. This Internet backbone reaches 186 cities and towns in India. A significant part of the company's revenue is derived from Corporate Services, which include corporate connectivity, network and communications solutions, security, network management services and hosting. A host of blue chip customers use Sify's corporate service offerings. Consumer services include broadband home access, dial up connectivity and the iWay cyber cafe chain across 158 cities and towns. The company's network services, Data Center operations and customer relationship management are accredited ISO 9001:2000.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.39.39
UK Pound	1	Rs.81.31
Euro	1	Rs.57.44

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions