<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 20-F
                                   (Mark One)

[_]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934 or

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934. For the fiscal year ended March 31, 2002.

                                       or

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934. For the transition period from _______ to _______

                        Commission File Number 001-15190

                        Satyam Computer Services Limited
             (Exact name of Registrant as specified in its charter)

                                 Not Applicable
                 (Translation at Registrant's name into English)

                                Republic of India
                 (Jurisdiction of incorporation or organization)

                            Satyam Technology Center
                              Bahadurpally Village
                    Qutbullapur Mandal, R.R.District - 500855
                            Hyderabad, Andhra Pradesh
                                      India
                                (91) 40-309-7505
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
American Depositary Shares, each represented by two Equity Shares, par value
Rs.2 per share.

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

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

311,391,210 equity shares, including 33,350,000 underlying equity shares for
16,675,000 ADS, were issued and outstanding as of March 31, 2002.

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

Yes  [X]             No  [_]
Indicate by check mark which financial statement item the registrant has elected
to follow.

Item 17        [_]             Item 18       [X]

<PAGE>


                                Table of Contents

<TABLE>
<CAPTION>
Item                                                                                                          Page
----                                                                                                          ----
<S>                                                                                                           <C>
Currency of Presentation and Certain Defined Terms .........................................................    1
Forward-Looking Statements May Prove Inaccurate ............................................................    1

PART I .....................................................................................................    2

Item 1.      Identity of Directors, Senior Management and Advisers .........................................    2
Item 2.      Offer Statistics and Expected Timetable .......................................................    2
Item 3.      Key Information ...............................................................................    2
Item 4.      Information on the Company ....................................................................   18
Item 5.      Operating and Financial Review and Prospects ..................................................   33
Item 6.      Directors and Officers of Registrant ..........................................................   57
Item 7.      Major Shareholders and Related Party Transactions .............................................   65
Item 8.      Financial Information .........................................................................   66
Item 9.      The Offer and Listing .........................................................................   66
Item 10.     Additional Information ........................................................................   68
Item 11.     Quantitative and Qualitative Disclosures About Market Risk ....................................   80
Item 12.     Description of Securities Other Than Equity Securities ........................................   81

PART II ....................................................................................................   82

Item 13.     Defaults, Dividend Arrearages and Delinquencies ...............................................   82
Item 14.     Material Modifications to the Rights of Security Holders and Use of Proceeds ..................   82
Item 15.     Reserved ......................................................................................   82
Item 16.     Reserved ......................................................................................   82

PART III  ..................................................................................................   83

Item 17.     Financial Statements ..........................................................................   83
Item 18.     Financial Statements ..........................................................................   83
Item 19.     Exhibits ......................................................................................   83
</TABLE>

<PAGE>


               Currency of Presentation and Certain Defined Terms

Unless the context otherwise requires, references herein to "we," "us," the
"company," "SAY" or "Satyam" are to Satyam Computer Services Limited, a limited
liability company organized under the laws of the Republic of India. References
to "U.S." or the "United States" are to the United States of America, its
territories and its possessions. References to "India" are to the Republic of
India. We are a leading Indian information technology services company which is
traded on the New York Stock Exchange under the symbol "SAY" as well as the
major Indian stock exchanges. "Satyam" is a trademark owned by Satyam Computer
Services. "Sify.com," "SatyamOnline," "Satyam: Net" and "satyamonline.com" are
trademarks used by our majority-owned subsidiary, Satyam Infoway Limited
("Infoway") for which we have registration applications pending in India. All
other trademarks or tradenames used in this Annual Report on Form 20-F ("Annual
Report") are the property of their respective owners.

In this Annual Report, references to "$", "Dollars" or "U.S. dollars" are to the
legal currency of the United States, and references to "Rs.," "rupees" or
"Indian rupees" are to the legal currency of India. References to a particular
"fiscal" year are to our fiscal year ended March 31 of such year.

For your convenience, this Annual Report contains translations of some Indian
rupee amounts into U.S. dollars which should not be construed as a
representation that those Indian rupee or U.S. dollar amounts could have been,
or could be, converted into U.S. dollars or Indian rupees, as the case may be,
at any particular rate, the rate stated below, or at all. Except as otherwise
stated in this Annual Report, all translations from Indian rupees to U.S.
dollars contained in this Annual Report have been based on the noon buying rate
in the City of New York on March 31, 2002 for cable transfers in Indian rupees
as certified for customs purposes by the Federal Reserve Bank of New York. The
noon buying rate on March 31, 2002 was Rs.48.83 per $1.00.

The International Data Corporation market data presented in this Annual Report
shows International Data Corporation's estimates derived from a combination of
vendor, user and other market sources and therefore may differ from numbers
claimed by specific vendors using different market definitions or methods. There
can be no assurance that the projected amounts will be achieved.

Information contained in our websites, including our corporate website,
www.satyam.com, is not part of this Annual Report.

                 Forward-Looking Statements May Prove Inaccurate

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT TO RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH
A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTION
ENTITLED "ITEM 3. KEY INFORMATION--RISK FACTORS", "ITEM 5. OPERATING AND
FINANCIAL REVIEW AND PROSPECTS" AND ELSEWHERE IN THIS ANNUAL REPORT. YOU ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE OF THIS ANNUAL REPORT. IN
ADDITION, YOU SHOULD CAREFULLY REVIEW THE OTHER INFORMATION IN THIS ANNUAL
REPORT AND IN OUR QUARTERLY REPORTS AND OTHER DOCUMENTS FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") FROM TIME TO TIME. OUR
FILINGS WITH THE SEC ARE AVAILABLE ON ITS WEBSITE, WWW.SEC.GOV.

                                       1

<PAGE>

                                     PART I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

Item 3. KEY INFORMATION

Selected Financial Data

You should read the following selected consolidated historical financial data in
conjunction with our financial statements and the related notes and Item 5.
Operating and Financial Review and Prospects" included elsewhere in this Annual
Report. The statement of operations data for the fiscal years ended March 31,
1999, 2000, 2001 and 2002 and the balance sheet data as of March 31, 1999, 2000,
2001 and 2002 are derived from our consolidated audited financial statements
including the notes, included elsewhere in this report, prepared in accordance
with U.S. GAAP for the fiscal years ended March 31, 1999, 2000, 2001 and 2002.
Selected consolidated historical financial data for the fiscal year ended March
31, 1998 has been omitted as our financial statements were not prepared in
accordance with U.S. GAAP for this period and this data cannot be provided
without unreasonable effort and expense.

<TABLE>
<CAPTION>
                                                                                     Year ended March 31,
                                                                                     --------------------

                                                                        1999          2000          2001            2002
                                                                  ------------------------------------------------------------
                                                                 (in thousands, except  per share data and as stated otherwise)
<S>                                                               <C>              <C>           <C>            <C>
Statement of Operations Data:
Revenues:
       Information technology services ......................        $ 95,573       $149,257      $273,467       $377,321
       Internet services ....................................           2,222         15,198        36,840         36,585
       Software products ....................................              --             --            --            585
                                                                     --------       --------      -----------------------
       Total revenues .......................................          97,795        164,455       310,307        414,491
Cost of revenues(1) .........................................          49,559         90,449       208,121        238,996
                                                                     ----------------------------------------------------

Gross profit ................................................          48,236         74,006       102,186        175,495
Operating expenses:
       Selling, general and administrative expenses(2) ......          31,896         69,592       124,100        140,896
       Amortization  of goodwill ............................             130          5,043        24,728         16,997
                                                                     --------       --------      -----------------------
       Impairment of goodwill ...............................              --             --            --         81,115
                                                                     --------       --------      -----------------------

       Total operating expenses .............................          32,028         74,635       148,828        239,008
                                                                     --------       --------      -----------------------

Operating Income (loss) .....................................          16,208           (629)      (46,642)       (63,513)
Interest income .............................................              43          2,625         5,732          3,806
Interest expense ............................................          (6,905)       (11,290)       (9,632)        (2,856)
Gain of sale of shares in Infoway ...........................              --             --            --         45,594
Other income ................................................             990          1,471         6,806         12,168
Other expenses ..............................................             (28)          (418)         (344)           (78)
                                                                     --------       --------      -----------------------

Income (Loss) before income taxes, minority interest
   and equity in earnings (losses) of associated
   companies, net ...........................................          10,308         (8,241)      (44,080)        (4,879)
Income taxes ................................................          (1,105)        (1,619)       (4,137)       (17,234)
Minority interest ...........................................            (171)         2,785        25,772         73,406
Equity in earnings (losses) of associated
   companies, net of taxes ..................................             (18)           135        (5,467)       (25,401)
                                                                     --------       --------      -----------------------

Net income (loss) ...........................................        $  9,014       $ (6,940)     $(27,912)      $ 25,892

Earnings (loss) per equity share:
       Basic and diluted ....................................        $   0.03       $  (0.03)     $  (0.10)      $   0.08

Earnings (loss) per ADS:
       Basic and diluted ....................................        $   0.07       $  (0.05)     $  (0.21)      $   0.17

Weighted average equity shares used in computing
   earnings per equity share:
       Basic ................................................         260,190        264,720       269,943        305,751
</TABLE>

                                       2

<PAGE>


<TABLE>
<S>                                                                       <C>           <C>          <C>            <C>
       Diluted ........................................................   260,260        264,720       269,943       307,113

Weighted average ADS used in computing earnings per ADS:
       Basic ..........................................................   130,095        132,360       134,972       152,875
       Diluted ........................................................   130,130        132,360       134,972       153,556

Cash dividend per equity share ........................................  $   0.01       $   0.01     $    0.02      $   0.02
Cash dividend per ADS .................................................  $   0.03       $   0.03     $    0.03      $   0.04

Other Data:
Net cash provided by:
       Operating activities ...........................................  $ 14,245       $ 14,115     $   5,935      $116,371
       Investing activities ...........................................   (36,089)       (83,619)     (137,775)      (40,360)
       Financing activities ...........................................    35,849        251,664        14,212       110,747
Capital expenditures ..................................................    39,071         42,909        85,156        29,664
Number of information technology services technical
   associates .........................................................     3,513          4,473         7,798         7,898
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     As at March 31,
                                                                                                     ---------------
                                                                            1999          2000             2001         2002
                                                                            ----          ----             ----         ----
                                                                                                      (in thousands)
<S>                                                                      <C>            <C>           <C>           <C>
Balance Sheet Data:
Cash and cash equivalents. ............................................  $ 13,215       $192,304     $   66,068      243,454
Total assets ..........................................................   116,319        412,559        481,099      515,502
Total long-term debt (excluding current portion) ......................    47,967         50,050          9,625        2,712
Total shareholders' equity ............................................    35,892        168,474        194,695      369,842
Capital stock (excluding long term debt and redeemable
preferred stock .......................................................        --        205,234        269,135      422,674
</TABLE>


(1) Inclusive of deferred stock based compensation expense of $13,356 thousand
in fiscal 2000, $31,336 thousand in fiscal 2001 and $7,212 thousand in fiscal
2002.

(2) Inclusive of deferred stock based compensation expense of $3,575 thousand in
fiscal 2000, $14,782 thousand in fiscal 2001 and $3,582 thousand in fiscal 2002.

                SELECTED FINANCIAL INFORMATION UNDER INDIAN GAAP

The unaudited selected unconsolidated financial and other data for fiscal 1998,
1999, 2000, 2001 and 2002 presented below has been derived from Satyam Computer
Services' unconsolidated financial statements, prepared in accordance with
Indian GAAP. We report our financial information in this manner to shareholders
that hold our equity shares listed on the Indian stock exchanges. These
financial statements are not included in this document.

<TABLE>
<CAPTION>
                                                                                        Year ended March 31
                                                                                        -------------------

                                                                            1998      1999        2000       2001       2002
                                                                            --------------        ----       ----       ----
                                                                      (in thousands, except  per share data and as stated otherwise)
<S>                                                                    <C>          <C>          <C>       <C>         <C>
Income:
Sales - export ......................................................    $ 47,882   $ 89,395    $152,749   $261,026    356,815
Sales - Domestic ....................................................          99        358       3,257      6,105      6,047
Other Income ........................................................       3,129         75         448      4,749     14,907
                                                                         -------------------    ------------------------------
Total ...............................................................      51,110     89,828     156,454    271,880    377,769

Expenditures:
Personnel expenses ..................................................      19,560     33,901      58,463    106,636    165,318
Operating and administration expenses ...............................       9,229     17,743      33,064     58,166     69,642
Marketing expenses ..................................................       1,207      3,366       6,688      4,885      6,142
Financial expenses ..................................................       3,221      6,274       9,418      7,558      2,010
Depreciation ........................................................       6,152     10,196      16,364     21,121     24,609
Preliminary and deferred revenue expenses written off ...............          --         --          --         --         --

Total ...............................................................      39,369     71,480     123,997    198,366    267,721
</TABLE>


                                       3

<PAGE>

<TABLE>
<S>                                                                  <C>          <C>           <C>         <C>         <C>
Profit before taxation .............................................   11,741       18,348        32,457     73,514      110,048
Provision for taxation .............................................    1,237        1,068         1,383      4,039        6,397
Profit after taxation ..............................................   10,504       17,280        31,074     69,475      103,651
Extraordinary items:
Merger related extraordinary items .................................       --           --         1,124         --           --
Income tax for earlier periods paid ................................      123           --            --        247          964
Miscellaneous expenses written off .................................      673           --            --         --
Profit on sale of shares in subsidiary company (net of tax) ........       --           --            --     37,251           --
Provision for losses in subsidiaries ...............................       --           --            --         --        8,538
Depreciation for earlier years .....................................    4,544           --            --         --           --
Gratuity for earlier years .........................................       --           --            --         --           --

Profit after tax and extraordinary items ........................... $  5,164     $ 17,280      $ 29,950   $106,479     $ 94,149
                                                                     ===========================================================

Earnings per equity share (adjusted)(2)(3) ......................... $   0.04     $   0.07      $   0.15   $   0.25     $   0.33
Earnings per equity share ..........................................     0.40         0.66          0.73       1.23         1.63

Equity shares used in computing earnings per
  equity share (adjusted)(3) .......................................  260,190      260,190       212,440    281,190      314,540
Equity shares used in computing earnings per equity share ..........   26,019       26,019        42,488     56,238       62,908

Cash dividend per equity share (adjusted)(3) ....................... $   0.01     $   0.01      $   0.01   $   0.02     $   0.02
Cash dividend per equity share .....................................     0.05         0.07          0.07       0.09         0.12

Other Data:
Net Cash provided by (used in):
Operating activities ............................................... $  5,552     $ 23,219      $ 37,282   $ 48,798     $117,280
Investing activities ...............................................  (23,275)     (39,341)      (33,914)      (594)     (33,347)
Financing activities ...............................................   20,630       22,079        10,850    (38,283)     107,140

<CAPTION>
As of March 31,                                                         1998         1999          2000       2001         2002
---------------                                                         -------------------------------------------------------
<S>                                                                  <C>          <C>           <C>         <C>         <C>
EBITDA(4) ..........................................................   21,051       34,516        58,033    101,810      132,941
Capital expenditures ...............................................   23,742       34,812        21,847     42,261       25,997
Balance Sheet Data:
Cash and cash equivalents .......................................... $  3,543     $  9,085      $ 24,523   $ 33,225     $230,115
Total Assets(5) ....................................................   66,068      107,928       166,060    251,046      453,876
Total long-term debt (excluding current portion) ...................   20,405       43,043        43,084     30,110          567
Total shareholders' equity(6) ......................................   27,607       39,619        80,659    177,995      404,440
</TABLE>


     (1) Figures for fiscal 2000, fiscal 2001 and fiscal 2002 are not comparable
     with those of previous fiscal years due to the merger of Satyam Enterprise
     Solutions Limited, Satyam Renaissance Consulting Limited, and Satyam Spark
     Solutions Limited with Satyam Computer Services which was completed in
     September 1999. The following yearly average exchange rates were used for
     conversion from rupees into U.S. dollars for each fiscal year indicated:
     1998 - Rs.37.20, 1999 - Rs.42.13, 2000 - Rs.43.40, 2001 Rs.45.67 and 2002 -
     Rs47.73.

     (2) Extraordinary items were not considered for computing earnings per
     share.

     (3) Indian GAAP does not require retrospective presentation of earnings per
     share data in the event of a stock split. However, for the purposes of
     presenting comparable data, the September 1, 1999 and August 7, 2000 stock
     splits have been retrospectively effected for computation of adjusted
     earnings per share and cash dividend per equity share.

     (4) EBITDA represents earnings (loss) before depreciation, amortization of
     intangible assets, interest income and expense, income tax expense
     (benefit) and extraordinary items. EBITDA is presented because we believe
     some investors find it to be a useful tool for measuring a company's
     ability to fund capital expenditures or to service future debts. EBITDA is
     not determined in accordance with generally accepted accounting principles
     and should not be considered in isolation or as an alternative to net
     income as an indicator of operating performance or as an alternative to
     cash flow as a measure of liquidity. Our EBITDA is not comparable to that
     of other companies which may determine EBITDA differently.

     (5) Total assets represent fixed assets (net of depreciation), investments
     and gross current assets.

     (6) Total shareholders' equity comprises share capital, reserves and
     surplus less miscellaneous expenditures.

     The following table shows the reconciliation from profit after taxation to
     EBITDA:

                                       4

<PAGE>

<TABLE>
<CAPTION>
                                                                                         Year ended March 31,
                                                                                         --------------------
                                                                1998      1999       2000          2001        2002
                                                                --------------       ------------------------------
          <S>                                                 <C>       <C>         <C>         <C>          <C>

          Profit after taxation ...........................   $10,504   $17,280     $31,074     $ 69,228     $102,688
          Add:
          Provision for taxation ..........................     1,237     1,068       1,383        4,286        7,361
          Depreciation ....................................     6,152    10,196      16,364       21,121       24,609
          Interest expense ................................     3,215     6,008       9,341        7,392        1,239
          Less: Interest on deposits ......................        57        36         129          217        2,956
                                                              -----------------     ---------------------------------

          EBITDA ..........................................   $21,051   $34,516     $58,033     $101,810     $132,941
                                                              =======================================================
</TABLE>

RISK FACTORS

Any investment in our ADSs involves a high degree of risk. You should consider
carefully the following information about these risks, together with the other
information contained in this Annual Report, before you decide to buy our ADSs.
If any of the following risks actually occur, our company could be seriously
harmed. In any such case, the market price of our ADSs could decline, and you
may lose all or part of the money you paid to buy our ADSs.

Risks Related to Our Overall Operations

Any inability to manage our rapid growth could disrupt our business and reduce
our profitability.

We have experienced significant growth in recent periods. Our total revenues
increased 33.6% in fiscal 2002 as compared to fiscal 2001. As of March 31, 2002,
we had 9,532 employees, whom we refer to as associates, worldwide as compared to
9,700 associates as of March 31, 2001. We expect our growth to place significant
demands on our management and other resources and will require us to continue to
develop and improve our operational, financial and other internal controls, both
in India and elsewhere. In particular, continued growth increases the challenges
involved in:

     .    recruiting and retaining sufficiently skilled technical, marketing and
          management personnel;

     .    providing adequate training and supervision to maintain our high
          quality standards; and

     .    preserving our culture and values and our entrepreneurial environment.

Our inability to manage our growth effectively could disrupt our business and
reduce our profitability.

Our subsidiaries may continue to experience losses and negative cash flows.

As of April 25, 2002, we owned 52.5% of the equity shares of Infoway and 100.0%
of the equity shares of VCI. Since their inception in December 1995 and January
1999, respectively, our subsidiaries Infoway and VCI have incurred significant
operating losses and negative cash flows. As of March 31, 2002, the cumulative
net losses incurred by Infoway were $224.7 million and by VCI were $27.5
million. We cannot assure you that the operating losses or negative cash flows
of Infoway and VCI will not continue or increase in the future or that Infoway
and VCI will become profitable.

Deferred stock based compensation expense may significantly reduce our net
income under U.S. GAAP.

Our reported income under U.S. GAAP has been and will continue to be affected by
the grant of warrants or options under our various employee benefit plans. Under
the terms of our existing plans, employees were typically granted warrants or
options to purchase equity shares at a substantial discount to the current
market value. These grants require us to record non-cash compensation expenses
under U.S. GAAP, amortized over the vesting period of the warrants or options.
We expect to recognize amortization of deferred stock based compensation expense
in respect of our Associate Stock Option Plan, or ASOP, in the approximate
amounts of $3.7 million in fiscal 2003 and $1.9 million in fiscal 2004 based on
the price of our equity shares on March 31, 2002 and in connection with both
granted and ungranted warrants and options on that date. In addition, we expect
to recognize amortization of deferred stock based compensation expense in
respect of our Associate Stock Option Plan B, or ASOP B, in the approximate
amounts of $59 thousand in fiscal 2003 and $35 thousand in fiscal 2004 in
connection with granted warrants and options. Infoway expects to recognize
amortization of deferred stock based compensation expense in respect of its
Infoway Associates Stock Option Plan, or IASOP, in the approximate amounts of
$11 thousand in fiscal 2003 and $5 thousand in fiscal 2004 based on the price of
Infoway's ADSs on March 31, 2002 and in connection with both granted and
ungranted

                                       5

<PAGE>

warrants and options. Depending on the market value of our equity shares and
Infoway's ADSs on the dates future grants are made, amortization of deferred
stock based compensation expense with respect to ungranted warrants may cause
the expected amounts to change. The size of our stock compensation expenses has
contributed, and may continue to contribute to negative operating income and
negative net income for purposes of U.S. GAAP. For example, we recognized
deferred stock based compensation of $1.2 million under our ASOP and ASOP B
Plans during fiscal 2002 and $10.5 million was amortized and charged to
earnings.

Impairment of Goodwill on account of our Investments may impact our net income
under U.S. GAAP.

We make estimates in the preparation of financial statements including the
useful lives of goodwill. Changes in such estimates resulting from events many
of which are outside the control of the Company, may result in the impairment of
goodwill which would negatively impact our net income under U.S. GAAP. Such
impact on net income may result in a reduction of the market value of our
shares.

Our revenues are highly dependent upon a small number of customers.

We derive a significant portion of our revenues from a limited number of
corporate customers. In fiscal 2002, our largest customer, General Electric
Company and its affiliates, accounted for 20.1% our information technology, or
IT, services revenues (excluding inter-segment revenues) and 18.3% of our total
revenues. In fiscal 2002, our second largest customer, State Farm Mutual
Automotive Insurance Company accounted for 7.6% of our IT services revenues
(excluding inter-segment revenues) and 6.9% of our total revenues. During fiscal
2001 and fiscal 2002, our five largest customers accounted for 39.1% and 42.2%,
respectively, of our IT services revenues (excluding inter-segment revenues) and
34.2% and 38.4%, respectively, of our total revenues. The volume of work
performed for specific customers is likely to vary from year to year,
particularly since we are usually not the exclusive outside service provider for
our customers. As a result, if we were to lose one of our major customers or
have it significantly reduce its volume of business with us, our profitability
could be reduced.

We dedicate significant resources to develop international operations which may
be more difficult to manage and operate.

In addition to our offshore IT centers in India, we have established new IT
centers in the United States, United Kingdom, Japan and Singapore and plan to
open additional international facilities. Our lack of experience with facilities
outside of India subjects us to risk with regard to foreign regulation and
overseas facilities management. Increasing the number of IT centers and the
scope of operations outside of India subjects us to a number of risks, including
administrative difficulties, currency exchange rate fluctuations, restrictions
against the repatriation of earnings, overlapping taxes and cost overruns and
delays.

System failure could disrupt the lines of communication our business depends on.

To deliver our services to our customers, we must maintain active voice and data
communications 24 hours a day between our main offices in Hyderabad, our other
IT centers and the offices of our customers worldwide. Any significant loss of
our ability to transmit voice and data through satellite and telephone
communications could result in lost customers and curtailed operations which
would reduce our profitability.

We may be unable to attract skilled professionals in the competitive labor
market.

Our ability to execute projects and to obtain new customers depends, in large
part, on our ability to attract, train, motivate and retain highly skilled
technical associates, particularly project managers, project leaders and other
senior technical personnel. We believe that there is significant competition for
technical associates who possess the skills needed to perform the services we
offer. An inability to hire and retain additional qualified personnel will
impair our ability to bid for or obtain new projects and to continue to expand
our business. Also, we cannot assure you that we will be able to assimilate and
manage new technical associates effectively. In fiscal 2001 and fiscal 2002, we
experienced associate attrition at a rate of 15.1% and 13.2%, respectively. Any
increase in our attrition rates, particularly the rate of attrition of
experienced software engineers and project managers and leaders, would harm our
growth strategy. We cannot assure you that we will be successful in recruiting
and retaining a sufficient number of replacement technical associates with the
requisite skills to replace those technical associates who leave. Further, we
cannot assure you that we will be able to redeploy and re-train our technical
associates to keep pace with continuing changes in IT, evolving technologies and
changing customer preferences. Historically, wage costs in the Indian IT
services industry have been significantly lower than wage costs in the United
States for comparably skilled technical associates. However, in recent years,
wage costs in the Indian IT services industry have been increasing at a faster
rate

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than those in the United States, driven in part by demand for Indian technical
associates overseas. In the long-term, wage increases may make us less
competitive unless we are able to continue increasing the efficiency and
productivity of our professionals and the prices of our services.

U.S. immigration restrictions could limit our ability to expand our U.S.
operations.

Our professionals working onsite at a customer's premises in the United States
are typically required to obtain visas. As of March 31, 2002, substantially all
of our personnel in the United States were working pursuant to extended H-1B
visas (687 persons) or temporary L-1 visas (635 persons). Although there is no
limit to new L-1 petitions, there is a limit to the number of new H-1B petitions
that are approved in any government fiscal year. Changes in existing U.S.
immigration laws that make it more difficult for us to obtain visas could impair
our ability to compete for and provide services to 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.

As a core element of our business strategy, we continue to offer a significant
portion of our services on a fixed-price basis, rather than on a
time-and-materials basis. During fiscal 2001 and fiscal 2002, we derived 22.1%
and 22.0%, respectively, of our total IT services revenues from fixed-price
contracts. Although we use our software engineering processes and past project
experience to reduce the risks associated with estimating, planning and
performing fixed-price projects, we bear the risk of cost overruns, completion
delays and wage inflation in connection with these projects. Many of these risks
may be beyond our control. Our failure to estimate accurately the resources and
time required for a project, future rates of wage inflation and currency
exchange rates or our failure to complete our contractual obligations within the
time frame committed could reduce the profitability of our fixed-price
contracts.

We may be liable to our customers for damages resulting from a system failure.

Many of our contracts involve projects that are critical to the operations of
our customers' businesses and provide benefits that may be difficult to
quantify. Any failure in a customer's system could result in a claim for
substantial damages against us, regardless of our responsibility for such
failure. Although we attempt to limit our contractual liability for damages
arising from negligent acts, errors, mistakes or omissions in rendering our
services, we cannot assure you that the limitations of liability set forth in
our service contracts will be enforceable in all instances or will otherwise
protect us from liability for damages. We do not maintain liability insurance to
cover losses from such claims for damages. Assertions of one or more large
claims against us could result in lost customers, and could increase our costs
and reduce our profitability.

We face intense competition in the IT services market, which could reduce our
revenues and prevent us from maintaining our customers.

The market for IT services is rapidly evolving and highly competitive. We expect
that competition will continue to intensify. We face competition in India and
elsewhere from a number of companies, including:

     .    Indian IT services companies, such as Infosys Technologies Limited,
          Wipro Infotech Software & Services and Tata Consultancy Services;

     .    U.S. IT services companies, such as Computer Sciences Corporation,
          Electronic Data Systems, Accenture, Cambridge Technology Partners and
          Keane Inc; and

     .    Other international, national, regional and local firms from a variety
          of market segments, including major international accounting firms,
          systems consulting and implementation firms, applications software
          firms, service groups of computer equipment companies, general
          management consulting firms, programming companies and temporary
          staffing firms.

We expect that future competition will increasingly include firms with
operations in other countries, potentially including countries with lower
personnel costs than those prevailing in India. A significant part of our
competitive advantage has historically been the cost advantage relative to
service providers in the United States and Europe. Since wage costs in this
industry in India are presently increasing at a faster rate than those in the
United States and Europe, our ability to compete effectively will become
increasingly dependent on our reputation, the quality of our services and our
expertise in specific markets. Many of our competitors have significantly
greater financial, technical and marketing resources and generate greater
revenues than us, and we cannot assure you that we will be able to compete

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successfully with such competitors and will not lose existing customers to such
competitors. We believe that our ability to compete also depends in part on a
number of factors outside our control, including the ability of our competitors
to attract, train, motivate and retain highly skilled technical associates, the
price at which our competitors offer comparable services and the extent of our
competitors' responsiveness to customer needs.

We may be unable to recoup our investment costs to develop our software
products.

We may develop and market our own software products, which will require
significant capital expenditures. To date, we have developed only one software
product through our subsidiary VCI, in which we had invested $27.3 million
representing equity and other advances as of March 31, 2002. We expect that the
markets for any software products we develop will be highly competitive. We
cannot assure you that any products developed by us will be commercially
successful or that the costs of developing such new products will be recouped.
Additionally, software product revenues typically occur in periods after the
periods in which the costs are incurred for development of such products.
Delayed revenues may cause periodic fluctuations of our results of operations.

Our chairman and managing director may continue to control our board and may
have interests which conflict with those of our other shareholders or holders of
our ADSs.

Mr. B. Ramalinga Raju, our chairman, together with his brother and our managing
director, Mr. B. Rama Raju, and his brother-in-law and our director, Mr. C.
Srinivasa Raju, comprise one-half of our board of directors and as of April 25,
2002, beneficially own in the aggregate approximately 10.9% of our outstanding
equity shares. As a result, these persons, acting together while they are board
members, have the ability to exercise significant influence over most matters
requiring approval by our board of directors, including the appointment of
directors to fill vacancies until the next shareholders' meeting and significant
corporate transactions. This could delay, defer or prevent a change in control
of our company, impede a merger, consolidation, takeover or other business
combination involving us, or discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of our company.

We may be restricted from acquiring non-Indian companies which could adversely
affect our growth strategy.

We have developed a growth strategy based on, among other things, expanding our
presence in existing and new markets and selectively pursuing attractive joint
venture and acquisition opportunities. Under Indian law, an Indian company is
usually required to obtain the approval of the Reserve Bank of India, or RBI,
and/or the government of India to acquire a non-Indian company. If we are unable
to obtain such approvals or are delayed in obtaining them, we may not be able to
fully execute our growth strategy which could adversely affect our operations.

Our revenues are difficult to predict and can vary significantly from quarter to
quarter which could cause our share price to decline significantly.

Our quarterly operating results have historically fluctuated and may fluctuate
significantly in the future. This is primarily because we derive our revenue
from fees for services generated on a project-by-project basis. Our projects
vary in size, scope and duration. For example, we have some projects that employ
only several people for a few weeks and we have other projects that employ over
100 people for six months or more. A customer that accounts for a significant
portion of our revenue in a particular period may not account for a similar
portion of our revenue in future periods. In addition, customers may cancel
contracts or defer projects at any time for a number of different reasons. As a
result, our revenues and our operating results in a particular period are
difficult to predict, may decline in comparison to corresponding prior periods
regardless of the strength of our business, and may not meet the expectations of
securities analysts or investors. If this were to occur the share price of our
equity shares and our ADSs would likely to decline significantly.

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.

Any failure to meet a customer's expectations could result in a cancellation or
non-renewal of a contract. Our contracts with customers do not commit our
customers to provide us with a specific volume of business and can typically be
terminated by our customers with or without cause, with little or no advance
notice and without penalty, which could significantly reduce our revenues.
Additionally, our contracts with customers typically are limited to a specific
project and not any future work. There are also a number of factors other than
our performance and not within our control that could cause the loss of a
customer. Our customers may demand price reductions, change their outsourcing
strategy by moving more work in-house, or replace their existing software with
packaged software supported by licensors, any of which could reduce our
profitability.

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Risks Related to Our Internet Services Business

Because we owned as of April 25, 2002, 52.5% of the equity shares of Infoway,
which we believe is the largest integrated Internet and electronic commerce
services company in India based on number of customers as of March 31, 2002, we
face risks related to Infoway's business.

Infoway and its subsidiary IndiaWorld Communications are engaged in disputes
which, if resolved unfavorably, could impose costs on Infoway or have other
undesirable effects.

Infoway's subsidiary IndiaWorld Communications is involved in pending litigation
relating to the IndiaWorld trademark in Federal Court in San Diego, California
with a third party located in the United States. IndiaWorld Communications
commenced the lawsuit alleging, among other things, that the third party
fraudulently registered and used the IndiaWorld trademark, and committed
copyright infringement and misappropriation of content of IndiaWorld
Communications' website. The third party filed a counterclaim against Infoway
and IndiaWorld Communications alleging, among other things, that the activities
of IndiaWorld Communications infringe a United States trademark for the term
"IndiaWorld" and associated logos and trade dress purportedly owned by this
third party and that the third party has an ownership interest in the underlying
assets of IndiaWorld Communications. On August 9, 2001, the Court granted
Infoway's motion to dismiss Infoway from this case because the Court found that
it did not have personal jurisdiction over Infoway. IndiaWorld Communications is
till involved in the case. Infoway have been advised by the prior owners of
IndiaWorld Communications that no infringement or misappropriation has taken
place. Infoway's contract with the prior owners of IndiaWorld Communications
includes an indemnity for past infringement or misappropriation. Infoway and
IndiaWorld Communications have also been contacted by a party that alleges,
among other things, that he is entitled to an equity ownership in IndiaWorld
Communications. Infoway believes that this claim is also covered by the
contractual indemnity provided by the prior owners of IndiaWorld Communications.
Nonetheless, any dispute such as those described above creates uncertainty as to
the possible outcome, including whether or not Infoway's indemnity will be
effective in protecting Infoway, and also could divert management time and
attention away from Infoway's business. An adverse outcome that is not
indemnified could be material.

If there is an adverse outcome in the class action litigation that has been
filed against Infoway, its business may be harmed.

On November 5, 2001, a securities class action lawsuit was filed in the United
States District Court for the Southern District of New York on behalf of all
persons who acquired Infoway's ADSs between October 20, 1999 and December 6,
2000. Infoway, certain of the executive officers of Infoway, and certain
underwriters involved in Infoway's initial public offering are named as
defendants in the complaint. This complaint alleges that certain of the
underwriters of Infoway's initial public offering violated the federal
securities laws by failing to disclose that they had solicited and received
undisclosed commissions from, and entered into undisclosed arrangements with,
certain investors who purchased ADSs in Infoway's initial public offering, and
had entered into undisclosed arrangements with certain investors whereby the
underwriters allocated ADSs in the initial public offering to those investors in
exchange for their agreement to purchase ADSs in the after-market at pre-
determined prices. The complaint also alleges that the defendants violated the
federal securities laws by issuing a registration statement in connection with
the initial public offering that contained material misstatements and/or
omissions because it did not disclose that these allegedly undisclosed
arrangements had occurred. The complaint seeks damages on behalf of all those
who purchased or otherwise acquired Infoway's ADSs during the period covered by
the complaint. The deadline for defendants to respond to the complaint has not
yet expired. Infoway believes it has meritorious defenses and intends to defend
this action vigorously. However, Infoway could be forced to incur material
expenses in the litigation, and in the event there is an adverse outcome,
Infoway's business could be harmed.

The market price of our equity shares is strongly affected by Infoway's volatile
stock price.

As of April 25, 2002, we owned 12.2 million equity shares of Infoway, which
represented 52.5% of Infoway's outstanding equity shares. Since its initial
public offering of ADSs in October 1999, the trading price of Infoway's ADSs has
ranged from a low of $0.87 to a high of $113.0 per ADS. As a result, the public
stock price of Infoway's ADSs owned by our company has ranged from a low of
approximately $42.46 million to a high of approximately $5.5 billion.
Fluctuations in the price of Infoway's ADSs have had a significant impact on the
market price of our equity shares and will have a significant impact on the
market price of our ADSs. Furthermore, because Infoway is an Internet service
provider which owns points of access to international bandwidth, foreign
ownership in Infoway, which will include all of Infoway's ADSs, is limited to
74.0% under present Indian law. This limitation means that, unless

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Indian law changes, more than 74.0% of Infoway's equity shares will never be
available to trade in the United States market.

The success of Infoway's business depends on the acceptance of the Internet in
India which may be slowed or halted by high bandwidth costs and other technical
obstacles in India.

Bandwidth, the measurement of the volume of data capable of being transported in
a communications system in a given amount of time, remains very expensive in
India, especially when compared to bandwidth costs in the United States.
Bandwidth rates are commonly expressed in terms of Kbps (kilobits per second, or
thousands of bits of data per second) or Mbps (megabits per second, or millions
of bits of data per second). Although prices for bandwidth in India have
declined recently, they are high due to, among other things, capacity
constraints.

The limited installed personal computer base in India limits Infoway's pool of
potential customers and restricts the amount of revenues that Infoway's consumer
Internet access services division may generate.

The market penetration rates of personal computers and online access in India
are far lower than such rates in the United States. For example, according to
International Data Corporation, in 2000 the Indian market contained
approximately 4.4 million Internet users compared to a total population in India
of 1.0 billion, while the U.S. market contained approximately 135 million
Internet users compared to a total population in the U.S. of 275 million.
Alternate methods of obtaining access to the Internet, such as through set-top
boxes for televisions, are currently not popular in India. There can be no
assurance that the number or penetration rate of personal computers in India
will increase rapidly or at all or that alternate means of accessing the
Internet will develop and become widely available in India. While the personal
computer penetration level in India is relatively low, Infoway is addressing the
demand for public Internet access through the establishment of a retail chain of
public Internet access centers, which Infoway refers to as "cybercafes", under
the "iway" branch name. Although this service creates a larger market, it also
imposes on the operator of the cybercafe the considerable costs of providing the
consumer access to a personal computer and related hardware and software.

The high cost of accessing the Internet in India limits Infoway's pool of
potential customers and restricts the amount of revenues that Infoway's consumer
Internet access services division may generate.

Infoway's growth is limited by the cost to Indian consumers of obtaining the
hardware, software and communications links necessary to connect to the Internet
in India. If the costs required to access the Internet do not significantly
decrease, most of India's population will not be able to afford to use Infoway's
services. The failure of a significant number of additional Indian consumers to
obtain affordable access to the Internet would make it very difficult to execute
Infoway's business plan.

The success of Infoway's business depends on the acceptance and growth of
electronic commerce in India which is uncertain and, to a large extent, beyond
Infoway's control.

Many of Infoway's existing and proposed products and services are designed to
facilitate electronic commerce in India, although there is relatively little
electronic commerce currently being conducted in India. Demand and market
acceptance for these products and services by businesses and consumers,
therefore, are highly uncertain. Many Indian businesses have deferred purchasing
Internet access and deploying electronic commerce initiatives for a number of
reasons, including the existence or perception of, among other things:

     .    inconsistent quality of service;

     .    need to deal with multiple and frequently incompatible vendors;

     .    inadequate legal infrastructure relating to electronic commerce in
          India;

     .    lack of security of commercial data, such as credit card numbers; and

     .    low number of Indian companies accepting credit card numbers over the
          Internet.

If usage of the Internet in India does not increase substantially and the legal
infrastructure and network infrastructure in India are not developed further,
Infoway is not likely to realize any benefits from its investment in the
development of electronic commerce products and services.

Infoway is highly dependent on its relationships with strategic partners to
provide key products and services to its customers.

Infoway relies on its arrangements with strategic partners to provide key
network products and services to its business clients. Some of these
relationships can be terminated by its partners in some circumstances. Infoway
also relies on some of its strategic partners to provide it with access to their
customer base. Infoway is a strategic partner of UUNet Technologies in India and
provide dial-up access to UUNet Technologies roaming international clients in
India. UUNet Technologies is a unit of WorldCom, Inc., which in June 2002
announced its intention to restate its financial statements for 2001 and the
first quarter of 2002. If Infoway's relationships with its strategic partners do
not continue, the ability of Infoway's corporate network/data services division
to generate revenues will be decreased significantly. Infoway also provides
access to a co-branded version of the AOL Instant Messenger service to its
portal customers, and this proprietary service is an important feature of
Infoway's website.

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Infoway's ability to compete in the Internet service provider market is hindered
by the fact that its principal competitor was until recently a
government-controlled provider of international telecommunications services in
India which enjoys significant competitive advantages over Infoway.

Videsh Sanchar Nigam Limited (VSNL), is a provider of international
telecommunications services in India, that, until recently, was controlled by
the Government of India. In February 2002, the Government of India sold a 25%
stake in VSNL to the TATA group, reducing the Government of India's ownership of
VSNL to 26%. VSNL had approximately 587,000 subscribers as of March 31, 2002.
VSNL enjoys significant competitive advantages over Infoway , including the
following:

     .    Longer service history. VSNL started offering Internet service
          provider services from August 1995, whereas Infoway has offered
          Internet service provider services only since November 1998.

     .    Access to network infrastructure. Because VSNL was controlled by the
          Government of India, it had direct access to network infrastructure
          which was owned by the Indian government. Infoway believes that this
          access is continuing as a result of the Government of India's
          investment in VSNL.

     .    Greater financial resources. VSNL has significantly greater total
          assets and annual revenues than Infoway.

In the past, VSNL aggressively reduced consumer Internet access prices despite
the lack of offsetting reductions in prevailing bandwidth tariffs payable by
private competitors, such as Infoway. Infoway believes that these practices
constitute an improper cross-subsidy funded by VSNL's present monopoly in
international long distance telephone service. The charges for international
gateways and other services presently being provided by VSNL are the subject of
a dispute pending before the TRAI and the Telecom Disputes Settlement and
Appellate Tribunal between VSNL and private Internet service providers,
including Infoway. The Telecom Disputes Settlement and Appellate Tribunal has
remanded the matter back to the TRAI for denovo consideration. This matter is
pending before the TRAI. Unless there is a change in government policy or
favorable resolution of this dispute, or until Infoway is able to reduce our
bandwidth costs through other means, Infoway will continue to face difficult
market conditions in the consumer Internet access services business. These
competitive issues may prevent Infoway from attracting and retaining subscribers
and generating advertising revenue. This could result in loss of market share,
price reductions, reduced margins or negative cash flow for Infoway's
operations.

Infoway may be required to further modify the rates it charges for its products
and services in response to new pricing models introduced by new and existing
competition in the Internet services market which would significantly affect its
revenues.

Infoway's corporate network/data services business faces significant competition
from well-established companies, including Global E-Commerce Limited, Sprint-RPG
Limited and WIPRO-CSD. Reliance Infocom, a member of the Reliance Group, is
building a nationwide fiber optic network in India and has announced plans to
provide a range of value-added services, including corporate connectivity
services.

A significant number of competitors have entered India's liberalized Internet
service provider market, and Infoway expects additional competitors to emerge in
the near future. As of December 31, 2001, approximately 442 companies had
obtained Internet service provider licenses in India, including 79 companies
which have obtained licenses to offer Internet service provider services
throughout India. New entrants into the national Internet service provider
market in India may enjoy significant competitive advantages over Infoway ,
including greater financial resources, which could allow them to charge Internet
access fees that are lower than Infoway's in order to attract subscribers. Since
May 2000, Infoway has offered unlimited Internet access to consumers for a fixed
price. A number of Infoway's competitors, including VSNL, Dishnet and Mantra,
also offer unlimited Internet access for a fixed price. In addition, some
competitors offer free Internet service. These factors have resulted in
significant reduction in actual average selling prices for consumer ISP
services. Infoway expects the market for consumer Internet access to remain
extremely price competitive.

Infoway's online portal, www.sify.com, faces significant competition from
well-established Indian content providers, including rediff.com, which completed
its initial public offering in the United States in June 2000. Some of these
sites currently have greater traffic than Infoway's site and offer some features
that Infoway does not. Further, the dominant Internet portals continue to be the
online services and search engine companies based in the United States, such as
America Online, Yahoo!, Microsoft Network and Lycos. These companies have been
developing specially branded or co-branded products designed for audiences in
specific markets. Infoway expects that these companies will deploy

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services that are targeted at the Indian market. For example, Yahoo! launched an
Indian service in June 2000.

Increased competition may result in reduced operating margins or operating
losses, loss of market share and diminished value in Infoway's services, as well
as different pricing, service or marketing decisions. Infoway cannot assure you
that it will be able to successfully compete against current and future
competitors.

The Government of India may change its regulation of Infoway's business or the
terms of Infoway's license to provide Internet access services without its
consent, and any such change could decrease Infoway's revenues and/or increase
Infoway's costs which would adversely affect Infoway's operating results.

Infoway's business is subject to government regulation under Indian law and to
significant restrictions under Infoway's Internet service provider license
issued by the Government of India. These regulations and restrictions include
the following:

     .    Infoway's Internet service provider license has a term of 15 years,
          and was originally issued in 1998.  Infoway's Internet service
          provider license was reissued in 2002, enabling Infoway to offer
          telephony services over the Internet and increasing Infoway's maximum
          permitted level of foreign equity investment to 74%. Infoway has no
          assurance that the license will be renewed in the future. If Infoway
          is unable to renew its Internet service provider license for any
          reason, it will be unable to operate as an Internet service provider
          in India and will lose one of its primary sources of revenue.

     .    The Telecom Regulatory Authority of India, or TRAI, a statutory
          authority constituted under the Telecom Regulatory Authority of India
          Act, 1997, maintains the right to regulate the prices Infoway charges
          its subscribers. The success of Infoway's business model depends on
          its ability to price its services at levels it believes is
          appropriate. If the TRAI sets a price floor, Infoway may not be able
          to attract and retain subscribers. Likewise, if the TRAI sets a price
          ceiling, Infoway may not be able to generate sufficient revenues to
          fund its operations. Similarly, an action of the Indian Parliament may
          impact Infoway's ability to set the prices for its services.

     .    The Government of India maintains the right to take over Infoway's
          entire operations or revoke, terminate or suspend its license for
          national security and similar reasons without compensation to Infoway.
          If the Government of India were to take any of these actions, Infoway
          would be prevented from conducting all or part of its business.

Infoway may be liable to third parties for information retrieved from the
Internet.

Because users of Infoway's Internet service provider service and visitors to
Infoway's websites may distribute its content to others, third parties may sue
Infoway for defamation, negligence, copyright or trademark infringement,
personal injury or other matters. Infoway could also become liable if
confidential information is disclosed inappropriately. These types of claims
have been brought, sometimes successfully, against online services in the United
States and Europe. Others could also sue Infoway for the content and services
that are accessible from Infoway's websites through links to other websites or
through content and materials that may be posted by Infoway's users in chat
rooms or bulletin boards. Infoway does not carry insurance to protect it against
these types of claims, and there is no precedent on Internet service provider
liability under Indian law. Further, Infoway's business is based on establishing
its network as a trustworthy and dependable provider of information and
services. Allegations of impropriety, even if unfounded, could damage Infoway's
reputation, disrupt its ongoing business, distract its management and employees,
reduce its revenues and increase its expenses.

Infoway's business may not be compatible with delivery methods of Internet
access services developed in the future.

Infoway faces the risk that fundamental changes may occur in the delivery of
Internet access services. Currently, Internet services are accessed primarily by
computers and are delivered by modems using telephone lines. As the Internet
becomes accessible by cellular telephones, personal data assistants, television
set-top boxes and other consumer electronic devices, and becomes deliverable
through other means involving digital subscriber lines, coaxial cable or
wireless transmission mediums, Infoway will have to develop new technology or
modify its existing technology to accommodate these developments. Infoway's
pursuit of these technological advances, whether directly through internal
development or by third party license, may require substantial time and expense.
Infoway may be unable to adapt its Internet service business to alternate
delivery means and new technologies may not be available to Infoway at all.

Infoway may not be able to maintain its Nasdaq National Market listing.

In order to maintain the listing of its ADSs on the Nasdaq National Market,
Infoway is required to comply with the continuing listing requirements of
Nasdaq, including the $1.00 minimum bid price requirement. The price of
Infoway's ADSs on the Nasdaq National Market has recently closed below $1.00.
Infoway's equity share-to-ADS exchange ratio is currently 1-to-4, and Infoway
may be required to adjust its equity share-to-ADS ratio in order to maintain its
Nasdaq National Market listing. Even if Infoway adjusts its equity share-to-ADS
ratio, Infoway does not know whether it will be able to maintain its Nasdaq
National Market listing in the future.

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Risks Related to Investments in Indian Companies

We are incorporated in India, and a substantial portion of our assets and our
employees are located in India. Consequently, our financial performance and the
market price of our ADSs will be affected by changes in exchange rates and
controls, interest rates, government of India policies, including taxation
policies, as well as political, social and economic developments affecting
India.

Conflicts in South Asia could adversely affect the Indian economy and our
company.

South Asia has from time to time experienced instances of civil unrest and
hostilities among neighboring countries, including between India and Pakistan.
In recent years, military confrontations between India and Pakistan have
occurred in the region of Kashmir. The political and military situation between
India and Pakistan have become subject to increased tension in recent months.
Any such conflicts in South Asia are likely to adversely affect the Indian
economy and the market for securities of Indian companies, including our ADSs.

Terrorist attacks and other acts of violence or war involving the United States
could adversely affect the markets in which we operate.

Terrorist attacks, such as the attacks that occurred in New York and Washington,
D.C. on September 11, 2001, and other acts of violence or war may negatively
effect our operations. There can be no assurance that there will not be further
terrorist attacks against the United States or United States businesses, from
which the majority of our revenues are derived. These attacks or armed conflicts
may directly impact our customers. Furthermore, these attacks may make travel
and the delivery of our services more difficult and ultimately affect our sales.

Also as a result of terrorism, the United States may enter into an armed
conflict which could negatively impact our business. Since October 2001, the
U.S. and its allies have been conducting military operations against various
targets located in Afghanistan. The consequences of any of these armed conflicts
are unpredictable, and we may not be able to foresee events that could have an
adverse effect on our business or your investment.

More generally, any of these events could cause consumer confidence and spending
to decrease or result in increased volatility in the U.S. and worldwide
financial markets and economy. They also could result in economic recession in
the U.S. or abroad. Any of these occurrences could have a significant impact on
our operating results, revenues and costs and may result in the volatility of
the market price for our securities.

Political instability could seriously harm business and economic conditions in
India generally and our business in particular.

During the past decade and in particular since 1991, the government of India has
pursued policies of economic liberalization, including significantly relaxing
restrictions on the private sector. Nevertheless, the role of the Indian central
and state governments in the Indian economy as producers, consumers and
regulators has remained significant. Since 1996, the government of India has
changed five times. The current government of India, formed in October 1999, has
announced policies and taken initiatives that supported the continued economic
liberalization policies that have been pursued by the previous governments. We
cannot assure you that these liberalization policies will continue in the
future. The rate of economic liberalization could change, and specific laws and
policies affecting technology companies, foreign investment, currency exchange
rates and other matters affecting investment in our securities could change as
well. A significant change in India's economic liberalization and deregulation
policies could disrupt business and economic conditions in India generally and
our business in particular.

Economic sanctions imposed on India by the United States could restrict our
access to technology and limit our ability to operate our business.

In May 1998, the United States imposed economic sanctions against India in
response to India's testing of nuclear devices. Since then, the United States
has waived some of these sanctions after its discussions with the government of
India. These sanctions, or additional sanctions, could restrict our access to
technology that is available only in the United States and that is required to
operate our business. We cannot assure you that any of these sanctions will
continue to be waived, that additional economic sanctions of this nature will
not be imposed, or that these sanctions or any additional sanctions that are
imposed will not disrupt our business or increase our costs or adversely affect
the market for our ADSs in the United States.

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Foreign investment restrictions under Indian law may adversely impact the value
of our ADSs.

Our equity shares are traded on the Stock Exchange, Mumbai, formerly known as
the Bombay Stock Exchange, or the BSE, the National Stock Exchange and the
Hyderabad Stock Exchange and they may trade on these stock exchanges at a
discount or premium to the ADSs traded on the New York Stock Exchange in part
because of restrictions on foreign ownership of the underlying shares.

Under current Indian regulations and practice, RBI approval is required for the
sale of equity shares underlying ADSs by a non-resident of India to a resident
of India as well as for renunciation of rights to a resident of India, unless
the sale of equity shares underlying the ADSs is through a recognized stock
exchange or in connection with the offer made under the regulations regarding
takeovers.

Since exchange controls still exist in India, the RBI will approve the price at
which the equity shares are transferred based on a specified formula, and a
higher price per share may not be permitted. Holders who seek to convert the
rupee proceeds from a sale of equity shares in India into foreign currency and
repatriate that foreign currency from India will have to obtain RBI approval for
each transaction. We cannot assure you that any required approval from the RBI
or any other government agency can be obtained.

Indian law imposes restrictions that limit your ability to convert equity shares
into ADSs, which may cause our equity shares to trade at a discount or premium
to the market price of our ADSs.

Under recent amendments to Indian regulations, our depositary bank is able to
accept deposits of outstanding equity shares and issue ADRs evidencing ADSs
representing such equity shares, but only to the extent, and limited to the
number, of ADSs converted into underlying equity shares.

Currency exchange rate fluctuations may affect the value of our ADSs.

The exchange rate between the rupee and the U.S. dollar has changed
substantially in recent years and may fluctuate substantially in the future.
During the three-year period from April 1, 1999 through March 31, 2002, the
value of the rupee against the U.S. dollar declined by approximately 15.0%. In
fiscal 2001 and fiscal 2002, our U.S. dollar-denominated revenues represented
82.1% and 82.7%, respectively, of our total revenues. We expect that a majority
of our revenues will continue to be generated in U.S. dollars for the
foreseeable future and that a significant portion of our expenses, including
personnel costs as well as capital and operating expenditures, will continue to
be denominated in rupees. Consequently, our results of operations will be
adversely affected to the extent that the rupee appreciates against the U.S.
dollar. Depreciation of the rupee will result in foreign currency translation
losses in respect of foreign currency borrowings. In fiscal 2001 and fiscal
2002, our foreign currency translation losses were approximately $12.4 million
and $15.1 million, respectively. Fluctuations in the exchange rate between the
rupee and the U.S. dollar will also affect the U.S. dollar conversion by the
depositary of any cash dividends paid in rupees on the equity shares represented
by the ADSs. In addition, fluctuations in the exchange rate between the Indian
rupee and the U.S. dollar will affect the U.S. dollar equivalent of the Indian
rupee price of our equity shares on the the Stock Exchange, Mumbai, the National
Stock Exchange and the Hyderabad Stock Exchange, which we refer to collectively
as the Indian stock exchanges. As a result, these fluctuations are likely to
affect the prices of our ADSs. These fluctuations will also affect the dollar
value of the proceeds a holder would receive upon the sale in India of any
equity shares withdrawn from the depositary under the deposit agreement. We
cannot assure you that holders of ADSs will be able to convert rupee proceeds
into U.S. dollars or any other currency or with respect to the rate at which any
such conversion could occur. In addition, our market valuation could be
seriously harmed by the devaluation of the rupee if U.S. investors analyze our
value based on the U.S. dollar equivalent of our financial condition and results
of operations.

The government of India has recently taken actions to curtail or eliminate tax
benefits that we have historically benefited from.

We have historically benefited from significant tax incentives provided under
Indian tax laws. The principal applicable incentive is tax deduction for 90% of
profits derived from exporting computer software and services. As a result, the
majority of our income is not subject to Indian tax and, accordingly, our
effective tax rate is far below the Indian statutory income tax rate of 35.0%
plus an applicable surcharge.

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The Software Technology Park tax exemption scheme has been modified from April
1, 2000. All facilities registered in the program before March 31, 2000, which
include all of our existing facilities in India and registrations for 10 new
facilities which have not yet been constructed, will continue to benefit from
this program under present law. Over time, as we construct additional
facilities, however, the overall benefits of this tax program to our company
will decrease with a resulting increase in our effective tax rate. We cannot
assure you as to what action the present or future governments of India will
take regarding tax incentives for the IT industry.

It may be difficult for you to enforce any judgment obtained in the United
States against us or our affiliates.

We are incorporated under the laws of the Republic of India and many of our
directors and key managerial personnel, and some of the experts named in this
document, reside outside the United States. In addition, virtually all of our
assets and the assets of many of these persons are located outside the United
States. As a result, you may be unable to:

..    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.

We have been advised by our Indian counsel, Crawford Bayley & Co., that the
United States and India do not currently have a treaty providing for reciprocal
recognition and enforcement of judgments (other than arbitration awards) in
civil and commercial matters. Therefore, a final judgment for the payment of
money rendered by any federal or state court in the United States on civil
liability, whether or not predicated solely upon the federal securities laws of
the United States, would not be enforceable in India. However, the party in
whose favor such final judgment is rendered may bring a new suit in a competent
court in India based on a final judgment which has been obtained in the United
States. If and to the extent Indian courts were of the opinion that fairness and
good faith so required, it would, under current practice, give binding effect to
the final judgment which had been rendered in the United States unless such a
judgment contravened principles of public policy of India.

Conditions in the Indian securities market may affect the price or liquidity of
our equity shares and our ADSs.

The Indian securities markets are smaller and more volatile than securities
markets in more developed economies. The Indian stock exchanges have in the past
experienced substantial fluctuations in the prices of listed securities and the
price of our equity shares has been especially volatile. For example, in 1999,
our share price on the BSE ranged from a high of Rs.459.80 ($9.38) in December
1999 to a low of Rs.73.10 ($1.49) in January 1999. In 2000, our share price on
the BSE reached a peak of Rs.1,445.99 ($29.49) and a low of Rs.291.50 ($5.95).
In 2001, our share price on the BSE reached a peak of Rs. 429.70 ($8.76) and a
low of Rs.111.00 ($2.26). In 2002, until April 25, 2002, our share price on the
BSE reached a peak of Rs. 331.15 ($6.75) and a low of Rs. 250.45 ($5.11). On
April 25, 2002 the closing price of our shares on the BSE Rs.259.55 ($5.29). For
comparison purposes, these prices have been adjusted to give effect to our
September 1, 1999 two-for-one stock split and our August 25, 2000 five-for-one
stock split and an exchange rate of Rs. 49.03 per $1.00 as on April 24, 2002 has
been used.

The Indian stock exchanges have also experienced problems that have affected the
market price and liquidity of the securities of Indian companies. These problems
have included temporary exchange closures, the suspension of stock exchange
administration, broker defaults, settlement delays and strikes by brokers. In
addition, the governing bodies of the Indian stock exchanges have from time to
time restricted securities from trading, limited price movements and restricted
margin requirements. Further, from time to time, disputes have occurred between
listed companies and stock exchanges and other regulatory bodies, which in some
cases may have had a negative effect on market sentiment. Similar problems could
occur in the future and, if they do, they could harm the market price and
liquidity of our equity shares and our ADSs.

The laws of India may not adequately protect our intellectual property rights.

The laws of India do not protect intellectual property rights to the same extent
as laws in the United States, and the global nature of our IT services and the
Internet makes it difficult to control the ultimate destination of our products
and services. For example, Indian statutory law does not protect service marks.
The misappropriation or duplication of our intellectual property could curtail
our operations or reduce our profitability.

We rely upon a combination of non-disclosure and other contractual arrangements
and copyright, trade secret and trademark laws to protect our intellectual
property rights. Ownership of software and associated deliverables created
for customers is generally retained by or assigned to our customers, and we do
not retain an interest in such software

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and deliverables. We have applied for the registration of "Satyam" and
"VisionCompass" as trademarks in India. We currently require our technical
associates to enter into non-disclosure and assignment of rights agreements to
limit use of, access to and distribution of our proprietary information. We
cannot assure you that the steps taken by us in this regard will be adequate to
prevent misappropriation of proprietary information or that we will be able to
detect unauthorized use and take appropriate steps to enforce our intellectual
property rights.

Although we believe that our services and products do not infringe upon the
intellectual property rights of others, we cannot assure you that such a claim
will not be asserted against us in the future. Assertion of such claims against
us could result in litigation, and we cannot assure you that we would prevail in
such litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms. We
expect that the risk of infringement claims against us will increase if more of
our competitors are able to obtain patents for software products and processes.
Any such claims, regardless of their outcome, could result in substantial cost
to us and divert management's attention from our operations. In the future,
litigation may be necessary to enforce our intellectual property rights or to
determine the validity and scope of the proprietary rights of others. Any
infringement claim or litigation against us could therefore result in
substantial costs and diversion of resources.

You may be subject to Indian taxes arising out of capital gains on the sale of
the underlying equity shares.

Generally, capital gains, whether short-term or long-term, arising on the sale
of the underlying equity shares in India are subject to Indian capital gains
tax. For the purpose of computing the amount of capital gains subject to tax,
Indian law specifies that the cost of acquisition of the equity shares will be
deemed to be the share price prevailing on the BSE or the National Stock
Exchange on the date the depositary advises the custodian to redeem receipts in
exchange for underlying equity shares. The period of holding of such equity
shares, for determining whether the gain is long-term or short-term, commences
on the date of the giving of such notice by the depositary to the custodian.
Investors are advised to consult their own tax advisers and to consider
carefully the potential tax consequences of an investment in our ADSs.

There may be less company information available in Indian securities markets
than securities markets in developed countries.

There is a difference between the level of regulation and monitoring of the
Indian securities markets and the activities of investors, brokers and other
participants and that of markets in the United States and other developed
economies. The Securities and Exchange Board of India, or SEBI, is responsible
for improving disclosure and other regulatory standards for the Indian
securities markets. SEBI has issued regulations and guidelines on disclosure
requirements, insider trading and other matters. There may, however, be less
publicly available information about Indian companies than is regularly made
available by public companies in developed economies.

Risk Related to our ADSs and our Trading Market

You may be restricted in your ability to exercise preemptive rights under Indian
law and thereby may suffer future dilution of your ownership position.

Under the Companies Act, 1956 of India, or the Companies Act, a company
incorporated in India must offer its holders of equity shares preemptive rights
to subscribe and pay for a proportionate number of shares to maintain their
existing ownership percentages before the issuance of any new equity shares,
unless the preemptive rights have been waived by adopting a special resolution
by holders of three-fourths of the shares which are voted on the resolution. As
U.S. holders of ADSs represent 10.6% of our outstanding equity shares, you may
be unable to exercise preemptive rights for equity shares underlying ADSs unless
a registration statement under the Securities Act of 1933, as amended, or the
Securities Act, is effective with respect to the rights or an exemption from the
registration requirements of the Securities Act is available. Our decision to
file a registration statement will depend on the costs and potential liabilities
associated with any given registration statement as well as the perceived
benefits of enabling the holders of our ADSs to exercise their preemptive rights
and any other factors that we deem appropriate to consider at the time the
decision must be made. We may elect not to file a registration statement related
to preemptive rights otherwise available by law to you. In the case of future
issuances, the new securities may be issued to our depositary, which may sell
the securities for your benefit. The value, if any, our depositary would receive
upon the sale of such securities cannot be predicted. To the extent that you are
unable to exercise preemptive rights granted in respect of the equity shares
represented by your ADSs, your proportional interests in our company would be
reduced.

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Holders of ADSs may be restricted in their ability to exercise voting rights.

At our request, the depositary bank will mail to you any notice of shareholders'
meeting received from us together with information explaining how to instruct
the depositary bank to exercise the voting rights of the securities represented
by ADSs. If the depositary bank timely receives voting instructions from you, it
will endeavor to vote the securities represented by your ADSs in accordance with
such voting instructions. However, the ability of the depositary bank to carry
out voting instructions may be limited by practical and legal limitations and
the terms of the securities on deposit. We cannot assure you that you will
receive voting materials in time to enable you to return voting instructions to
the depositary bank in a timely manner. Securities for which no voting
instructions have been received will not be voted.

An active or liquid trading market for our ADSs is not assured.

We cannot predict the extent to which an active, liquid public trading market
for our ADSs will exist. Active, liquid trading markets generally result in
lower price volatility and more efficient execution of buy and sell orders for
investors. The lack of an active, liquid trading market could result in the loss
of market makers, media attention and analyst coverage. If there is no longer a
market for our equity shares, or if we fail to continue to meet eligibility
requirements, we may be required to delist from the New York Stock Exchange and
this may cause our stock prices to decrease significantly. In addition, if there
is a prolonged decline in the price of our equity shares, we may not be able to
issue equity securities to fund our growth, which would cause us to limit our
growth or to incur higher cost funding, such as short-term or long-term debt.
Further, if our ADS trading price falls below $5.00 per ADS, our ADSs will be
considered a penny stock and trading in our ADSs will be subject to a set of
rules adopted by the Securities and Exchange Commission that regulate
broker-dealer practices in connection with transactions in penny stocks. The
penny stock rules require broker-dealers who recommend penny stocks to persons
other than their established customers and accredited investors to make a
special written suitability determination for the purchaser, provide them with a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market, and receive
the purchaser's written agreement to the transaction before the sale. These
requirements limit the ability of broker-dealers to sell penny stocks. Also,
because of the extra requirements, many broker-dealers are unwilling to sell
penny stocks at all. As a result, if our ADSs were subject to the penny stock
rules, the market liquidity for our ADSs could be adversely affected.

Liquidity of a securities market is often a function of the volume of the
underlying shares that are publicly held by unrelated parties. Although you are
entitled to withdraw the equity shares underlying the ADSs from the depositary
at any time, there is no public market for our equity shares in the United
States.

The future sales of securities by our company or existing shareholders may harm
the price of our ADSs or our equity shares.

The market price of our ADSs or our equity shares could decline as a result of
sales of a large number of ADSs or equity shares or the perception that such
sales could occur. Such sales also might make it more difficult for us to sell
ADSs or equity securities in the future at a time and at a price that we deem
appropriate. As of April, 25, 2002, we have an aggregate of 311,391,210 equity
shares outstanding, which includes underlying equity shares of 33,350,000 for
16,675,000 ADSs. All ADSs are freely tradable, other than ADSs purchased by our
affiliates. The remaining equity shares outstanding may be sold in the United
States only pursuant to a registration statement under the Securities Act or an
exemption from the registration requirements of the Securities Act, including
Regulation S.

Forward-looking statements contained in this Annual Report may not be realized.

We have included statements in this document which contain words or phrases such
as "may," "will," "will likely result," "believe," "expect," "will continue,"
"anticipate," "estimate," "intend," "plan," "contemplate," "seek to," "future,"
"objective," "goal," "project," "should" and similar expressions or variations
of such expressions, that are "forward-looking statements." Actual results may
differ materially from those suggested by the forward-looking statements due to
risks or uncertainties associated with our expectations with respect to, but not
limited to, our ability to implement our strategy and our growth and expansion.

In addition, other factors that could cause results to differ materially from
those estimated by the forward-looking statements contained in this document
include, but are not limited to, general economic and political conditions in
India, Southeast Asia, and other countries which have an impact on our business
activities, changes in Indian and foreign laws, regulations and taxes, changes
in competition and other factors beyond our control, including the factors
described in this "Risk Factors" section. We do not intend to update any of the
forward-looking statements after the

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date of this Annual Report to conform such statements to actual results.

Item 4. INFORMATION ON THE COMPANY

History and Development

The full legal name of our company is Satyam Computer Services Limited. Satyam
was organized as a limited liability company under the laws of the Republic of
India pursuant to the provisions of the Indian Companies Act on June 24, 1987.
Our registered office is located at Mayfair Center, SP Road, Secunderabad 500
003, Andhra Pradesh, India. Our principal place of business is the Satyam
Technology Center located at Bahadurpally Village, Qutbullapur Mandal, R.R.
District 500 855, Hyderabad, Andhra Pradesh, India, telephone number (91)
40-309-7505. Our agent for service in the United States is CT Corporation
System, 111 8th Avenue, New York, New York 10011, telephone number 1 (212)
894-8940. Our operations are primarily conducted in India and majority of our
revenues are derived from the United States.

We effected a two-for-one stock split of our equity shares in September 1999 and
a five-for-one stock split of our equity shares in August 2000.

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) in the United States and elsewhere outside of India a
price of $9.71 per ADS. We received approximately $152.7 million, net of
underwriting discounts, commissions and other costs of this offering. On May 15,
2001, our ADSs were listed on the New York Stock Exchange.

Our principal capital expenditures for the fiscal years 2000, 2001 and 2002 were
comprised mainly of expansion of infrastructure facilities in India and abroad.
Our capital expenditures amounted to $22.4 million in fiscal 2000, $42.3 million
in fiscal 2001 and $30.0 million in fiscal 2002. In fiscal 2000, our capital
expenditures were incurred mainly for expansion of offshore facilities in
Hyderabad, Pune and Bangalore and for a major upgrade in the data and voice
communication network. In fiscal 2001, our capital expenditures were incurred
mainly for expansion of offshore facilities in Hyderabad, Chennai and
acquisition of land in Bangalore. In fiscal 2002, our capital expenditures were
incurred mainly for expansion of offshore facilities in acquisition/long lease
of land in Bangalore and expansion of facilities in Hyderabad and Chennai.

Business Overview

Background

We are the fourth largest provider of IT services in India, based on the amount
of export revenues generated during the fiscal year ended March 31, 2001. We
offer a comprehensive range of services, including software development, system
maintenance, packaged software integration, and engineering design services. We
use our global infrastructure to deliver value-added services to our customers
to address IT needs in specific industries and to facilitate eBusiness
initiatives. We began providing IT services to businesses in 1988 and as of
March 31, 2002 we had 7,898 technical associates servicing over 300 customers
worldwide. In addition to our core business of providing IT services, we have
also selectively invested in related businesses. We recognized the importance of
the Internet to India and, in December 1995, created Infoway, which we believe
is the largest integrated Internet and electronic commerce services company in
India, based on the number of customers as of March 31, 2002. Infoway's shares
are listed only in the United States and are quoted on the Nasdaq National
Market under the symbol "SIFY". Through our wholly owned subsidiary in the
United States, VCI, we have developed VisionCompass, a software product for use
as a management tool to assess and help improve business performance.

Our Core Business Segment--IT Services

Industry Overview

In 2000, the worldwide IT services industry grew to approximately $385.0
billion, an increase of approximately 10% over 1999, and is projected to grow at
a compound annual growth rate of 11% to reach $583.0 billion by the year 2004
according to International Data Corporation. We believe the growth of this
industry is driven by the following factors and trends:

Increased importance of IT to businesses. In today's increasingly competitive
business environment, companies have become dependent on technology not only to
conduct day-to-day operations, but also as a strategic tool to enable them

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to re-engineer business processes, restructure organizations and react quickly
to competitive, regulatory and technological changes. As systems continually
become more complex, companies increasingly turn to external IT service
providers to develop and implement new technologies and integrate them with
existing applications in which a company may have already made a considerable
investment.

Impact of the Internet and the emergence of eBusiness. Businesses are
increasingly using the Internet to interact with new and existing customers and
create new revenue opportunities. Business conducted electronically over the
Internet, or eBusiness, extends beyond Internet-based applications, such as
eCommerce websites and corporate intranets, to include packaged software tools
such as customer and supply chain management software. eBusiness initiatives are
often large and difficult to manage and must keep pace with constantly evolving
business processes and technological innovations. In addition, managing and
upgrading existing systems has also become more critical given the importance of
these systems to eBusiness initiatives. Internal IT departments often do not
have the appropriate resources or breadth of skills necessary to execute these
initiatives. As a result, companies increasingly turn to outside service
providers to design, integrate, implement and maintain their eBusiness
applications.

Emergence of a high-quality IT services industry in India. India has emerged as
a destination for companies seeking to engage IT service providers in a variety
of areas, including eBusiness and software design, development, integration and
system maintenance. India's National Association of Software and Service
Companies, or NASSCOM estimates that export revenue generated from the software
and service industry in India was approximately $ 6.2 billion in fiscal 2001 and
will reach $7.8 billion by fiscal 2002. The key factors contributing to this
rapid growth include the availability of a large pool of highly skilled,
English-speaking engineers and professionals, the ability to produce high
quality software applications, low personnel costs relative to the United States
and a time difference which permits work to be done during non-business hours in
the United States and Europe.

We believe that India ranks second only to the United States as the country with
the largest population of English-speaking technical personnel. According to
NASSCOM, engineering colleges and technical institutes in India produce
approximately 130,000 computer software professionals each year. Given the
shortage of technical labor in the United States and other developed economies,
the availability of people could be a competitive advantage for Indian IT
services companies. Also, the English speaking ability of Indian technical
engineers and professionals facilitates interaction with customers in the United
States and Europe and is a significant advantage compared to non-English
speaking countries which also offer IT services.

Indian companies have developed high-quality methodologies. A January 2002
NASSCOM survey of international quality standards of the top 300 Indian IT
services companies showed that 216 had acquired ISO 9000 or SEI or other
certifications and 58 more companies were in the process of acquiring the same.
According to NASSCOM, currently 36 Indian companies have received a level five
assessment under the Software Engineering Institute's Capability Maturity Model,
or SEI-CMM, developed by the Carnegie Mellon University. Level five is the
highest level attainable under the SEI-CMM standards, which assess an
organization's quality management system and systems engineering processes and
methodologies. The level five certification process involves periodically
subjecting our management system and systems engineering processes and
methodologies to stringent third party review and verification. Some of our
customers look to an SEI-CMM certification as a threshold indication of the
quality of our processes and methodologies.

Need for IT service providers who can provide a range of services worldwide.
Many companies today need a wide range of IT services, from high value-added
services such as the integration and implementation of eBusiness and packaged
software applications to lower-end services such as system maintenance and the
re-engineering of older applications. As a result, companies often seek a
service provider that can understand and integrate a wide spectrum of emerging
technologies with existing systems and which offers a comprehensive range of
services from software design and development to system maintenance. In
addition, as companies become global, they increasingly require IT support on a
worldwide basis. In the eBusiness environment, service providers need to have a
close relationship with customers given the complexity and time sensitive nature
of eBusiness.

We believe there is a need for full service IT service providers that have
expertise in both existing systems and new Internet-based technologies, access
to a large pool of highly-skilled technical personnel and the ability to
cost-effectively service customers on a worldwide basis.

Our Business

We believe the following aspects of our business help us to address the
challenges faced by our customers in the current IT environment:

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Comprehensive range of services. We provide our customers the ability to meet
all of their IT needs from one service provider. Our understanding of both
existing systems and new Internet technologies allows us to assist our customers
in the management and maintenance of established systems and the development and
integration of new technologies such as Internet-based customer or supply chain
management software applications. We also help them understand their IT needs
and work with them to develop an appropriate strategy to address these needs.

Global delivery model. We provide our services through our offshore centers
located in India, our seven offsite centers located in the United States, United
Kingdom, Japan and Singapore and onsite teams operating on our customers'
premises. Through this global network, we can provide a flexible delivery mix
that is tailored to meet our customers' specific needs. In addition, our global
network of centers allows us to service our customers on a 24-hour basis and
thereby shorten the time required to complete projects. Our onsite teams and
offsite centers allow us to respond quickly to customer requests, to interact
closely with the customer to develop IT services where the customers'
specifications are not clearly defined and to market services tailored to meet
the needs of specific geographic markets.

Focus on eBusiness. Our eBusiness services include designing, developing,
integrating and maintaining Internet-based applications, such as eCommerce
websites, and implementing and integrating packaged software applications, such
as customer or supply chain management software applications. We also assist our
customers in making their existing computing systems accessible over the
Internet.

In-depth industry knowledge. We have developed significant industry expertise in
insurance, financial services, manufacturing and telecommunications. This allows
us to better understand and address the IT needs of customers within a
particular industry. Our technical associates include experienced project
managers and software engineers with substantial experience in providing IT
services to a particular industry. We have also hired business specialists who
possess the industry knowledge our company needs to better understand the
requirements of our customers in these sectors and assist our software engineers
in proactively designing IT services. We believe our customers benefit from our
ability to design and develop applications and services tailored to address
industry-specific needs.

Adherence to high quality standards. We have a large pool of highly trained
technical associates that allows us to provide high quality services tailored to
meet our customers' needs. As of March 31, 2002, 61.0% of our technical
associates had bachelors degrees in engineering, and 39.0% had masters degrees
in engineering, technology or computer applications and bachelors degrees in
Science and others. Each new technical associate must participate in a three to
six-month software engineering training program and all technical associates are
expected to undertake between 40 and 80 hours per year of development training.
In addition, we have implemented strict quality control programs which form an
integral part of our project management methodology to ensure we provide high
quality services to our customers. We have a company-wide quality management
system which satisfies the ISO 9001 TickIT and received a level five assessment
under the SEI-CMM standards. According to NASSCOM, only 58 companies worldwide
have been assessed at level five. Among other things, our system involves a
rigorous review of software development processes, testing of all work,
measurement and analysis of key quality metrics and regular internal quality
audits. Our adherence to this system ensures that our customers receive timely
delivery of consistent and high-quality services.

Our Growth Strategy

Our main goal is to be a leading worldwide provider of comprehensive IT
services. We intend to accomplish our goal by:

Continuing to focus on eBusiness and high-value added services. To better
service our customers in all key industry segments, we intend to continue to
focus on and expand our eBusiness offerings and our other high-value added
services, such as packaged software integration and engineering design services.
To continue to differentiate our services and achieve recognition as a leading
worldwide provider of comprehensive IT services, we intend to broaden our range
of Internet-based applications as new technologies become available.

Leveraging our existing customer base. Our goal is to build long-term stable
business relationships with our customers to generate consistent revenues. With
our existing customers, we plan to continue to expand the scope and range of the
services we provide by extending our capabilities into new and emerging
technologies and by understanding our customers' businesses. For example, some
of our customers who initially engaged us for Year 2000 conversion projects
subsequently retained us to provide other IT services. In fiscal 2001 and fiscal
2002, we generated 80.7% and 82.7%, respectively, of our IT services revenues
(excluding inter-segment revenues) from customers who were

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<PAGE>

customers in the prior year. To further strengthen our relationships and broaden
the scope and range of the services we provide to existing customers, our senior
corporate executives have specific relationship management responsibilities for
our largest customers.

Expanding our presence in existing markets and penetrating new geographic
markets. We plan to expand our presence in our existing markets and to establish
a presence in new geographic markets throughout Europe and the Asia-Pacific
region. We intend to accomplish this by leveraging our existing global customer
base to serve them in other geographic locations. We expect to open additional
sales and marketing offices in Europe and the Asia-Pacific region and to
establish new offsite centers in other major markets to help us gain better
access to new customers. We also plan to continue to hire local employees to
staff and manage our offsite centers. We believe that the use of locally hired
technical associates and managers working from offsite centers will enable us to
increase our share of the local market and compete more effectively with local
IT service providers.

Continuing to enhance our specific industry expertise. We aim to have an
in-depth understanding of targeted industries in order to identify customer
needs in those industries and be able to proactively design and offer tailored
IT services to address those needs. By focusing on targeted industries, we
believe we can develop services that are reusable within an industry and thereby
lower our cost of delivering those services. We intend to enhance our health
care, government and retail IT services capabilities by hiring additional
specialists with expertise in these industries. We have also organized our
company by line of business, with each operating unit serving customers in a
particular industry. We believe that our decentralized structure enhances our
focus on our targeted industries which should further increase our level of
expertise.

Attracting and retaining quality technical associates and augmenting their
training. To attract, retain and motivate our technical associates, we plan to
continue to provide an environment that rewards entrepreneurial initiative and
performance, including competitive salaries and benefits as well as incentives
in the form of cash bonuses and stock options. We also intend to continue to
devote significant resources to training our technical associates through our
Satyam Learning Center in a variety of software languages and computer
platforms. We have also established the Satyam Technology Entrepreneurship
Program, known as STEP, through which we provide an opportunity for technical
associates with ideas to act as real entrepreneurs by forming joint ventures
with our company to develop and market their ideas, with access to our company's
resources, people, infrastructure and systems. These joint ventures are run by
the participating associate as virtual companies, and the participating
associate receives a fixed percentage of the equity of the joint venture,
creating a sharing of the wealth between the individual associate and our
company.

Enhancing our capabilities through joint ventures, technology alliances and
acquisitions. We plan to continue to broaden our network of joint ventures and
technology alliances with technology providers, customers, and IT service
providers, particularly in markets in which we are not currently involved. We
enter into these joint ventures and alliances to acquire expertise in high-end
software products and emerging technologies, to add qualified personnel, to gain
access to additional customers to invest in companies which service niche
markets. We will also consider acquiring companies to gain ownership of specific
technologies and to exploit other synergies with our existing business. While we
currently have not identified any specific candidates, we regularly engage in
discussions and negotiations relating to potential investment, joint ventures,
technology alliances and acquisitions in the ordinary course of our business.

IT Service Offerings

We offer a comprehensive range of IT services based on existing and emerging
technologies that are tailored to meet the specific needs of our customers. Our
IT services include:

Software development. We design, develop and install software for a variety of
IT systems. Our applications range from single-platform, single-site systems to
multi-platform, multiple-site systems. A project may involve the development of
new applications or new functions for existing software applications. Each
development project typically involves all aspects of the software development
process, including definition, prototyping, design, pilots, programming,
testing, installation and maintenance.

System maintenance. We provide maintenance services for large software systems,
which may include modifications and enhancements to the system and product
support. We also assist customers in migrating to new technologies while
extending the useful life of existing systems. Projects may involve
re-engineering software to migrate applications from mainframe to client/server
architectures or to migrate from existing operating systems to UNIX or Windows
NT. For companies with extensive proprietary software applications, implementing
such technologies may require rewriting and testing millions of lines of
software code. We perform most of the maintenance work at our offshore
facilities using satellite links to our customer's system. In addition, we
maintain a small team on the customer's

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<PAGE>

premises to coordinate support functions.

Packaged software integration. We work with providers of packaged software in
the areas of enterprise resource planning, customer relationship management and
supply chain management to install and integrate these packages with our
customers' existing computer systems and with various Internet applications as
required to address the eBusiness needs of our customers. These packaged
software applications help enable companies to strengthen relationships with
their customers and business partners, create new revenue opportunities, enhance
operating efficiencies and improve communications. We also customize this
software to meet the specific needs of our customers and provide ongoing
maintenance and support services. We have established alliances with providers
of enterprise resource planning systems, such as Oracle and SAP. We have also
established alliances with other companies who supply customer relationship or
supply chain management systems and eBusiness applications for building on-line
businesses. In addition, we offer our customers applications in the areas of
business and customer intelligence, data-mining and data-warehousing to enable
them to analyze trends.

Engineering design services. We provide engineering design services using
computer aided design, modeling and engineering tools. Our engineering design
services include component design, product and process analysis, and simulations
and range from basic drawing changes to complex designs. In addition, our
services may involve customizing the latest computer aided design, modeling and
engineering software to specific user requirements.

eBusiness. As part of our service offerings, we focus on solving the eBusiness
needs of our customers. Our eBusiness services include designing, developing and
maintaining Internet-based applications, such as eCommerce websites, and
integrating them with our customers' existing computer systems and packaged
software applications. For example, we have designed, developed and deployed
business-to-business applications for Intercontinental Steel Singapore to
facilitate on-line trading of steel and for Ford Motor Company to enable dealer
integration and on-line procurement. We have also created business-to-consumer
applications to facilitate remote banking kiosks that offer automatic teller
transactions over the Internet, on-line auctions and on-line retail sales. We
also help our customers assess their eBusiness needs, develop strategies and
formulate implementation plans. Revenues derived from eBusiness services
comprised 20.6%, 27.4% and 14.2% of our IT services revenues (excluding
inter-segment revenues) in fiscal 2000, fiscal 2001 and fiscal 2002.

Delivery of IT Services

We offer our customers flexible delivery alternatives through our offshore
centers located in India, through offsite centers which we have established in
our major markets and through onsite teams operating at the customers' premises.

Offshore centers. We typically assign a team of technical associates to visit a
customer's premises and determine the scope and requirements of a particular
project. Some members of the initial team remain onsite to facilitate direct
liaison with the customer, while others return to India to establish and
supervise a larger project team of suitably qualified technical associates to
implement the project. Typically 20% of a project team will be on site depending
on the nature and complexity of the project. Projects completed in our offshore
centers in India contributed 60.9% and 47.8% to our IT services revenues in
fiscal 2001 and fiscal 2002, respectively.

We have also entered into arrangements with several customers where an entire
project team is assigned to a single customer. Such teams, called dedicated
offshore centers, work from our facilities in India and are staffed and managed
by us. Once the project priorities are established by the customer, we, in
conjunction with the customer's IT department, manage the execution of the
project. When needed, our dedicated offshore centers will have equipment
specific to the customer, or will have a separate work area with its own
security protocols. The customer agrees to a regular periodic billing amount
regardless of the work performed. We have an established dedicated offshore
centers for, among others, General Electric Appliances Products LLP, and Ford
Motor Company.

Offsite centers. We believe that a key success factor in meeting our customers'
needs is our physical presence near the customer. Accordingly, we have expanded
and improved the offshore development model by establishing offsite centers in
our major markets. In the United States, we currently operate four offsite
centers located in Atlanta, Georgia; Chicago, Illinois; Parsippany, New Jersey;
and Santa Clara, California. Outside of the United States, we have five offsite
centers located in Tokyo, Japan; Basingstoke, U.K.; Singapore; Sydney,
Australia; and Dubai, Middle East. We believe our offsite centers allow us to
respond quickly to customer requests, to interact closely with the customer to
develop IT services where the customer's specifications are not clearly defined
and to market services tailored to meet the needs of specific geographic
markets. In addition, we staff our offsite centers with locally-hired managers,
marketers and technical associates which we believe enables us to compete more
effectively with local IT service providers. Projects completed at our offsite
centers contributed 4.8% of our IT services revenues in fiscal 2001

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<PAGE>

and 5.8% in fiscal 2002.

Onsite teams. Some customers require the presence of our project teams at their
premises, particularly for mission critical or high-end projects. The customer's
team and our project team collaborate to develop IT services that meet the
customer's specifications. Projects completed by our onsite teams contributed
34.4% of our IT services revenues in fiscal 2001- and 46.4%% in fiscal 2002.

As of March 31, 2002, 1,894 of our technical associates worked in our customers'
premises and offsite centers compared to 1,374 as of March 31, 2001.

Quality and project management. Our well established quality management system
which is critical to the success of our delivery model, now reaches out to all
our associates, onsite / offsite/offshore, through WEB Qualify (Quality
Information For You), the online Quality management system.

With the launch of the revised ISO 9000 standards early last year, we lost no
time in adhering to the ISO 9001:2000 standards and were one of the first few
companies to be certified. Our quality management system has further evolved
with focused initiatives like Business Unit Quality Goals and Project Risk
Reporting, which have helped benchmark our goals in product / service quality
and manage project risks.

Process automation tools to enhance productivity were launched this year :
QUANTIFY and WEBAuditor have been effectively deployed. QUANTIFY automates the
project data management & software development process. WEBAuditor automates the
Internal Quality Audits process. We now conduct all project audits using
WEBAuditor.

After September 11th, maintaining a high level of customer confidence has
required in-depth information security measures and comprehensive business
continuity planning. Our proactive efforts in this direction through the
Information Security Management System (ISMS) initiative has led to the
successful certification of Hyderabad units to BS 7799 standards. BS 7799
certification has given us an internationally recognized structured methodology
to evaluate, implement, maintain and manage information security.

With the business continuity initiative, we are fully committed and equipped to
provide a strong and stable environment for servicing client requirements. The
initiative is intended to minimize delays and speed up resumption of critical
services to customers in the event of any disaster.

We have won the prestigious "IMC Bajaj National Quality Trophy" for the year
2001. This award, which was instituted in 1997 by the Indian Merchants Chamber,
is similar to the renowned "Malcolm Baldrige National Quality Award" for US
Companies. The award recognizes Indian companies for business excellence and
achievement. We were assessed on our strengths in understanding and deploying
the requirements for business excellence as well as performance results.

Customers

We market our services primarily to companies in the United States, Europe, the
Middle East and the Asia-Pacific region. Our strategy is to seek new customers
and at the same time secure additional engagements from existing customers by
providing high quality services and by being responsive to customer needs. The
strength of our relationships has resulted in significant recurring revenue from
existing customers. We generated $120.4 million, $224.1 million and $312.5
million in IT services revenues in fiscal 2000, fiscal 2001 and fiscal 2002,
respectively, from customers who were customers in the prior fiscal year. We
also derive a significant proportion of our IT services revenues from a limited
number of customers. In fiscal 2000, fiscal 2001 and fiscal 2002, our largest
customer, General Electric Company and its affiliates, accounted for 15.7%,
18.0% and 20.1%, respectively, of our IT services revenues (excluding
inter-segment revenues) and 14.2%, 15.8% and 18.3%, respectively, of our total
revenues. During the same periods, our second largest customer, State Farm
Mutual Automotive Insurance Company, accounted for 13.1%, 9.3% and 7.6%,
respectively, of our IT services revenues (excluding inter-segment revenues) and
11.9%, 8.1% and 6.9%, respectively, of our total revenues. In fiscal 2000,
fiscal 2001 and fiscal 2002, our five largest customers accounted for 42.4%,
39.1% and 42.2%, respectively, of our IT services revenues (excluding
inter-segment revenues) and 38.4%, 34.2% and 38.4%, respectively, of our total
revenues.

Sales and Marketing

We sell and market our services through 14 main sales and marketing offices
spread across the globe. In the United States, we have 5 sales and marketing
offices located in Atlanta, Chicago, Parsippany, Santa Clara, and Vienna. We

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also have sales and marketing offices in Basingstoke, Sydney, Singapore, Dubai,
Tokyo and Shanghai and a network of business representatives, who work with
Satyam in several countries. Our Global Sales and Marketing Group, based in the
United States, coordinates all of our marketing and sales operations. We focus
on establishing and maintaining long-term relationships with our customers.

Our sales and marketing operations are divided into three sub-groups. One group
consists of sales associates who work solely on acquiring new customers. Another
group consists of account managers who market further services to existing
customers. The third group manages our many marketing alliances. As of March 31,
2002, we employed 90 sales and 13 marketing associates globally.

Joint Ventures and Alliances

We have in the past entered into, and plan to continue to enter into, joint
ventures and alliances with technology providers, customers, and IT service
providers, particularly in markets in which we are not currently involved. We
enter into these joint ventures and alliances to gain access to additional
customers, to acquire expertise in high-end software products and emerging
technologies, to add qualified personnel and to make investments in companies
engaged in providing services to niche markets. We believe our two most
significant joint ventures are:

GE Affiliate: In December 1998, we entered into a joint venture with an
affiliate of GE Industrial Systems. The joint venture company provides the GE
affiliate with engineering design services, software development and system
maintenance services. We believe this joint venture is significant because it
has helped us to strengthen our relationship with one of our largest customers,
General Electric Company and its affiliates.

TRW Inc.: In September 2000, we entered into an agreement with TRW Inc. to form
a non-exclusive joint venture to provide TRW and other global companies with
software development, system maintenance and engineering design services.
Through a company incorporated in Delaware to operate the joint venture, Satyam
Manufacturing Technology, Inc., we own a 76.0% equity interest in the joint
venture and TRW owns a 24.0% interest. We manage this joint venture, which is
largely focused on the automotive sector worldwide. TRW has targeted to
outsource to the joint venture at least $200 million of revenues from
information systems and engineering work through December 31, 2005. As part of
the joint venture arrangement with TRW, in August 2000 we issued to ESL Inc., an
affiliate of TRW, warrants to purchase 319,480 of our equity shares in exchange
for a payment of Rs.22.9 million (approximately $0.5 million). These warrants
were expired unexercised on February 21, 2002.

For additional information regarding the joint venture with TRW Inc. and the
warrants issued to ESL Inc., please see

"Item 5. Operating and Financial Review and Prospects--Overview--Joint Venture
with TRW Inc.".

Competition

The IT services industry is highly competitive and served by numerous national,
regional and local firms, all of which are either existing or potential
competitors of our company. Our primary India-based competitors include Infosys
Technologies Limited, Wipro Infotech Software & Services and Tata Consultancy
Services. Our primary U.S.-based competitors include Computer Sciences
Corporation, Electronic Data Systems, Accenture, Cambridge Technology Partners
and Keane Inc. Generally, our competitors include participants from a variety of
market segments, including major international accounting firms, systems
consulting and implementation firms, applications software firms, service groups
of computer equipment companies, general management consulting firms,
programming companies and temporary staffing firms. Many of these competitors
have substantially greater financial, technical and marketing resources and
greater name recognition than us. We believe that the principal competitive
factors in the IT services industry include the range of services offered,
technical expertise, responsiveness to customer needs, speed in delivering IT
services, quality of service and perceived value. We believe that we compete
favorably with respect to these factors. There are relatively few barriers to
entry into our markets such that we may face additional competition from new
entrants into our markets. In addition, there is a risk our customers may elect
to increase their internal IT resources to satisfy their IT services needs.

Communications Infrastructure

A key component of our IT services delivery model is the linking of a customer's
onsite system with our offsite and offshore centers through a privately owned
Frame Relay Network consisting of satellite and fiber communications links. Our
data and voice network, SatyamNet, connects our facilities worldwide through a
high speed network with a backbone of satellite, fiber optic and land lines.
Video Conferencing is used on the same network to improve customer

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interaction. SatyamNet allows projects to progress and software applications to
be installed without the need for extensive attendance at the customer's
premises. Similarly, day-to-day maintenance of a customer's system can be
carried out largely from one or more offsite or offshore centers with only a few
maintenance professionals required to be stationed at the customer's premises.
We lease dedicated telecommunication lines from VSNL and Software Technology
Park of India which permit data communication between our facilities in India
and between such facilities and our customers' facilities abroad. All of our
Indian satellite and fiber links terminate at our communication hubs in Vienna,
Virginia and Parsippany, New Jersey. From the Vienna and Parsippany
communication hubs, we connect our offshore centers in India to our offsite
centers in the United States through high speed networks and to customers'
systems through leased lines, the Internet, the customer's own network or a
network operated by third parties. These two locations act as back-up
telecommunications centers for each other to help ensure that the connectivity
to our customer premises is always available.

In December 2001, we completed a major upgrade of SatyamNet to enhance and
optimize network efficiency across all operating locations. This upgrade has
enhanced our aggregate links capacity by more than 100.0% in different
bandwidths, which cater to the networking requirements of approximately 7,000
workstations across various geographic locations. We currently lease two 2Mbps
Fiber Optic links from Hyderabad and Chennai and three 512Kbps international
links ( one fiber and the other two satellite ) and one 64 kbps international
satellite link. The aggregate BW is 5.6Mbps and consists of both fiber and
satellite links to take care of media redundancy. In addition, we have 512kbps
committed information rate high speed links connecting various cities in India
and plan to upgrade this to 1Mbps in a few months. Our intra-city links are
connected by 2048 kbps lines expandable up to 8192 kbps. We can add or reduce
the number of such links based on capacity needs. We are now connected with UK
by a 256K dedicated leased circuit and also connected to Australia and Singapore
by a 128K link framed leased circuit from our US office hubs. We have also added
redundant Internet Mail and Name Resolution servers in our US offices as a part
of building Disaster Recovery infrastructure.

During business hours, the average loading of SatyamNet is currently
approximately 40% of total capacity, with sudden bursts in usage reaching
approximately 50%. Our network has extra capacity available to service new
customers in the immediate future and to permit sudden bursts of data transfer
and other contingent uses. The Network utilization is monitored using a
centralized management software, and the utilization reports are shared with
senior associates on a weekly basis. When the utilization reaches 60%, the
process for enhanced BW is activated.

We have not experienced any significant downtime in our communications network
during the last 12 months. To help minimize the likelihood of downtime in our
voice and data communications network, we have built redundancy and alternative
pathways into our network. For example, most of our communications take place
over international links. Each office that has its own international link also
has a inter-city link to another nearby office, which provides an alternative
pathway for international communications if the office's own international link
breaks down. We have also provided ISDN links as a back-up for the intra-city
links. We also stock spare parts for our network equipment so we can quickly
repair equipment breakdowns.

The terms of our customer contracts often impose particular confidentiality and
security standards. We have independently established a system of security
measures to protect our computer systems from security breaches and computer
viruses that may attempt to gain access to our communications network. We
maintain a firewall at the entry point of the network which checks incoming data
for viruses and unauthorized access before they are transmitted on SatyamNet.
All traffic received at our facilities in India is again checked for viruses,
with contaminated files quarantined. We have arrangements with two virus
protection vendors for the automatic identification of viruses and the dispatch
or development of appropriate software countermeasures. We backup our data on a
regular basis to protect against losses. We have also created a secondary site
in New Jersey for contingency and disaster recovery purposes. We have been
recommended for BS7799 / ISO 17799 certification by Ministry of Information
Technology, Government of India, which is accredited by RVA, Netherland - in
recognition of Satyam's high standards of network security and business
continuity practices.

Facilities

Our corporate headquarters, the Satyam Technology Center, is located in
Hyderabad, India. We own this facility, which provides a modern workspace for
approximately 1400 software engineers in two buildings covering an aggregate
area of approximately 209,300 square foot, which are linked to our other
facilities through our SatyamNet. The Satyam Technology Center also has
recreational facilities and housing for up to 400 associates and covers an
approximately 153,000 square foot area.

We also have additional software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad and

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Pune, with facilities aggregating approximately 720,000 square foot. We own the
facilities in Bhubaneshwar and lease our other facilities with terms ranging
from six years to nine years. Each facility is equipped with computers, servers,
telecommunications lines and back-up electricity generation facilities
sufficient to ensure an uninterrupted power supply.

In addition to the offshore centers in India, we operate offsite centers in
major markets to establish a local presence closer to our customers. Our four
offsite centers currently operating in the United States are located in Atlanta,
Georgia; Chicago, Illinois; Parsippany, New Jersey and Santa Clara, California.
Outside the United States, we operate three offsite centers in Tokyo, Japan,
Basingstoke, United Kingdom and Singapore. We lease all of our offsite centers
with terms ranging from two years to seven years.

We have plans to construct new facilities on our own land in Bangalore, Pune and
Hyderabad and in other locations in India with overall plans to increase
associate capacity in fiscal 2003. We also have plans to construct our
facilities in existing as well as in new offsite centers. The expansion of
facilities will improve our ability to meet growing business demand. These
proposed expansion of facilities primarily include construction of new
facilities and addition of equipment in our own land in Bangalore, Pune and
Hyderabad; and expansion of facilities in premises in Chennai. The investment in
these expansions is estimated to be around $40 million and would be financed
through proceeds of our ADS offering in May 2001 and cash generated from
operations.

Other Business Segments-Internet Services

Business Overview

As of April 25, 2002, we owned 52.5% of the equity shares of Infoway. We believe
Infoway is the largest integrated Internet, network and electronic commerce
services company in India, offering end-to-end solutions with a comprehensive
range of products delivered over a common Internet backbone infrastructure.
Infoway's primary businesses include the following:

     . corporate network/data services;

     . consumer Internet access services; and

     . online portal and content offerings.

Infoway's comprehensive range of products and services enables its business and
consumer customers to communicate, transmit and share information, access online
content and conduct business remotely using Infoway's private data network or
the Internet.

Infoway began providing corporate network/data services to businesses in April
1998, and as of March 31, 2002 Infoway had more than 650 corporate customers.
Infoway launched its Internet service provider business in November 1998,
becoming the first private Internet service provider to begin service after the
Indian government, opened the market to private competition. Infoway currently
has more than 600,000 subscribers for its SatyamOnline services. Infoway also
operates an online portal, www.sify.com, and related content sites specifically
tailored for Indian interests worldwide. Sify.com is one of India's leading
portals with services in areas such as news, travel, finance, health and
shopping in addition to e-mail, chat and search.

Infoway currently operates a large national private data network in India. Our
network utilizes Internet protocol, which is an Internet industry standard for
tracking Internet addresses, routing outgoing messages and recognizing incoming
messages. As of March 31, 2002, Infoway owned and operated 53 points of presence
serving more than 250 cities across India, representing an estimated 90% of the
installed personal computer base in India. Points of presence are
telecommunications facilities located in a particular market which allow
Infoway's customers to connect to the Internet through a local telephone call.
Infoway operate international Internet gateways in Ahmedabad, Bangalore, Bhopal,
Kolkata (Calcutta), Chennai (Madras), Cochin, Chandigarh, Delhi, Hyderabad,
Lucknow, Mumbai (Bombay) and Pune.

Infoway is seeking to become the premier integrated Internet, network and
electronic commerce solutions provider to businesses and consumers in India. We
believe that demand for Infoway's services is significant in India and growing
rapidly as businesses and consumers seek alternatives to the communications
services offered by India's government-controlled telecom providers.

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Industry Overview

Development of the Internet. According to an International Data Corporation, the
total number of Internet users worldwide is expected to grow at a compound
annual growth rate of more than 27% from approximately 196 million in 1999 to
502 million in 2003. We believe that the large and increasing number of home and
office computers linked to the Internet, advances in network design, increased
availability of Internet-based software and applications, the emergence of
useful content and electronic commerce technologies, and convenient, fast and
inexpensive Internet access will continue to drive Internet growth and usage in
the near future.

Special Communications Needs of Businesses. As the Internet becomes more
developed and reliable, businesses are increasingly utilizing the Internet for
functions critical to their core business strategies such as sales and
marketing, customer service and project coordination. The Internet presents a
compelling profit opportunity for businesses by enabling them to reduce
operating costs, access valuable information and reach new markets. To maintain
a significant presence on the Internet, businesses typically purchase Internet
access services and establish a website. Internet access provides a company with
its basic gateway to the Internet, allowing it to transfer e-mail, access
information and connect with employees, customers and suppliers. A website
provides a company with a tangible identity and an interactive presence on the
Internet. Many corporations are also converting their information systems and
databases to web-enabled systems. According to International Data Corporation,
worldwide e-commerce spending grew 68% between 2000 and 2001 reaching more than
$600 billion. International Data Corporation has forecast that the e-commerce
spending will pass the $ 1.0 trillion mark in 2002.

The Opportunity in India. As with many developing nations, the
telecommunications infrastructure in India had until recently, been controlled
by government-controlled telecom providers. The resulting service has been and
remains inferior to service in developed countries. At the same time, however,
the Indian economy continues to modernize and expand, particularly in sectors
such as software development that are dependent on a reliable communications
network. The growth of these industries is leading to an increasing base of
personal computers and wired homes and businesses in India with a resulting
increased demand for Internet services. We believe these trends, which mirror
trends in more mature economies, will continue to develop in India.

The ability to exploit the Internet service provider and other data service
markets in India is currently inhibited by bandwidth limitations imposed by cost
and technical obstacles. Bandwidth refers to the measurement of the volume of
data capable of being transported in a communications system in a given amount
of time. Bandwidth rates are commonly expressed in terms of Kbps (kilobits per
second, or thousands of bits of data per second) or Mbps (megabits, or millions
of bits of data per second). Generally, bandwidth remains very expensive in
India. Prices for bandwidth are set by two agencies in India, the Department of
Telecommunications, or DOT, and the TRAI and have remained high due to, among
other things, capacity constraints.

To date, a significant amount of the usage of Indian content sites on the World
Wide Web has been driven by Internet users outside of India. We expect the
growth in personal computers and Internet users to increase the demand for
Internet content directed towards domestic Indian consumers as well as the
amount of electronic commerce in India. Set forth below is a table summarizing
International Data Corporation's projections for Internet use and electronic
commerce revenue in India:

<TABLE>
<CAPTION>
                                                                                                 Annualized
                                                                   2000             2005           Growth
                                                             -----------------  -------------   ------------
<S>                                                          <C>                <C>             <C>
                                                                (in millions, except annualized growth)
Indian Internet users ....................................         4.4              37.6            53%
Indian installed personal and network computer base ......         4.2              33.0            51%
Indian Internet commerce revenues ........................        $393           $27,000           134%
</TABLE>

Private market participants historically have not been able to exploit the
market opportunities in India because the regulatory environment in India
largely prevented any competition with the national government-controlled
telecom providers. Until November 1998, the only Internet service provider
permitted in India was VSNL, till recently, a government sponsored and
majority-owned entity, which at that time had approximately 150,000 subscribers.
VSNL began providing Internet access on August 15, 1995. As of March 31, 2002
VSNL had approximately 587,000 subscribers. On November 6, 1998, the government
opened the Indian Internet service provider market to private competition and
granted Internet service provider licenses. The licensees include cable
television operators and joint ventures between local companies and large
international telecom providers. Internet service provider licenses are

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<PAGE>

granted for 15 years, with only nominal license fees. Currently, pricing of
Internet service provider services is not regulated by the Government of India,
although it has the power to elect to do so through policy directives. The
prices Internet service providers charge their subscribers and the
interconnection charges between service providers are regulated by the TRAI. The
charges for international gateways and other services presently being provided
by VSNL are the subject of a dispute pending before the TRAI and the Telecom
Disputes Settlement and Appellate Tribunal between VSNL and private Internet
service providers, including Infoway. VSNL has priced these services at levels
which we believe are inconsistent with the terms and conditions on which VSNL
has secured the bandwidth for its international gateways. This is a pending
matter and, as of the date of this annual report, no decision has been
announced. The Telecom Disputes Settlement and Appellate Tribunal has remanded
this matter back to the TRAI for denovo consideration. This matter is pending
before the TRAI. The resolution of this dispute could have a material impact on
Infoway's business.

Growth Strategy

Infoway's goal is to become the premier integrated Internet, network and
electronic commerce solutions provider to businesses and consumers in India.
Infoway's principal business strategies to accomplish this objective are:

     . Invest in the continued enhancement and expansion of its network
       infrastructure to support customer growth, enter new markets and
       accommodate increased customer usage;

     . Increase penetration in its existing markets by expanding awareness of
       the "SatyamOnline" brand name to capitalize on its first mover advantage
       in India;

     . Expand its products and services with new technologies to enable its
       customers to use the Internet more effectively;

     . Strengthen its Internet portal and other Internet content websites with
       more content tailored to Indian interests worldwide;

     . Expand its customer distribution channels through strategic alliances to
       take advantage of the sales and marketing capabilities of its strategic
       partners; and

     . Pursue selective strategic investments, alliances and acquisitions to
       expand its customer base, increase utilization of its network and add new
       technologies to its product mix.

Internet Service Offerings

Corporate Network/Data Services. Infoway offers a comprehensive suite of
technology products and network-based services that provide its corporate
customers with comprehensive Internet and private network access. Infoway's
products and services enable its corporate customers to offer a full range of
business-to-business and electronic commerce-related services. Infoway's
corporate network/data and e-consulting services consist of the following:

     . Premium Internet access. Infoway offers continuous high-speed Internet
       access, as well as dial-up Internet access, to businesses in India.

     . Private network services. Infoway offers a wide variety of private
       network services for both small and large corporate customers.

     . Web-based services. Infoway provides comprehensive website design,
       development, implementation and hosting services.

     . Data Center. Infoway's 20,000 square foot data center in Mumbai .
       (Bombay) has been designed to act as a reliable, secure and scalable
       facility to host mission-critical applications with the capacity to host
       4,000 servers.

 Initiatives in our corporate network and technology services business include:

..    International Gateways. Infoway has private international gateways to the
     Internet in strategic partnership with Singapore Telecommunications Ltd.,
     Cyberstar and New Skies in twelve strategic cities in India. These private

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<PAGE>

     international gateways enable Internet users to access globally available
     data faster and provide enhanced service to customers.

..    SafeScrypt Limited. In partnership with Verisign, a leading provider of
     Internet trust services, Infoway has formed a wholly-owned subsidiary,
     SafeScrypt Limited, to provide managed digital certificate-based
     authentication services in India.

Infoway's corporate network/data services division accounted for approximately
36.1%, 48.4% and 49.6% of Infoway's revenues in fiscal 2000, 2001 and 2002,
respectively. The increase in corporate network/data services division revenues
as a percentage of total revenues from fiscal 2000 to fiscal 2001 and from
fiscal 2001 to fiscal 2002 was primarily due to the growth of Infoway's
corporate customer base combined with increased competition and pricing
pressures in the consumer Internet access services division. Recent trends cause
us to believe that corporate services will continue to be the largest part of
Infoway's business for the immediate future.

Consumer Internet access services. Infoway offers dial-up Internet access,
e-mail and web page hosting to consumers in India through convenient online
registration and user-friendly software. In November 1998 after deregulation of
the Internet service provider market in India, Infoway launched its Internet
service provider business and became the first private Internet service provider
in India. As of March 31, 2002, Infoway had 600,000 consumer Internet
subscribers.

In addition, Infoway offers public Internet access to consumers through
cybercafes, which Infoway refers to as "iways." Because the personal computer
penetration rate in India is relatively low, iways are designed to provide
public Internet access to the significant portion of the Indian population that
does not own a personal computer. Infoway believes that iways will expand access
to our portal and websites to consumers who do not own a personal computer or
have Internet access at home. Iways offer a full range of Internet connectivity
services. As of March 31, 2002, we operated 680 iways in 10 cities.

Infoway is the largest national provider, of Internet access and Internet
services to consumers and businesses in India, based on the number of
subscribers as of March 31, 2002. Until recently, the largest national Internet
service provider in India was VSNL, which had been majority-owned by the Indian
government. In February 2002, the Government of India sold a 25% stake in VSNL
to the TATA group. The Government of India retained a 26% interest in VSNL.

Infoway's consumer Internet access services division accounted for approximately
57.7%, 38.3% and 32.7% of our revenues in fiscal 2000, 2001 and 2002
respectively. The decrease in consumer Internet access services division
revenues as a percentage of total revenues from fiscal 2000 to fiscal 2001 and
from fiscal 2001 to fiscal 2002 was due to the growth of our corporate customer
base combined with increased competition and pricing pressures in the consumer
Internet access services division.

Online portal and content offerings. Infoway operates an online portal,
www.sify.com, that functions as a principal entry point and gateway for
accessing the Internet by providing useful web-related services and links.
Infoway also offers related content sites specifically tailored to Indian
interests worldwide in four local Indian languages.

..    IndiaWorld Communications. Infoway completed the acquisition of IndiaWorld
     in June 2000. Prior to its acquisition by Infoway, IndiaWorld
     Communications was a leading provider of Internet content and services in
     India.

..    Online Trading in Securities. Infoway formed a joint venture with Refco
     Group Ltd. to meet the growing demand among Internet subscribers for online
     investing services in India. The joint venture will offer online equity and
     futures trading for retail customers once online trading is implemented by
     the stock exchanges in India, as well as execution and clearing services
     for financial institutions. Infoway has a 40% ownership interest in the
     joint venture.

..    Online Travel Services. Infoway entered into a tie-up with AFL Indtravels,
     the Indian affiliate of Carlson Wagonlit Inc., to offer online air travel,
     hotel and car hire services on sify.com.

..    America Online - AOL Instant Messenger. Infoway has a multi-year agreement
     with America Online to distribute a co-branded version of the AOL Instant
     Messenger service to Infoway's customers.

..    CricInfo Limited Investment. In July 2000, Infoway acquired a 25% stake in
     CricInfo Limited. CricInfo Limited operates www.cricinfo.com, which is one
     of the most popular cricket sites in the world. Infoway receives a

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<PAGE>

     portion of the revenues generated from advertising and electronic commerce
     business generated by www.cricinfo.com's India site.

..    Indiaplaza.com Acquisition. In July 2000, Infoway entered into an agreement
     to acquire all of the outstanding capital stock of IndiaPlaza.com, Inc., a
     private company incorporated in California. Infoway completed this
     acquisition in December 2000. Indiaplaza.com operates an online shopping
     mall catering to Indian interests.

In fiscal 2000, 2001 and 2002, Infoway's online portal and content offerings
division accounted for approximately 6.3%, 11.8% and 13.1% respectively, of
Infoway's total revenues.

Strategic Alliances

Infoway maintains a number of strategic relationships with key vendors of
Internet-related hardware, software and services. Some of these relationships
are exclusive to Infoway in India, subject in some cases to minimum sales
thresholds. These relationships result in two significant benefits. First, they
provide Infoway with the ability to offer valuable products and services to
Infoway's customers in India. In addition, these relationships help Infoway
market its services by providing it with access to its partners' customer bases.
Infoway's network and related services are focused on meeting the needs of
corporate customers, particularly in manufacturing and service organizations,
which have a need to coordinate their activities with satellite operations such
as dealers, distributors, agents and suppliers.

Technology and Network Infrastructure

Infoway currently operates India's largest national Internet protocol private
data network with 53 points of presence serving more than 250 cities across
India, representing an estimated 90% of the installed personal computer base in
India. A point of presence is commonly defined as the ability to access online
services in a market through a local telephone call or local leased lines.
Infoway operates its network facilities and customer service operations which
gives it greater control over the utilization and quality of its network.
Infoway has designed and built its network using advanced technologies and
equipment which allows it to continue to expand the geographic range of its
network, integrate improved data processing technologies and enhance speed and
capacity with little or no disruption to its customers.

Competition

Infoway faces competition in each of its markets and we expect that this
competition will intensify as the market in India for corporate network services
and technology products, Internet service provider services and online content
develops and expands. Infoway competes on the basis of service, reliability and
customer support. Price and ease of use are also competitive factors.

Corporate network/data services. Infoway's competitors for many private network
services include government services, companies that have built and operate
their own private data networks, satellite communications agencies, such as
Bharti BT, Comsat, HCL Comnet and Hughes, and terrestrial network providers,
such as Global Electronic Commerce Services, HCL Infinity and WiproNet Ltd.

Consumer Internet Access Services. Infoway's principal competitor is VSNL, a
telecom provider that was controlled by the Government of India until recently.
As of December 31, 2001, approximately 442 companies had obtained Internet
service provider licenses in India. Infoway expects other competitors to emerge
in the future. Infoway also expect prices to continue to fall as more
competitors enter the market. Further, Infoway believes that it is inevitable
that the large, foreign providers of Internet service provider services will
eventually attempt to enter the Indian market through local joint ventures or
other means.

Since May 2000, Infoway has offered unlimited Internet access to consumers for a
fixed price. A number of Infoway's competitors, including VSNL, Dishnet and
Mantra, also offer unlimited Internet access for a fixed price. In addition, at
least one of Infoway's competitors offers free Internet service. Infoway expects
the market for consumer Internet access to remain extremely price competitive as
late market entrants attempt to acquire customers.

In the past, VSNL aggressively reduced consumer Internet access prices despite
the lack of offsetting reductions in prevailing bandwidth tariffs payable by
private competitors, such as Infoway. Infoway believes that these practices
constitute an improper cross-subsidy funded by VSNL's present monopoly in long
distance telephone service. The charges for international gateways and other
services presently being provided by VSNL are the subject of a dispute pending
before the TRAI and the Telecom Disputes Settlement and Appellate Tribunal
between VSNL and private

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<PAGE>

Internet service providers, including Infoway. The Telecom Disputes Settlement
and Appellate Tribunal has remanded this matter back to the TRAI for denovo
consideration. This matter is pending before the TRAI. Unless there is a change
in government policy or favorable resolution of this dispute, or until we are
able to reduce our bandwidth costs through other means, we will continue to face
difficult market conditions in the consumer access business.

In addition, Infoway could face competition from companies that develop new and
innovative techniques to access the Internet. Although growing rapidly,
International Data Corporation estimates that India had an installed base of
only approximately 4.2 million personal computers in 2000. Technology permitting
a connection to the Internet through alternative, less capital intensive means
is likely to be attractive to Indian consumers. A number of companies are
planning alternative Internet access devices, such as set-top boxes for
televisions, to create demand for Internet services in excess of that which
could be supported by the installed base of personal computers. The provider who
develops this technology is likely to have a significant advantage in the
marketplace.

Online Portal. There are several other companies in India that have developed
websites, including rediff.com which completed its initial public offering in
the United States in June 2000 and others, that are designed to act as Internet
portals. These sites currently have greater traffic than Infoway's site and
offer some features that Infoway does not. Further, the dominant Internet
portals continue to be the online services and search engine companies based in
the United States, such as America Online, Yahoo, Microsoft Network and Lycos.
These companies have been developing specially branded or co-branded products
designed for audiences in specific markets. Infoway expects that these companies
will deploy services that are targeted at the Indian market. For example, Yahoo!
launched an Indian service in June 2000.

To be competitive, Infoway must respond promptly and effectively to the
challenges of technological change, evolving standards and Infoway's
competitors' innovations by continuing to enhance its products and services, as
well as its sales and marketing channels. Increased competition could result in
loss of market share, reduced prices or reduced margins, any of which could
adversely affect Infoway's business. Competition is likely to increase
significantly as new companies enter the market and current competitors expand
their services.

Government Regulation

Infoway is subject to comprehensive regulation by the Ministry of Communications
through the Telecom Commission and the Department of Telecommunications, or DOT,
pursuant to the provisions of the Indian Telegraph Act of 1885, or Telegraph
Act, the India Wireless Telegraphy Act, 1933, or Wireless Act, and the terms of
the Internet service provider license agreement Infoway entered into with the
DOT under which Infoway operates. Pursuant to the Telegraph Act, the provision
of any telecommunications services in India requires a license from the
Government of India, obtained through the DOT. While the Telegraph Act sets the
legal framework for regulation of the telecommunications sector and the Wireless
Act regulates the possession of wireless telegraphy equipment, much of the
supervision and regulation of Infoway is implemented more informally through the
general administrative powers of the DOT, including those reserved to the DOT
and other governmental agencies under Infoway's license.

In March 1997, the Government of India established the TRAI, an independent
regulatory authority, under the provisions of the Telecom Regulatory Authority
of India Act. The TRAI also has the authority to, from time to time, set the
rates at which domestic and international telecommunications services are
provided in India. The TRAI does not have authority to grant licenses to service
providers or renew licenses, functions which remain with the DOT. Failure to
follow TRAI directives may lead to the imposition of fines. Decisions of the
TRAI may be appealed to the Telecom Disputes Settlement and Appellate Tribunal.

Infoway entered into a license agreement with the Department of
Telecommunications, or DOT, under which it was granted a license to provide
national Internet services on a non-exclusive basis. The term of its license is
15 years, and it can be revoked by the DOT if Infoway breaches the terms and
conditions of the license. The DOT retains the right to take over Infoway's
network and to modify, revoke, terminate or suspend the terms and conditions of
the license at any time if, in its opinion, it is necessary or expedient to do
so in the interest of general public, or for the proper operation of the
telecommunications sector or for security considerations. The DOT also retains
the right to review the terms of Infoway's license based on changes in national
telecommunications policy. Infoway is not allowed to assign or transfer
its rights under the license without the prior written consent of the DOT.

The Government of India has recently revised foreign investment policies
permitting up to 74% foreign equity in an Internet service provider. Infoway's
license was reissued in April, 2002, permitting it to have foreign investment up
to 74% of its total equity and also to offer Internet telephony, subject to the
terms of operation as detailed in Infoway's license.

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Infoway may be required to import into India computer hardware and Internet
related software purchased from foreign manufacturers for business purposes.
These imports will be subject to the Export and Import Policy as declared by the
Ministry of Commerce. At the time of import, Infoway will be required to pay a
customs duty pursuant to the Customs Tariff Act, 1975.

Facilities

Infoway owns approximately 100,000 square foot corporate headquarters located in
Chennai (Madras), India. Infoway maintains a network operations center located
in Chennai and 20,000 square foot data center in Mumbai (Bombay). Infoway's
Chennai facility houses its central network servers as well as its network staff
which monitors network traffic, service quality and equipment at all its points
of presence to ensure a reliable Internet service. Most of Infoway's points of
presence are staffed 24-hours-a-day, seven-days-a-week. Infoway has backup power
generators and software and hardware systems designed to prevent network
downtime in the event of system failures. In the future, Infoway may add
additional facilities to supplement or add redundancy to its current network
monitoring capability.

Our Other Business Segments--Software Products

Through our wholly owned subsidiary in the United States, VCI, we have developed
VisionCompass, a software product for use as a management tool to assess and
help improve business performance. VCI's sales and marketing strategy will
target Fortune 1000 companies in the manufacturing, professional services and
telecommunications markets, utilizing both a direct sales force and select
channel partners.

Research and Development

Our research and development efforts are focused on development services
required by our existing customers or as needed to attract new customers. As of
March 31, 2002, we employed 49 associates dedicated to our research and
development activities. In addition, our management and other operational
personnel are also involved in research and development activities. We have
applied for one patent in the United States related to VisionCompass. We expect
to continue to invest some of our resources in research and development. We
estimate that we have spent approximately $5.7 million in fiscal 2000, $3.1
million in fiscal 2001 and $2.2 million in fiscal 2002 on company-sponsored
research and development activities.

Intellectual Property

Ownership of software and associated deliverables created for customers is
generally retained by or assigned to the customer, and we do not usually retain
an interest in such software or deliverables. We also develop software products
and software tools which are licensed to customers and remain our property. We
rely upon a combination of non-disclosure and other contractual arrangements and
copyright, trade secret, patent and trademark laws to protect our proprietary
rights in technology. We currently require our technical associates to enter
into non-disclosure and assignment of rights agreements to limit use of, access
to and distribution of our proprietary information. The source code for our
proprietary software is generally protected as trade secrets and as unpublished
copyright works. We have applied for the registration of "Satyam" and
"VisionCompass" as trademarks in India and United States. We generally apply for
trademarks and service marks to identify our various service and product
offerings.

Although we believe that our services and products do not infringe the
intellectual property rights of others, we cannot assure you that such a claim
will not be asserted against us in the future. Assertion of such claims against
us could result in litigation, and there is no assurance that we would prevail
in such litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms. We
cannot assure you that we will be able to protect such licenses from
infringement or misuse, or prevent infringement claims against us in connection
with our licensing efforts. We expect that the risk of infringement claims
against us will increase if more of our competitors are able to obtain patents
for software products and processes. Any such claims, regardless of
their outcome, could result in substantial cost to us and divert management's
attention from our operations. Any infringement claim or litigation against us
could, therefore, result in substantial costs and diversion of resources.

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Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of the financial condition and results of operations of
our company should be read in conjunction with the financial statements and the
related notes included elsewhere in this document. This discussion contains
forward-looking statements that involve risks and uncertainties. For additional
information regarding these risks and uncertainties, please see "Item 3.-Risk
Factors."

Overview

We are the fourth largest provider of IT services in India, based on the amount
of export revenues generated during our fiscal year ended March 31, 2002. We
offer a comprehensive range of services, including software development, system
maintenance, packaged software integration, and engineering design services. We
use our global infrastructure to deliver value-added services to our customers
to address IT needs in specific industries and to facilitate eBusiness
initiatives. We also have two main subsidiaries, Infoway, which provides
Internet services in India, and VCI, which has developed and markets our
software product, VisionCompass. Our total revenues increased by 88.7% to $310.3
million in fiscal 2001 from $164.5 million in fiscal 2000 and by 33.6% to $414.5
million in fiscal 2002 from $310.3 million in fiscal 2001.

Our reportable operating segments consist of the following three businesses:

     IT services. In our IT services business, we provide our customers the
ability to meet all of their IT needs from one service provider. Our
understanding of both existing computer systems and new Internet technologies
allows us to assist our customers in the management and maintenance of existing
systems and the development and integration of new technologies. Our 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. We also assist our customers in making their existing
computing systems accessible over the Internet. We offer our customers flexible
delivery alternatives through our offshore centers located in India, through
offsite centers which we have established in our major markets and through
onsite teams operating on the customers' premises.

     - Internet services. Through our subsidiary, Infoway, we offer our
corporate network/data services; consumer Internet access services; and online
portal and content offerings. Our corporate network/data services division
derives its revenues from dial-up and dedicated Internet access, electronic
commerce, electronic data interchange, e-mail and other messaging services,
virtual private networks, web hosting and web-based solutions. An important
asset in this business is the quality and reach of our large IP network in
India. Our consumer Internet access services division derives its revenues
primarily from the "SatyamOnline" dial-up business and the "iway" public
Internet access business. Infoway's ADSs trade on the Nasdaq National Market
under the symbol "SIFY".

In October 2001, we announced our intention to explore alternatives in order to
divest our interest in Infoway. As also announced in October, 2001, we have
acquired Infoway's software services division with effect from January 1, 2002.
The transaction was approved by stockholders of Infoway at an extraordinary
general meeting held on February 28, 2002. This acquisition includes the
purchase of specified tangible and intangible fixed assets, current assets and
current liabilities of the division as well as the assignment of its continuing
business in favour of the company. The objective of the acquisition is to permit
us to concentrate on our core business of software services and to permit
Infoway to concentrate on Internet services. The acquisition price of US$6.9
million has been paid to SIFY.

Software products. Through our wholly owned subsidiary in the United States,
VCI, we have developed VisionCompass, a software product for use as a management
tool to assess and help improve business performance. VCI's sales and marketing
strategy will target Fortune 1000 companies in the manufacturing, professional
services and telecommunications markets, utilizing both a direct sales force and
select channel partners.

Revenues

Our IT services revenues (excluding inter-segment revenues, which are revenues
generated from services provided by Satyam Computer Services to its subsidiaries
and vice-versa) represented 88.1% and 91.0% of our total revenues in fiscal
2001and fiscal 2002, respectively. These revenues increased by 83.2% to $273.5
million in fiscal 2001 from $149.3 million in fiscal 2000 and by 38.0% to $377.3
million in fiscal 2002 from $273.5 million in fiscal 2001. The fall in growth
rate can be primarily attributed to the general industry recession in the United
States and other parts of the world and the business slow down consequent to
terrorist attacks in the United States. Our revenues are generated

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principally from IT services provided on either a time-and-materials or a
fixed-price basis. Revenues from IT services provided on a time-and-materials
basis are recognized in the month that services are performed. Revenues from IT
services provided on a fixed-price basis are recognized under the percentage of
completion method of accounting when the work executed can be reasonably
estimated and under the completed contract method of accounting when the work to
complete cannot be reasonably estimated. The percentage of completion estimates
are subject to periodic revisions and the cumulative impact of any revision in
the estimates of the percentage of completion is reflected in the period in
which the changes become known. Although from time to time we have revised our
project completion estimates, to date such revisions have not materially
affected our reported revenues. Revenues from IT services (excluding
inter-segment revenues) provided on a time-and-materials basis represented 77.7%
and 78.1% of our IT services revenues in fiscal 2001 and fiscal 2002,
respectively. Revenues from IT services (excluding inter-segment revenues)
provided on a fixed-price basis represented 22.3% and 21.9% of our IT services
revenues in fiscal 2001 and fiscal 2002, respectively.

The following table represents our IT services revenues (excluding inter-segment
revenues) by type of IT service offering for the periods indicated:

<TABLE>
<CAPTION>
         Type of IT service offering                    Fiscal 2000             Fiscal 2001                  Fiscal 2002
         ---------------------------                    -----------             -----------                  -----------
                                                                       (in millions, except percentages)
<S>                                                   <C>      <C>           <C>         <C>             <C>    <C>
Software development ..............................   $ 79.7     53.4%       $175.9        64.3%          195.5   51.8%
System maintenance ................................     41.4     27.7          55.3        20.2           110.2   29.2
Packaged software integration .....................     14.8      9.9          22.5         8.2            53.0   14.1
Engineering design services .......................     13.4      9.0          19.8         7.3            18.6    4.9
                                                      ------   ------        ------      ------          -------------

      Total .......................................   $149.3    100.0%       $273.5       100.0%          377.3  100.0%
                                                      ======   ======        ======      ======          =============
</TABLE>

We provide our IT services through our offshore centers located in India,
through offsite centers which we have established in our major markets and
through onsite teams operating on our customers' premises. Offshore IT services
revenues consist of revenues from IT services work conducted in our offshore
centers and onsite work conducted at customers' premises which is related to
offshore work. Offshore IT services revenues do not include revenues from
offsite centers or onsite work which is not related to any offshore work. We
charge higher rates and incur higher compensation expenses for work performed by
our onsite teams on a customer's premises or at our offsite centers as compared
to work performed at our offshore centers in India. Services performed at our
onsite teams or at our offsite centers typically generate higher revenues per
capita but at a lower gross margin than the same amount of services performed at
our offshore centers in India. Offshore IT services revenues (excluding
inter-segment revenues) represented 60.7% and 47.7% of our IT services revenues
in fiscal 2001 and fiscal 2002, respectively. Offsite and onsite IT services
revenues (excluding inter-segment revenues) represented 39.3% and 53.3% of our
IT services revenues in fiscal 2001 and fiscal 2002, respectively.

IT services revenues and gross profits are affected by the rate at which
associates are utilized. We calculate utilization rates monthly, based on the
ratio of the actual number of hours billed by technical associates in such month
to the total number of billable hours. For purposes of such calculation, we
assume that an associate is 100.0% utilized if he works 157 hours per month.
Utilization rates for IT services were 73.0% and 77.5% in fiscal 2001 and fiscal
2002, respectively. These utilization rates do not include training time for our
associates.

Revenues from Internet services are generated principally from corporate network
and technology services, web-site design and development, sale of Internet
access and banner advertisements and sponsorship contracts. Our Internet
services revenues (excluding inter-segment revenues) represented 11.9% and 8.8%
of our total revenues in fiscal 2001 and fiscal 2002, respectively. These
revenues increased by 142.4% to $36.8 million in fiscal 2001 from $15.2 million
in fiscal 2000 and decreased by 0.7% to $36.6 million in fiscal 2002 from $36.8
million in fiscal 2001.

Revenues from software products to date have been immaterial.

Expenses

Cost of revenues for IT services consists primarily of salary and other
compensation and benefits, deferred stock based compensation expense,
depreciation, data communications expenses, Rents, computer maintenance, cost of
software for internal use, and foreign travel expenses. Cost of revenues for
Internet services consists primarily of recurring telecommunication costs
necessary to provide Internet access to consumer and corporate network
subscribers, personnel and operating expenses associated with customer support
and network operations, travel expenses and third

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party software and hardware purchased for resale to corporate customers.

Selling, general and administrative expenses consist of salary and other
compensation and benefits, deferred stock based compensation expense,
depreciation, sales and marketing expenses, telecommunications expenses, rent,
repairs and maintenance, travelling expenses, power and fuel, professional
charges, training and development and administrative expenses. Costs associated
with the development of software products are classified under selling, general
and administrative expenses and primarily consist of research and development
expenditures and compensation and benefit expenses. We expect sales and
marketing expenses to increase on a relative basis as we introduce our products
commercially.

Amortization of goodwill expense primarily relate to goodwill arising from the
acquisitions of IndiaWorld and IndiaPlaza.com by Infoway and our acquisition of
the minority interest in Satyam Enterprise Solutions Limited, or SES.

Impairment of goodwill during the year ended March 31, 2002 primarily relates to
the impairment of goodwill arising from the acquisitions of IndiaWorld and
IndiaPlaza.com by Infoway.

Consolidation of Subsidiaries

As of March 31, 2002, we had invested $7.3 million representing equity and other
advances in Infoway, $27.3 million in VCI and $9.7 million in six of our other
subsidiaries. Since their inception in December 1995 and January 1999,
respectively, our subsidiaries Infoway and VCI have incurred significant
operating losses and negative cash flows. As of March 31, 2002, the cumulative
net losses incurred were $224.7 million by Infoway, $27.5 million by VCI and
$9.0 million by our other subsidiaries.

The results of Infoway and VCI are reflected in our financial statements under
U.S. GAAP whereas the unconsolidated audited financial statements prepared under
Indian GAAP for Satyam Computer Services do not reflect the results of our
subsidiaries. Infoway's and VCI's combined losses reduced our consolidated net
income (loss) U.S. GAAP by $83.3 million in fiscal 2002, $42.6 million in fiscal
2001 and $16.7 million in fiscal 2000.

In November 1999, Infoway purchased 24.5% of the outstanding shares of
IndiaWorld for a cash purchase price of $28.3 million, and made an $11.8 million
non-refundable deposit towards an option to purchase the remaining 75.5% of the
outstanding shares in IndiaWorld for a purchase price of $85.0 million. Infoway
exercised the option to acquire the remaining outstanding shares of IndiaWorld
in June 2000 by paying $48.7 million in cash and the balance in 268,500 equity
shares of Infoway valued at $24.6 million. For U.S. GAAP reporting purposes, the
financial statements of IndiaWorld have been consolidated with Infoway's
financial statements from and after December 1, 1999. The acquisition has been
accounted for as a purchase, and Infoway is amortizing the goodwill on a
straight-line basis over a period of five years. Most of the purchase price
represented goodwill. The total goodwill from this acquisition amounted to
$106.8 million, of which $19.4 million and $11.5 million has been amortized and
impaired, and charged to earnings in fiscal 2001 and fiscal 2002, respectively.
During fiscal 2002, goodwill amounting to $73.1 million was impaired and charged
to earnings.

Equity in Earnings (Losses) of Associated Companies

Associated companies are accounted for using the equity method. In July 2000,
Infoway acquired a 25% stake in CricInfo Limited for a consideration of $37.5
million worth of Infoway's ADSs. The total goodwill from this acquisition
amounted to $37.4 million, of which $4.3 million and $3.7 million has been
amortized and charged to equity in earnings (losses) of associated companies net
of taxes in fiscal 2001 and fiscal 2002, respectively. During the fiscal 2002
goodwill amounting to $21.4 million was impaired and charged to earnings.

On October 5, 2001, Infoway entered into an agreement to subscribe for unsecured
convertible notes to be issued by Cricinfo in an aggregate amount of up to GBP
1.0 million ($1.5 million) to meet Cricinfo's short to medium term working
capital requirements. These notes are redeemable on October 5, 2004. The
subscription will be in tranches of such amounts and on such dates as agreed to
in writing from time to time by Infoway and Cricinfo. The terms of the note
instrument provide for the payment of interest on the principal amount at the
rate of 8% per annum. In addition, Infoway shall be entitled, at any time upon
5-business days notice to Cricinfo, to convert the notes into Cricinfo shares
based on a predetermined conversion formula. Infoway will not be obligated to
subscribe for notes if it is not satisfied that Cricinfo has met certain agreed
upon performance measures. On March 31, 2002 Infoway entered into an arrangement
to subscribe to a further issue of Cricinfo convertible notes in an aggregate
amount of upto GBP0.5

                                       35

<PAGE>

million ($0.7 million) by Cricinfo that would be subject to the same terms as
discussed above.

Investment in Satyam GE Software Services Private Limited

In January 2002, Satyam Computer Services has initiated the process of transfer
of its 50% shareholding in Satyam GE Software Services Private Limited ("Satyam
GE") to GE Pacific (Mauritius) Limited, Mauritius ("GEPL") in accordance with
the shareholders' agreement for a consideration of approximately $4.0 million.
The transfer is subject to fulfillment of terms and conditions specified in the
agreement and obtaining necessary approvals from appropriate authorities. Satyam
Computer Services continues to have the ability to exercise significant
influence over the operating and financial policies of Satyam GE and hence has
accounted for its 50% interest in Satyam GE using the equity method for the year
ended March 31, 2002. The resulting carrying amount of the investment in Satyam
GE of $3.0 million as of March 31, 2002 after recognition of income for the year
then ended does not exceed the expected selling price of $4.0 million.

On December 29, 2000, Satyam Computer Services entered an agreement with
Computer Associates International, Inc. ("CA") to form an equally held joint
venture company CA Satyam ASP Private Ltd. ("CA Satyam"). The joint venture was
formed in January 2001 at Mumbai, India. As per the agreement, both Satyam
Computer Services and CA are to invest $1.5 million each in the joint venture.
During the year ended March 31, 2002 Satyam Computer Services invested $0.5
million in CA Satyam.

Deferred Stock based Compensation

In May 1998, Satyam Computer Services established its ASOP. Aspects of the ASOP
differ significantly from typical U.S. stock option plans. We subsequently
established the Trust to administer the ASOP, and issued to the Trust warrants
to purchase 13,000,000 equity shares. To give our associates the benefit of our
stock split in September 1999, the Trust exercised its warrants to acquire our
shares before the split using the proceeds from bank loans. The Trust
periodically grants eligible associates warrants to purchase equity shares held
by or reserved for issuance by the Trust. The warrants may vest immediately or
may vest over a period ranging from two to three years, depending on the
associate's length of service and performance. Upon vesting, employees have 30
days in which to exercise their warrants.

Each warrant issued by the Trust currently entitles the associate holding the
warrant to purchase 10 equity shares of our company at a price of Rs.450
($10.31), plus an interest component associated with the loan the Trust assumed,
for the conversion of the warrants it held. The interest component is computed
based on a fixed vesting period and a fixed interest rate. This exercise price
has been substantially below the market price of our shares at the time the
warrants have been granted by the Trust. Neither we nor the Trust may increase
the exercise price of the warrants. We account for the ASOP as a fixed plan in
accordance with Accounting Principles Board Opinion No. 25.

Under U.S. GAAP, the difference between the exercise price and the market price
on the date the warrants are granted to associates is required to be treated as
a non-cash compensation charge and amortized over the vesting period of the
equity shares underlying the warrants. Under U.S. GAAP, in fiscal 2000, 2001 and
2002, we recognized deferred stock based compensation of $23.3 million, $38.0
million and $1.2 million, and $16.5 million, $44.2 million and $10.4 million was
amortized and charged to earnings, respectively. As of March 31, 2002, warrants
(net of forfeited and cancelled) to purchase 11,441,070 equity shares have been
granted to associates pursuant to ASOP, and warrants to purchase 9,516,180
equity shares have been exercised. As of March 31, 2002, the Trust held warrants
to purchase 1,558,930 equity shares which had not yet been granted to associates
pursuant to the ASOP but are expected to be granted in the future. We expect to
recognize amortization of deferred stock based compensation expense in respect
of our ASOP in the approximate amounts of $3.7 million in fiscal 2003 and $1.9
million in fiscal 2004 based on the price of our equity shares on March 31, 2002
and in connection with both granted and ungranted warrants on such date.
Depending on the market value of our equity shares on the dates future grants
are made, amortization of deferred stock based compensation expense with respect
to ungranted warrants may cause the expected amounts to change.

In May 1999, the shareholders at our annual general meeting approved the
Associate Stock Option Plan B, or ASOP B for the grant of 13.0 million Equity
shares. In June, 2001 the Shareholders at our Annual General Meeting approved
the grant of further 15.7 million equity shares to this plan. The ASOP B is
substantially similar to the ASOP and will be administered by a committee of our
board of directors. Under U.S. GAAP, in fiscal 2002, we recognized deferred
stock based compensation of $6 thousand and $58 thousand was amortized and
charged to earnings, respectively. As of March 31, 2002, options (net of
forfeited and cancelled) to purchase 10,197,328 equity shares have been granted
to associates under this plan. We expect to recognize amortization of deferred
stock based compensation expense in respect of these granted options in the
approximate amounts of $59 thousand in fiscal 2003 and $35 thousand in fiscal
2004. We expect that the exercise prices of options granted in the future under
the ASOP B will generally not be less

                                       36

<PAGE>

than the fair market value of the underlying shares and therefore we do not
expect to incur compensation expense with respect to those future grants. We
also account for the ASOP B as a fixed option plan.

In May 1999, the shareholders at our annual general meeting approved the
Associate Stock Option Plan ADR, or ASOP - ADR, pursuant to which we expect to
periodically issue grants to eligible associates to purchase ADRs. As of March
31, 2002, warrants for 1,169,425 ADSs representing 2,338,850 equity shares have
been granted to associates under the ASOP ADR. The warrants issued under
ASOP-ADR could be at a price per option which is not less than 90% of the value
of one ADS as reported on NYSE (fair market value) on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the day of
grant as decided by the Board or any of its Committees of the ASOP (ADS). We
account for the ASOP ADR as a fixed option plan. We expect that the exercise
prices of options granted in the future under the plan will not be less than the
fair market value of the underlying ADRs and therefore we do not expect to incur
compensation expense with respect to those future grants.

In fiscal 1999, Infoway established the IASOP. The IASOP is substantially
similar to the ASOP and is administered by an employee welfare trust called the
Infoway Trust. Infoway issued to the Infoway Trust warrants to purchase 825,000
equity shares of Rs.1 each in Infoway. In turn, the Infoway Trust from time to
time grants to eligible associates warrants to purchase equity shares held by or
reserved for issuance by the Infoway Trust. An associate must pay consideration
of Rs.1 per warrant to the Infoway Trust and each warrant entitles the
associate-holder to purchase one equity share of Infoway at an exercise price
decided by the board of directors. The board of directors has determined that in
no event will the exercise price for warrants granted in the future be less than
90.0% of the market price of the shares on the Nasdaq National Market as of the
grant date. The warrants and the shares received upon the exercise of warrants
are subject to progressive vesting over a three year period from the date the
warrants were issued to the associate. The exercise period for these warrants is
30 days from the vesting period. The warrants allotted and the underlying shares
are not subject to any repurchase obligations by Infoway. We account for the
IASOP as a fixed option plan.

Under U.S. GAAP, in fiscal 2001 and fiscal 2002, Infoway recognized deferred
stock based compensation of $2.2 million and $1.5 million, of which $1.9 million
and $0.3 million was amortized and charged to earnings, respectively. In fiscal
2002, Infoway recognized insignificant amounts of deferred stock based
compensation expense. As of March 31, 2002, warrants (net of forfeited and
cancelled) to purchase 584,040 equity shares of Infoway have been granted to
associates pursuant to its IASOP, and 200 warrants have been exercised. As of
March 31, 2002, the Infoway Trust held warrants to purchase 240,960 equity
shares of Infoway which had not yet been granted by the Infoway Trust to
associates pursuant to its IASOP but are expected to be granted in the future.
We expect that the exercise price of warrants granted in the future will not be
less than 90.0% of the fair market value of the underlying shares and therefore
we do not expect to incur significant compensation expense with respect to those
future grants. We expect to recognize amortization of deferred stock based
compensation expense in connection with Infoway's IASOP in the approximate
amounts of $0.1 million in fiscal 2003 and $0.05 million in fiscal 2004 based on
the price of Infoway's ADSs on March 31, 2002 and in connection with both
granted and ungranted warrants. Depending on the market value of Infoway's ADSs
on the dates future grants are made, amortization of deferred stock based
compensation expense with respect to ungranted warrants may cause the expected
amounts to change.

In April 2000, VCI established the VCI 2000 Stock Option Plan or VCI Plan. As of
March 31, 2002, options (net of forfeited and cancelled) to purchase 70,000
shares in VCI have been granted to associates pursuant to the VCI Plan, and no
options have been exercised. As of March 31, 2002, 24,930,000 shares in VCI are
reserved for issuance upon the exercise of options which had not been granted
pursuant to the VCI Plan but are expected to be granted in the future. We
account for the VCI Plan as a fixed option plan. The exercise prices of the
prior options grants have been at fair value of the underlying shares. We expect
that the exercise prices of options granted in the future under the plan will be
equal to the fair value of the underlying shares and therefore we do not expect
to incur compensation expense with respect to those future grants.

The Trust recognized interest expense of $1.8 million in fiscal 2001 and $0.7
million in fiscal 2002. The figure is reflected in our U.S. GAAP consolidated
financial statements whereas the audited financial statements of Satyam Computer
Services prepared under Indian GAAP do not reflect this figure.

Joint Venture with TRW Inc.

     In September 2000, we entered into an agreement with TRW Inc. to form a
non-exclusive joint venture to provide TRW and other global companies with
software development, system maintenance and engineering design services. We own
a 76.0% interest in the joint venture and TRW owns a 24.0% interest. We manage
this joint venture,

                                       37

<PAGE>

which is largely focused on the automotive sector worldwide. TRW generated
revenues for the joint venture of $29.0 million during the fiscal ended March
31, 2002.

     After December 31, 2003, TRW has the option to require us to purchase its
24.0% interest. Under the joint venture agreement, TRW is not legally obligated
to provide any business to the joint venture. However, the buyout price of TRW's
interest in the joint venture depends on the aggregate amount of revenue which
TRW will provide to the joint venture through December 31, 2005. TRW has
initially targeted to outsource to the joint venture at least $200 million of
revenues from information systems and engineering work by December 31, 2005. TRW
may adjust this initial target revenue amount before May 31, 2001, but the
adjusted target revenue amount cannot be less than $100 million. [NTD: Satyam to
confirm initial target unchanged.] If the amount of revenues outsourced by TRW
to the joint venture by December 31, 2003 does not meet specified minimum
levels, we have the right to buy out TRW's 24.0% interest in the joint venture
for no or nominal consideration. If TRW exercises its option to sell the shares
to us after December 31, 2003, the purchase price of TRW's 24.0% stake will be
determined by the higher of an independent valuation of the 24.0% interest and a
formula based on the amount of revenues provided to the joint venture by TRW but
in any event no more than 2.0% of our total market capitalization on December
31, 2003. We may, at our discretion, use either cash or our equity securities
valued at the then prevailing market price as consideration for TRW's stake. If
TRW divests its stake after December 31, 2003, the terms of the joint venture's
supply agreement with TRW will continue until December 31, 2007 if the joint
venture remains able to perform the supply agreement. Under these circumstances,
TRW is required to use its best attempts to provide the same levels of business
to the joint venture from January 1, 2006 through December 31, 2007 as it had
provided to the joint venture during the preceding two years. If we undergo a
change in control or bankruptcy, TRW may terminate the joint venture agreement
on or before December 31, 2003 and require us to purchase its shares in the
joint venture and all of our securities issued to TRW or its affiliates in
connection with the joint venture agreement at a price equal to $1.0 million
plus the total consideration TRW has invested in the shares of the joint venture
(but excluding the initial amount paid for its 24.0% interest) and our
securities, net of any amount received by TRW for any sale of such shares or
securities.

     As part of the joint venture arrangement with TRW, on August 22, 2000, we
issued to ESL Inc., an affiliate of TRW, 63,896 warrants (each warrant
exercisable to purchase five equity shares) for an upfront payment of Rs.22.9
million (approximately $0.5 million). These warrants are convertible into
319,480 of our equity shares for Rs.644.40 ($14.1) per share, totaling
approximately $4.5 million, during an exercise period from January 22, 2002 to
February 21, 2002. The upfront payment made by ESL Inc. for these warrants, plus
the aggregate exercise price for the 319,480 equity shares underlying these
warrants, will equal approximately $5.0 million. The excess of the fair value of
the warrants, as determined at the date of grant, over the consideration of
warrants paid by ESL Inc., amounts to approximately $1.2 million. This amount
will be amortized ratably over the period of five years and three months,
starting from the date of signing of the joint venture agreement, which was
September 26, 2000, until December 31, 2005. The amortization will be classified
as a reduction of the revenue recognized under the agreement. However, if the
amortization exceeds the amount of revenue recognized in any period, the excess
amortization will be recorded as an expense. These warrants for 319,480 equity
shares expired unexcercised on February 21, 2002.

The exercise price and the fair market value of the warrants issued to ESL Inc.
were not determined based on the revenue TRW has targeted to provide to the
joint venture. The exercise price of the warrants was determined based on the
average closing prices of the underlying shares on the Indian stock exchanges in
accordance with the Securities and Exchange Board of India guidelines. The fair
value of the warrants at the date of grant was determined by reference to the
prevailing market price of our equity shares on the Indian exchanges, using the
Black Scholes model with an assumed volatility of 90% and a risk free interest
rate of 10.672%.

Principles of Currency Translation

In fiscal 2001 and fiscal 2002, 82.1% and 82.7%, respectively, of our total
revenues were generated in U.S. dollars. A majority of our expenses were
incurred in Indian rupees and the balance was incurred in U.S. dollars, European
currencies and Japanese yen. Our functional currency and the functional currency
for our subsidiaries located in India is the Indian rupee; however, the Japanese
yen, U.S. dollars, Sterling pounds and Singapore dollars are the functional
currencies of our foreign subsidiaries located in Japan, the U.S., the U.K. and
Singapore, respectively. The translation of such foreign currencies into U.S.
dollars (our reporting currency) is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue and
expense accounts using monthly simple average exchange rates prevailing during
the reporting periods. Adjustments resulting from the translation of functional
currency financial statements to reporting currency are accumulated and reported
as other comprehensive income, a separate component of shareholders' equity.

                                       38

<PAGE>

We expect that a majority of our revenues will continue to be generated in U.S.
dollars for the foreseeable future and that a significant portion of our
expenses, including personnel costs as well as capital and operating
expenditures, will continue to be denominated in Indian rupees. Consequently,
our results of operations will be affected to the extent the rupee appreciates
against the U.S. dollar.

Results of Operations

The following table sets forth selected operating data as value and as a
percentage of revenues by segment (including inter-segment revenues) for the
periods indicated:

<TABLE>
<CAPTION>
                                                                                                  Fiscal 2002
                                                                                                  -----------

                                                                      IT           Internet    Software
                                                                   services        services    products   Elimination    Total
                                                                   --------        ----------------------------------    -----
                                                                                      (in thousands)
<S>                                                               <C>             <C>           <C>       <C>            <C>
Statement of Operations Data:
Revenues - external customers ...................................  $377,321       $  36,585         585          --      414,491
Inter-segment revenue ...........................................       618           2,806     $   284     $(3,708)          --
                                                                                  ---------------------     -------     --------

      Total revenues ............................................   377,939          39,391         869      (3,708)     414,491
Cost of revenues(1) .............................................   213,528          28,689         177      (3,398)     238,996
                                                                   --------       ---------------------     -------     --------

Gross profit ....................................................   164,411          10,702         692        (310)     175,495
Operating expenses:
   Selling, general and administrative expenses(2) ..............    92,070          45,814       3,322        (310)     140,896
   Amortization  of goodwill ....................................     4,311          12,686          --          --       16,997
                                                                   --------                     -------     --------------------
      Impairment of goodwill ....................................        --          81,115          --          --       81,115
                                                                   -------------------------------------------------------------

      Total operating expenses ..................................    96,381         139,615       3,332        (310)     239,008
                                                                   ------------------------     -------     -------     --------

Operating income (loss) .........................................    68,030        (128,913)     (2,630)         --      (63,513)
Interest income .................................................     2,984             822          --          --        3,806
Interest expense ................................................    (2,811)            (45)         --          --       (2,856)
Gain on sale of shares of infoway ...............................    45,594              --          --          --       45,594
Other income ....................................................    11,182             986          --          --       12,168
Other expenses ..................................................        58            (136)         --          --          (78)
                                                                                                            -------     --------
Income (loss) before income taxes, minority interest
 and equity in earnings (losses) of associated companies,
 net of taxes ...................................................   125,037        (127,286)     (2,630)         --       (4,879)
Income taxes ....................................................   (17,234)             --          --          --      (17,234)
Minority interest ...............................................        64          73,342          --          --       73,406
Equity in earnings (losses) of associated companies .............     1,363         (26,764)         --          --      (25,401)
                                                                                                -------     -------     --------

Net income (loss) ...............................................  $109,230       $ (80,708)    $(2,630)         --     $ 25,892
                                                                   ========       =================================     ========

Depreciation ....................................................  $ 25,008       $  12,093     $   384          --     $ 37,485
Deferred stock based compensation. ..............................    10,479             316          --          --       10,795
</TABLE>


<TABLE>
<CAPTION>
                                                                       Year ended March 31,
                                                                       --------------------
                                                                     2000
                                                                     ----
                                           IT       Internet       Software                                     IT
                                        services    services       products     Elimination      Total       services
                                        --------    --------       ------------------------      -----       --------
                                                        (in thousands)
<S>                                     <C>         <C>            <C>          <C>             <C>          <C>
Statement of Operations
 Data:
Revenues-- external
 customers ...........................  $149,257     $15,198           --              --       $164,455     $273,467
Inter-segment revenue ................     5,768         208           --        $ (5,976)            --        3,547
                                        --------     -------      -------        --------       ---------------------

 Total revenues ......................   155,025      15,406           --          (5,976)       164,455      277,014
Cost of revenues(/1/) ................    89,387       6,935           --          (5,873)        90,449      181,326
                                        --------     -------      -------        --------       ---------------------

Gross profit .........................    65,638       8,471           --            (103)        74,006       95,688
Operating expenses:
 Selling, general and
  administrative expenses(/2/) .......    44,912      16,428       10,802          (2,550)        69,592       66,958
 Amortization of goodwill ............     2,370       2,673           --              --          5,043        4,500
                                        --------     -------      -------        --------       ---------------------
<CAPTION>
                                                         2001
                                                         ----

                                          Internet    Software      Elimina-
                                          services    products       tion     Total
                                          -----------------------------------------
                                                (in thousands)
<S>                                      <C>          <C>         <C>        <C>
Statement of Operations
 Data:
Revenues-- external
 customers ............................  $  36,840        --            --   $310,307
Inter-segment revenue .................      2,148    $  213     $  (5,908)        --
                                         --------------------------------------------

 Total revenues .......................     38,988       213        (5,908)   310,307
Cost of revenues(/1/) .................     27,892       142        (1,239)   208,121
                                         --------------------------------------------

Gross profit ..........................     11,096        71        (4,669)   102,186
Operating expenses:
 Selling, general and
  administrative expenses(/2/) ........     47,862    13,949        (4,669)   124,100
 Amortization of goodwill .............     20,228        --            --     24,728
                                         --------------------------------------------
</TABLE>

                                       39

<PAGE>

<TABLE>
<S>                       <C>       <C>       <C>        <C>         <C>        <C>        <C>        <C>       <C>       <C>
 Total operating
  expenses .............   47,282    19,101     10,802     (2,550)     74,635     71,458     68,090      13,949    (4,669)  148,828
                          -------   -------   --------   --------    --------------------------------------------------------------

Operating income
 (loss) ................   18,356   (10,630)   (10,802)     2,447        (629)    24,230    (56,994)    (13,878)       --   (46,642)
Interest income ........      182     2,443         --         --       2,625        263      5,469          --        --     5,732
Interest expense .......  (10,548)     (742)        --         --     (11,290)    (9,366)      (266)         --        --    (9,632)
Other income ...........    3,838        80         --     (2,447)      1,471      3,115      3,686           5        --     6,806
Other expenses .........     (206)       --       (212)        --        (418)      (330)       (14)         --        --      (344)
                          -------   -------   --------   --------    --------------------------------------------------------------

Income (loss) before
 income taxes, minority
 interest and equity in
 earnings (losses) of
 associated companies,
 net of taxes. .........   11,622    (8,849)   (11,014)        --      (8,241)    17,912    (48,119)    (13,873)       --   (44,080)
Income taxes ...........   (1,653)       34         --         --      (1,619)    (4,102)       (35)         --        --    (4,137)
Minority interest ......     (317)    3,102         --         --       2,785         65     25,707          --        --    25,772
Equity in earnings
 (losses) of associated
 companies .............      135        --         --         --         135        890     (6,357)         --        --    (5,467)
                          -------   -------   --------   --------    --------------------------------------------------------------

Net income (loss) ......  $ 9,787   $(5,713)  $(11,014)        --    $ (6,940)  $ 14,765  $ (28,804)  $ (13,873)       --  $(27,912)
                          =======   =======   ========   ========    ==============================================================

Depreciation ...........  $17,246   $ 2,872   $     52         --    $ 20,170     19,874      9,340         424        --  $ 29,638
Deferred stock
 compensation ..........   16,457       474         --         --      16,931     44,219      1,899          --        --    46,118
</TABLE>

     (1) Inclusive of deferred stock based compensation expenses $13,190
     thousand for IT services and $166 thousand for Internet services, in fiscal
     2000, $30,862 thousand for IT services and $474 thousand for Internet
     services, in fiscal 2001 and $7,140 thousand for IT services and $72
     thousand for Internet services, in fiscal 2002.

     (2) Inclusive of deferred stock based compensation expense of $3,267
     thousand for IT services and $308 thousand for Internet services in fiscal
     2000, $13,357 thousand for IT services and $1,425 thousand for Internet
     services in fiscal 2001 and $3,339 thousand for IT services and $243
     thousand for Internet services in fiscal 2002.

<TABLE>
<CAPTION>
    Fiscal 2002
    -----------
                                                                      IT         Internet        Software
                                                                   services      services        products        Total
                                                                   --------      --------        --------        -----
<S>                                                                <C>           <C>             <C>            <C>
Statement of Operations Data:
Revenues - external customers ..............................           99.8%         92.9%           67.3%       100.0%
Inter-segment revenue ......................................            0.2           7.1            32.7           --
                                                                                                                 -----

      Total revenues .......................................          100.0         100.0           100.0        100.0
Cost of revenues(1) ........................................           56.5          72.8            20.4         57.7
                                                                                     ----

Gross profit ...............................................           43.5          27.2            79.6         42.3
Operating expenses:
   Selling, general and administrative expenses(2) .........           24.4         116.3           382.3         34.0
   Amortization  of  goodwill ..............................            1.1          32.2              --          4.1
                                                                     --------------------          -------------------
     Impairment of goodwill ................................             --         205.9              --         19.6
                                                                     -------------------------------------------------

      Total operating expenses .............................           25.5         354.4           382.3         57.7
                                                                     ------        ------          ------        -----

Operating income (loss) ....................................           18.0        (327.3)         (302.6)       (15.3)
Interest income ............................................            0.8           2.1              --          0.9
Interest expense ...........................................           (0.7)         (0.1)             --         (0.7)
</TABLE>

                                       40

<PAGE>

<TABLE>
<S>                                                                       <C>         <C>        <C>         <C>
Gain on sale of share in Infoway ......................................        12.1         --          --       11.0
Other income ..........................................................         3.0        2.5          --        2.9
Other expenses ........................................................          --       (0.3)         --         --
                                                                             ------                 ------     ------

Income (loss) before income taxes, minority interest and
equity in earnings (losses) of associated companies,
net of taxes ..........................................................        33.1     (323.1)     (302.6)      (1.2)
Income taxes ..........................................................        (4.6)        --          --       (4.2)
Minority interest. ....................................................          --      186.2          --       17.7
                                                                             -----------------      -----------------

Equity in earnings (losses) of associated companies ...................         0.4      (67.9)         --       (6.1)
                                                                             ------     ------      ------     ------

Net income (loss) .....................................................        28.9%    (204.9)%    (302.6)       6.2%
                                                                             ======     ======      ======     ======


Depreciation ..........................................................         6.6%      30.7%       44.2%       9.0%
Deferred stock based compensation .....................................         2.8%       0.8%         --        2.6%
</TABLE>

<TABLE>
<CAPTION>
       Year ended March 31,                                      2000                                         2001
       ---------------------                                     ----                                         ----
                                                IT       Internet    Software               IT         Internet   Software
                                             services    services    products      Total    services   services   products    Total
                                             --------------------    -------------------    ---------------------------------------
<S>                                           <C>          <C>         <C>      <C>         <C>        <C>        <C>       <C>
Statement of Operations
  Data:
Revenues -- external
  customers ..............................     96.3%        98.6%         --      100.0%      98.7%     94.5%       ---     100.0%
Inter-segment revenue ....................      3.7          1.4          --         --        1.3       5.5      100.0%       --
                                              -----        -----       -----    -------------------------------------------------

  Total revenues .........................    100.0        100.0          --      100.0      100.0     100.0      100.0     100.0
Cost of revenues(1) ......................     57.7         45.0          --       55.0       65.5      71.5       66.7      67.1
                                              -----        -----       -----    -------------------------------------------------

Gross profit .............................     42.3         55.0          --       45.0       34.5      28.5       33.3      32.9
Operating expenses:
  Selling, general and
   administrative
   expenses(2) ...........................     29.0        106.6          --       42.3       24.2     122.8     6548.8      40.0
  Amortization of
   goodwill ..............................      1.5         17.4          --        3.1        1.6      51.9         --       8.0
                                              -----        -----       -----    -------------------------------------------------

  Total operating
   expenses ..............................     30.5        124.0          --       45.4       25.8     174.6     6548.8      48.0
Operating income
  (loss) .................................     11.8        (69.0)         --       (0.4)       8.7    (146.2)   (6515.5)    (15.0)
Interest income ..........................      0.1         15.9          --        1.6        0.1      14.0         --       1.8
Interest expense .........................     (6.8)        (4.8)                  (6.9)      (3.4)     (0.7)        --      (3.1)
Other income .............................      2.5          0.5          --        0.9        1.1       9.5        2.3       2.2
Other expense ............................     (0.1)          --          --       (0.3)      (0.1)       --                 (0.1)
                                              -----        -----       -----    -------------------------------------------------

Income (loss) before income taxes, minority
  interest and equity in earnings
  (losses) of associated companies,
  net of taxes ...........................      7.5        (57.4)         --       (5.0)       6.5    (123.4)   (6513.1)    (14.2)
Income taxes .............................     (1.1)         0.2          --       (1.0)      (1.5)     (0.1)        --      (1.3)
Minority interest ........................     (0.2)        20.1          --        1.7         --      65.9         --       8.3
Equity in earnings
  (losses) of associated
  companies ..............................      0.1           --          --        0.1        0.3     (16.3)        --      (1.8)
                                              -----        -----          --    -------------------------------------------------

Net income (loss) ........................      6.3%       (37.1)%        --       (4.2)%      5.3%    (73.9)%  (6513.1)%    (9.0)%
                                              =====        =====       =====    =================================================
</TABLE>

                                       41

<PAGE>

<TABLE>
<S>                                  <C>          <C>      <C>       <C>         <C>         <C>        <C>        <C>
Depreciation ...................     11.1%        18.6%      --       12.3%         7.2%      24.0%      199.1%     9.6%
Deferred stock
  compensation .................     10.6          3.1       --       10.3         16.0%       4.9%         --     14.9%
</TABLE>

       (1) Inclusive of deferred stock based compensation expenses $13,190
       thousand for IT services and $166 thousand for Internet services, in
       fiscal 2000, $30,862 thousand for IT services and $474 thousand for
       Internet services, in fiscal 2001 and $7,140 thousand for IT services and
       $72 thousand for Internet services, in fiscal 2002.

       (2) Inclusive of deferred stock based compensation expense of $3,267
       thousand for IT services and $308 thousand for Internet services in
       fiscal 2000, $13,357 thousand for IT services and $1,425 thousand for
       Internet services in fiscal 2001 and $3,339 thousand for IT services and
       $243 thousand for Internet services in fiscal 2002.

Comparison of fiscal 2002 and 2001

Revenues. Revenues increased by 33.6% to $414.5 million in fiscal 2002 from
$310.3 million in fiscal 2001. The revenue growth was primarily a result of
increases in revenues from IT services, which represented $377.3 million of
revenues in fiscal 2002 as compared to $273.5 million in fiscal 2001. In fiscal
2002, we derived approximately 91.0% of our total revenues from IT services,
approximately 8.8% of our total revenues from Internet services and 0.2% of our
total revenues from software products.

During fiscal 2002, we derived 72.0% of our revenues from the United States,
7.7% from India, 2.2% from Japan, 9.5% from Europe, and the remaining 8.6% from
other countries. During fiscal 2001, we derived 72.3% of our revenues from the
United States, 10.1% from India, 2.4% from Japan, 6.6% from Europe and the
remaining 8.6% from other countries.

Cost of revenues. Cost of revenues increased 14.8% to $239.0 million in fiscal
2002 from $208.1million in fiscal 2001. This increase was attributable primarily
to increases in associate compensation and benefits expenses, depreciation
expense and an increase in other expenses. Associate compensation and benefits
expenses increased 40.8% to $145.5 million, or 35.1% of revenues, in fiscal 2002
from $103.3 million, or 33.3% of revenues, in fiscal 2001. Depreciation expense
increased 40.2% to $21.6 million, or 5.2% of revenues, in fiscal 2002 from $15.4
million, or 5.0% of revenues, in fiscal 2001. Other expenses were primarily
comprised of cost of direct supplies. Other expenses increased 52.1% to $28.6
million, or 6.9% of revenues, in fiscal 2002 from $18.8 million, or 6.1% of
revenues, in fiscal 2001. These increases were partly compensated by a decrease
in deferred stock based compensation, communication expenses and travel
expenses. Deferred stock based compensation expense decreased 77.0% to $7.2
million, or 1.7% of revenues, in fiscal 2002 from $31.3 million, or 10.1% of
revenues, in fiscal 2001. Communication expenses decreased 4.1% to $18.5
million, or 4.5% of revenues, in fiscal 2002 from $19.3 million, or 6.2% of
revenues, in fiscal 2001. Travel expenses decreased 12.0% to $17.5 million, or
4.2% of revenues, in fiscal 2002 from $19.9 million, or 6.4% of revenues, in
fiscal 2001. Inter-segments cost of revenues were $3.4 million in fiscal 2002 as
compared to $1.2 million in fiscal 2001 and have not been allocated to the
individual components that make up cost of revenues. Cost of revenues
represented 57.7% of revenues in fiscal 2002 and 67.1% in fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 13.5% to $140.9 million in fiscal 2002 from
$124.1 million in fiscal 2001. This increase was a result primarily of increases
in associate compensation and benefits, profressional charges, travel expenses,
depreciation expense and other expenses. Compensation and benefits expenses
increased 69.1% to $44.4 million, or 10.7% of revenues, in fiscal 2002 from
$26.3 million, or 8.5% of revenues, in fiscal 2001. Professional charges
increased 57.2% to $11.9 million, or 2.9% of revenues, in fiscal 2002 from $7.6
million, or 2.5% of revenues, in fiscal 2001. Travel expenses increased 43.2% to
$10.3 million, or 2.5% of revenues, in fiscal 2002 from $7.2 million, or 2.3% of
revenues, in fiscal 2001. Depreciation expense increased 11.5% to $15.8 million,
or 3.8% of revenues, in fiscal 2002 from $14.2 million, or 4.6% of revenues, in
fiscal 2001. Other expenses increased 18.7% to $27.1 million, or 6.5% of
revenues, in fiscal 2002 from $22.8 million, or 7.4% of revenues, in fiscal
2001. These increase were partly compensated by a decrease in deferred stock
based compensation and marketing expenses. Deferred stock based compensation
expense decreased 75.8% to $3.6 million, or 0.9% of revenues, in fiscal 2002
from $14.8 million, or 4.8% of revenues, in fiscal 2001. Marketing expenses
decreased 33.9% to $9.9 million, or 2.4% of revenues, in fiscal 2002 from $15.0
million, or 4.8% of revenues, in fiscal 2001. Inter-segment selling, general and
administrative expenses were $0.3 million in fiscal 2002 as compared to $4.7
million in fiscal 2001 and have not been allocated to the individual components
that make up selling, general and administrative expenses. Selling, general and
administrative expenses represented 34.0% of

                                       42

<PAGE>

revenues in fiscal 2002 as compared to 40.0% of revenues in fiscal 2001.

Amortization of goodwill. Amortization of goodwill expense was $16.9 million in
fiscal 2002 as compared to $24.7 million in fiscal 2001.

Impairment of goodwill: In the year ended March 31, 2002, Satyam recorded an
impairment charge of $81.1 million relating to goodwill acquired in the
IndiaWorld, India Plaza and Eduempire acquisitions by Infoway as a result of an
ongoing impairment assessment of goodwill recorded in connection with various
acquisitions. Since the operations of those entities have been completely
integrated into the operations of Infoway. Satyam assessed the recoverability of
goodwill arising out of the India World and India Plaza acquisitions at the
enterprise level of Infoway. The impairment charge was calculated as the
difference between the market value of Infoway and its net assets. The
assessment was performed due to significant decline in Infoway's stock price for
a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other-than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of $73.1 million, India Plaza of $8.0 million and
Eduempire of $50 thousand has been charged to the statement of operations for
the year ended March 31, 2002.

Operating income (loss). As a result of the foregoing, we incurred an operating
loss of $63.5 million in fiscal 2002 as compared to $46.6 million in fiscal
2001. Excluding primary non-cash items of amortization and impairment of
goodwill expense and deferred stock based compensation expense, operating income
would have been $45.4 million in fiscal 2002 and $24.2 million in fiscal 2001
and operating margin would have been 11.0% and 7.8% of total revenues in fiscal
2002 and 2001, respectively.

Interest income. Interest income was $3.8 million in fiscal 2002 and $5.7
million in fiscal 2001.

Interest expense. Interest expense decreased to $2.9 million in fiscal 2002 from
$9.6 million in fiscal 2001 primarily on account of repayment debt.

Gain of sale of shares in Infoway. Gain on sale of shares in Infoway was $45.6
million which was recognized in fiscal 2002. In June 2000, we completed a sale
of 347,200 equity shares to GSIC at a price of US$144 per share, subject to a
put option to sell the shares back to us. If Infoway had not completed an
initial public offering on a recognized stock exchange in India by September
2001. The put option held by GSIC expired unexercised on October 15, 2001.

Other income. Other income increased to $12.2 million in fiscal 2002 from $6.8
million in fiscal 2001 which was primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $78 thousand in fiscal 2002 and $0.3 million
in fiscal 2001.

Income taxes. Income taxes were $17.2 million in fiscal 2002 as compared to $4.1
million in fiscal 2001. The increase in income taxes is mainly on account of tax
paid on the capital gain on sale of shares of Infoway and the provision for
foreign taxes payable overseas by offsite and onsite centers, principally in the
United States.

Minority Interest. Minority interest increased to $73.4 million in fiscal 2002
from $25.8 million in fiscal 2001.

Equity in earnings (losses) of associated companies. Equity losses of associated
companies were $25.4 million in fiscal 2002 as compared to $5.5 million in
fiscal 2001 which was primarily due to impairment of goodwill associated with
our investment in CricInfo Limited. Satyam evaluates the recoverability of
goodwill relating to the investment in associated companies as current events or
circumstances warrant to determine whether adjustments are needed to their
carrying values. In the year ended March 2002, Satyam recorded a impairment
charge of $21.0 million relating to goodwill on the Cricinfo acquisition by
Infoway as a result of an impairment assessment.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth
assumption for Cricinfo at the time of acquisition. Due to the change in market
realities, management believes those revenue growth estimates would require
significant downward revision. The anticipated leadership and synergistic
benefits have also largely not realized. The current fair value of Cricinfo as
an independent entity is negligible due to its mounting cash losses coupled with
the adverse current market conditions. The impairment was based on

                                       43

<PAGE>

discounted cash flow method considering historical results adjusted to reflect
management's best estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-than temporary. Hence, out of the carrying value of goodwill as at
September 30, 2001 of $24.5 million, $21.4 million has been charged to the
statement of operations for the year ended March 31, 2002. The management
believes that balance goodwill of $3.1 million is attributable to the future
discounted cash flows from Infoway's share in revenue.

Net income (loss). As a result of the foregoing, net income was $25.9 million in
fiscal 2002 as compared to a net loss of $27.9 million in fiscal 2001. Excluding
primary non-cash items of amortization and impairment of goodwill expense and
deferred stock based compensation expense, net income would have been $134.8
million in fiscal 2002 and $42.9 million in fiscal 2001 and net margin would
have been 32.5% and 13.8% in fiscal 2002 and 2001, respectively.

IT Services

Revenues. IT services revenues (including inter-segment revenues) increased
36.4% to $377.9 million in fiscal 2002 from $277.0 million in fiscal 2001, of
which $0.6 million and $3.5 million represented inter-segment revenues in fiscal
2002 and 2001, respectively. All "revenues" discussed in this sub-section relate
only to IT services revenues generated from external customers and exclude
inter-segment revenues generated from services provided by Satyam Computer
Services to its subsidiaries and vice-versa.

Our revenue growth primarily reflected the higher proportion of our service
offerings that address the system maintenance and packaged software integration.

During fiscal 2002, we derived 76.5% of our revenues from the United States,
10.4% from Europe, 2.4% from Japan, 1.6% from India and the remaining 9.1% from
the Middle East, Africa, Singapore and Australia. During fiscal 2001, we derived
78.6% of our revenues from the United States, 7.0% from Europe, 2.7% from Japan,
2.2% from India and the remaining 9.5% from the Middle East, Africa, Singapore
and Australia.

For purposes of the remainder of the discussion of the results of operations for
our business segments, except as specifically indicated, we have included all
inter-segment data for all items under discussion. Please refer to the "Results
of Operations" table above for an analysis of consolidation of the business
segments.

Cost of revenues. Cost of revenues increased 17.8% to $213.5 million in fiscal
2002 from $181.3 million in fiscal 2001. Cost of revenues represented 56.5% of
revenues in fiscal 2002 as compared to 65.5% in fiscal 2001. The increase in
cost of revenues was attributable primarily to an increase in associate
compensation and benefits; depreciation expenses and other expenses.
Compensation and benefit expenses increased 42.2% to $142.5 million, or 37.7% of
revenues in fiscal 2002 from $100.2 million, or 36.2% of revenues, in fiscal
2001 respectively. Depreciation expense increased 40.2% to $21.6 million, or
5.7% of revenues, in fiscal 2002 from $15.4 million, or 5.6% of revenues, in
fiscal 2001. Other expenses primary comprised cost of direct supplies, rental
expenses and professional charges. Other expenses increased 83.4% to $20.4
million, or 5.4% of revenues, in fiscal 2002 from $11.1million, or 4.0% of
revenues, in fiscal 2001. These increases were partly offset by a decrease in
deferred stock based compensation expense and travel expenses. Deferred stock
based compensation expense decreased 76.9% to $7.1 million, or 1.9% of revenues,
in fiscal 2002 from $30.9 million, or 11.1% of revenues. Travel expenses
decreased 12.0% to $17.5 million, or 4.6% of revenues, in fiscal 2002 from $19.9
million, or 7.2% of revenues, in fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 37.5% to $92.1 million in fiscal 2002 from
$67.0 million in fiscal 2001. Selling, general and administrative expenses
represented 24.4% of revenues in fiscal 2002 as compared to 24.2% in fiscal
2001. The increase in selling, general and administrative expenses was
attributable primarily to an increase in compensation and benefit expenses;
marketing expenses; profressional charges; travelling expenses and other
expenses. Compensation and benefit expenses increased 186.0% to $33.3 million,
or 8.8% of revenues, in fiscal 2002 from $11.6 million, or 4.2% of revenues, in
fiscal 2001. Marketing expenses increased 31.6% to $6.7 million, or 1.8% of
revenues, in fiscal 2002 from $5.1 million, or 1.8% of revenues, in fiscal 2001.
Professional charges increased 63.1% to $9.1 million, or 2.4% of revenues, in
fiscal 2002 from $5.6 million, or 2.0% of revenues, in fiscal 2001. Travelling
expenses increased 102.7% to $8.2 million, or 2.2% of revenues, in fiscal 2002
from $4.0 million, or 1.5% of revenues, in fiscal 2001. Other expenses increased
34.1% to $18.0 million, or 4.8% of revenues, in fiscal 2002 from $13.4 million,
or 4.9% of

                                       44

<PAGE>

revenues, in fiscal 2001. These increase were primarily offset by a decrease in
deferred stock based compensation expense and depreciation expenses. Deferred
stock based compensation expense decreased 75.0% to $3.3 million, or 0.9% or
revenues, in fiscal 2002 from $13.4 million, or 4.8% of revenues, in fiscal
2001. Depreciation expenses decreased 24.3% of to $3.4 million, or 0.9% of
revenues, in fiscal 2002 from $4.4 million, or 1.6% of revenues, in fiscal 2001.

Amortization of goodwill. Amortization of goodwill was $4.3 million in fiscal
2002 as compared to 4.5 million in fiscal 2001. The goodwill expense reflects
the goodwill associated with the acquisition of the minority interest in SES in
September 1999.

Operating income (loss). As a result of the foregoing, operating income was
$68.0 million in fiscal 2002 as compared to $24.2 million in fiscal 2001.
Excluding primary non-cash items of amortization of goodwill expense and
deferred stock based compensation expense, operating income would have been
$82.8 million in fiscal 2002 and $72.9 million in fiscal 2001 and operating
margin would have been 21.9% and 26.3% of revenues in fiscal 2002 and 2001,
respectively.

Interest income. Interest income increased to $3.0 million in fiscal 2002 from
$0.3 million in fiscal 2001. The increase in interest income was attributable
primarily to interest earned on deposits kept out of proceeds from our ADS
offering.

Interest expense. Interest expense decreased to $2.8 million in fiscal 2002 from
$9.4 million in fiscal 2001 primarily on account of repayment of debt.

Gain of sale of shares in Infoway. Gain on sale of shares in Infoway was $45.6
million which was recognized in fiscal 2002. In June 2000, we completed a sale
of 347,200 equity shares to GSIC at a price of US$144 per share, subject to a
put option to sell the shares back to us. If Infoway had not completed an
initial public offering on a recognized stock exchange in India by September
2001. The put option held by GSIC expired unexercised on October 15, 2001.

Other income. Other income increased to $11.2 million in fiscal 2002 from $3.1
million in fiscal 2001 which was primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $58 thousand in fiscal 2002 and $0.3 million
in fiscal 2001.

Income taxes. Income taxes were $17.2 million in fiscal 2002 and $4.1 million in
fiscal 2001. The increase in income taxes is mainly on account of tax paid on
the capital gain on sale of shares of Infoway and the provision for foreign
taxes payable overseas by offsite and onsite centers, principally in the United
States.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $1.4 million in fiscal 2002 as compared to $0.9 million in fiscal
2001 primarily due to proportionate earnings associated with our investment in
Satyam Venture Engineering Services Limited and Satyam-GE Software Services (P)
Ltd.,

Net income (loss). As a result of the foregoing, net income was $109.2 million
in fiscal 2002 as compared to net income of $14.8 million in fiscal 2001.
Excluding primary non-cash items of amortization of goodwill expense and
deferred stock based compensation expense, net income would have been $124.0
million in fiscal 2002 and $63.5 million in fiscal 2001 and net margin would
have been 32.8% and 22.9% in fiscal 2002 and 2001, respectively.

Internet Services

Revenues. Internet services revenues (including inter-segment revenues) were
$39.4 million in fiscal 2002 and $39.0 million in fiscal 2001, of which
inter-segment revenues were $2.8 million in fiscal 2002 and $2.1 million in
fiscal 2001. The number of Internet access subscribers grew from more than
460,000 as of March 31, 2001 to over 600,000 as of March 31, 2002.

Cost of revenues. Cost of revenues increased 2.9% to $28.7 million in fiscal
2002 from $27.9 million in fiscal 2001. Cost of revenues represented 72.8% of
Internet services revenues in fiscal 2002 as compared to 71.5% in fiscal 2001.
The higher level of cost of revenues was attributable to compensation and
benefit expenses. Direct personnel costs for web development and customer
technical support increased 30.9% to $5.0 million, or 12.6% of revenues, in
fiscal 2002 from $3.8 million, or 9.7% of revenues, in fiscal 2001. These
increases were partially offset by a decrease in leased line costs which
decreased 8.6% to $14.1 million, or 35.9% of revenues, in fiscal 2002 from $15.5
million, or 39.7% of revenues, in fiscal 2001. Cost of hardware and software
purchased for resale was $6.0 million in fiscal 2002

                                       45

<PAGE>

and $6.0 million fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $45.8 million in fiscal 2002 from $47.9 million in
fiscal 2001. Selling, general and administrative expense represented 116.3% of
Internet services revenues in fiscal 2002 as compared to 122.8% in fiscal 2001.
This decrease was primarily attributable to decrease in marketing expenses.
Marketing expenses decreased 66.8% to $3.2million, or 8.1% of revenues, in
fiscal 2002 from $9.6 million, or 24.5% of revenues, in fiscal 2001. This
decrease was partially offset by an increase in depreciation expense and
Indirect personnel costs. Depreciation expense increased 29.5% to $12.1 million,
or 30.7% of revenues, in fiscal 2002 from $9.3 million, or 24.0% of revenues, in
fiscal 2001. Personnel costs increased 0.3% to $9.6 million, or 24.5% of
revenues, in fiscal 2002 from $9.6 million, or 24.6% of revenues, in fiscal
2001.

Amortization of goodwill. Amortization of goodwill expense was $12.7 million in
fiscal 2002 as compared to $24.7 million in fiscal 2001.

Impairment of goodwill: In the year ended March 31, 2002, Satyam recorded an
impairment charge of $81.1 million relating to goodwill acquired in the
IndiaWorld, India Plaza and Eduempire acquisitions by Infoway as a result of an
ongoing impairment assessment of goodwill recorded in connection with various
acquisitions. Since the operations of those entities have been completely
integrated into the operations of Infoway. Satyam assessed the recoverability of
goodwill arising out of the India World and India Plaza acquisitions at the
enterprise level of Infoway. The impairment charge was calculated as the
difference between the market value of Infoway and its net assets. The
assessment was performed due to significant decline in Infoway's stock price for
a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other-than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of $73.1 million, India Plaza of $8.0 million and
Eduempire of $50 thousand has been charged to the statement of operations for
the year ended March 31, 2002.

Operating income (loss). As a result of the foregoing, operating loss increased
to $128.9 million in fiscal 2002 from $57.0 million in fiscal 2001. Excluding
primary non-cash items of amortization and impairment of goodwill expense and
deferred stock based compensation expense, operating loss would have been $34.8
million in fiscal 2002 and $34.9 million in fiscal 2001.

Interest income. Interest income decreased to $0.8 million in fiscal 2002 as
compared to $5.5 million in fiscal 2001 primarily due to reduction in deposits
with banks

Interest expense. Interest expense decreased to $45 thousand in fiscal 2002 from
$0.3 million in fiscal 2001.

Other Income. Other income was $1.0 million in fiscal 2002 as compared to $3.7
million in fiscal 2001.

Minority Interest. Minority interest increased to $73.3 million in fiscal 2002
from $25.7 million in fiscal 2001.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $26.8 million in fiscal 2002 as compared to $6.4 million in
fiscal 2001 which was primarily due to impairment of goodwill associated with
our investment in CricInfo Limited. Satyam evaluates the recoverability of
goodwill relating to the investment in associated companies as current events or
circumstances warrant to determine whether adjustments are needed to their
carrying values. In the year ended March 2002, Satyam recorded a impairment
charge of $21.4 million relating to goodwill on the Cricinfo acquisition by
Infoway as a result of an ongoing impairment assessment of goodwill recorded in
connection with various acquisitions.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth assumption
for Cricinfo at the time of acquisition. Due to the change in market realities,
management believes those revenue growth estimates would require significant
downward revision. The anticipated leadership and synergistic benefits have also
largely not realized. The current fair value of Cricinfo as an independent
entity is negligible due to its mounting cash losses coupled with the adverse
current market conditions. The impairment was based on
discounted cash flow method considering historical results adjusted to reflect
management's best estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-

                                       46

<PAGE>

than temporary. Hence, out of the carrying value of goodwill as at September 30,
2001 of $24.5 million, $21.4 million has been charged to the statement of
operations for the year ended March 31, 2002. The management believes that
balance goodwill of $3.1 million is attributable to the future discounted cash
flows from Infoway's share in revenue.

Net income (loss). As a result of the foregoing, net loss increased to $80.7
million in fiscal 2002 from $28.8 million in fiscal 2001. Excluding primary
non-cash items of amortization and impairment of goodwill expense and deferred
stock based compensation expense, net income would have been $13.4 million in
fiscal 2002 as compared to net loss of $6.7 million in fiscal 2001.

Software Products

In fiscal 2002, VCI has generated revenues of $0.9 million of which $0.3 million
was from intersegment revenues. VCI incurred a $2.6 million net loss in fiscal
2002 as compared to a $13.9 million net loss in fiscal 2001.

The net loss of $2.6 million in fiscal 2002 was attributable primarily to
selling and general administrative expenses, research and development expenses
which primarily comprised employee compensation and benefits of $1.7 million and
professional charges of $0.4 million. The net loss of $13.9 million in fiscal
2001 was attributable primarily to research and development, selling and general
administrative expenses, which primarily comprised professional charges of $3.4
million and employee compensation and benefits of $6.3 million.

Comparison of fiscal 2001 and 2000

Revenues. Revenues increased by 88.7% to $310.3 million in fiscal 2001 from
$164.5 million in fiscal 2000. The revenue growth was primarily a result of
increases in revenues from IT services, which represented $273.5 million of
revenues in fiscal 2001 as compared to $149.3 million in fiscal 2000, and to a
lesser extent increases in revenues from Internet services. In fiscal 2001, we
derived approximately 88.1% of our total revenues from IT services,
approximately 11.9% of our total revenues from Internet services and no revenues
were generated from software products.

During fiscal 2001, we derived 72.3% of our revenues from the United States,
10.1% from India, 2.4% from Japan, 6.6% from Europe and the remaining 8.6% from
other countries. During fiscal 2000, we derived 74.9% of our revenues from the
United States, 10.0% from India, 6.3% from Japan, 5.2% from Europe, and the
remaining 3.6% from other countries.

Cost of revenues. Cost of revenues increased 130.1% to $208.1 million in fiscal
2001 from $90.4 million in fiscal 2000. This increase was attributable primarily
to increases in associate compensation and benefits expenses, deferred stock
based compensation expense, costs of international travel, communication
expenses and an increase in other expenses. Associate compensation and benefits
expenses increased 118.5% to $103.3 million, or 33.3% of revenues, in fiscal
2001 from $47.3 million, or 28.8% of revenues, in fiscal 2000. Deferred stock
based compensation expense increased 134.6% to $31.3 million, or 10.1% of
revenues, in fiscal 2001 from $13.4 million, or 8.1% of revenues, in fiscal 2000
due to higher prevailing prices of our equity shares and those of Infoway on the
dates we granted options. Travel expenses increased 94.3% to $19.9 million, or
6.4% of revenues, in fiscal 2001 from $10.3 million, or 6.2% of revenues, in
fiscal 2000. Communication expenses increased 248% to $19.3 million, or 6.2% of
revenues, in fiscal 2001 from $5.5 million, or 3.4% of revenues, in fiscal 2000.
Depreciation expense increased 94.0% to $15.4 million, or 5.0% of revenues, in
fiscal 2001 from $8.0 million, or 4.8% of revenues, in fiscal 2000. Other
expenses increased 211% to $18.8 million, or 6.1% of revenues, in fiscal 2001
from $6.1 million, or 3.7% of revenues, in fiscal 2000. Inter-segment cost of
revenues were $1.2 million in fiscal 2001 as compared to $5.9 million in fiscal
2000 and have not been allocated to the individual components that make up cost
of revenues. Cost of revenues represented 67.1% of revenues in fiscal 2001 and
55.0% in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 78.3% to $124.1 million in fiscal 2001 from
$69.6 million in fiscal 2000. This increase was a result primarily of increases
in associate compensation and benefits, deferred stock based compensation
expense, Marketing expenses and other expenses. Compensation and benefits
expenses increased 139.3% to $26.3 million, or 8.5% of revenues, in fiscal 2001
from $11.0 million, or 6.7% of revenues, in fiscal 2000. Deferred stock based
compensation expense increased 314% to $14.8 million, or 4.8% of revenues, in
fiscal 2001 from $3.6 million, or 2.2% of revenues, in fiscal 2000. Marketing
expenses increased 66.1% to $15.0 million, or 4.8% of revenues, in fiscal 2001
from $9.0 million, or 5.5% of revenues, in fiscal 2000. Other expenses increased
157.6% to $22.8 million, or 7.4% of revenues, in fiscal 2001 from $8.9 million,
or 5.4% of revenues, in fiscal 2000. Inter-segment selling, general and
administrative expenses were $4.7 million in fiscal 2001 as compared to $2.6
million in fiscal 2000 and have not been allocated to the individual

                                       47

<PAGE>

components that make up selling, general and administrative expenses. Selling,
general and administrative expenses represented 40.0% of revenues in fiscal 2001
as compared to 42.3% of revenues in fiscal 2000.

Amortization of goodwill. Amortization of goodwill was $24.7 million in fiscal
2001 as compared to $5.0 million in fiscal 2000. The goodwill expense in fiscal
2001 reflects the amortization of goodwill associated with the acquisition of
the minority interest in SES in September 1999, the acquisition of IndiaWorld
and IndiaPlaza.com by Infoway.

Operating income (loss). As a result of the foregoing, we incurred an operating
loss of $46.6 million in fiscal 2001 as compared to $0.6 million in fiscal 2000.
Excluding primary non-cash items of amortization of goodwill and deferred stock
based compensation expense, operating income would have been $24.2 million in
fiscal 2001 and $21.3 million in fiscal 2000 and operating margin would have
been 7.8% and 13.0% of total revenues in fiscal 2001 and 2000, respectively.

Interest income. Interest income increased to $5.7 million in fiscal 2001 from
$2.6 million in fiscal 2000. This increase was attributable primarily to
interest earned on deposits placed with banks from Infoway's public offerings
proceeds.

Interest expense. Interest expense decreased to $9.6 million in fiscal 2001 from
$11.3 million in fiscal 2000.

Other income. Other income increased to $6.8 million in fiscal 2001 from $1.5
million in fiscal 2000. The increase is primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $0.3 million in fiscal 2001 and $0.4 million
in fiscal 2000.

Income taxes. Income taxes were $4.1 million in fiscal 2001 as compared to $1.6
million in fiscal 2000. The increase in income taxes is mainly on account of
provision for foreign taxes payable overseas by offsite and onsite centers,
principally in United States.

Equity in earnings (losses) of associated companies. Equity losses of associated
companies were $5.5 million in fiscal 2001 as compared to $0.1 million in fiscal
2000 which was primarily due to proportionate losses associated with our
investment in Satyam Venture Engineering Services Limited, and amortization of
goodwill associated with our investment in CricInfo Limited.

Net income (loss). As a result of the foregoing, net loss was $27.9 million in
fiscal 2001 as compared to a net loss of $6.9 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, net income would have been $42.9 million in fiscal
2001 and $15.0 million in fiscal 2000 and net margin would have been 13.8% and
9.1% in fiscal 2001 and 2000, respectively.

IT Services

Revenues. IT services revenues (including inter-segment revenues) increased
78.7% to $277.0 million in fiscal 2001 from $155.0 million in fiscal 2000, of
which $3.5 million and $5.8 million represented inter-segment revenues in fiscal
2001 and 2000, respectively. All revenues discussed in this sub-section
"Revenues" relate only to IT services revenues generated from external customers
and exclude inter-segment revenues generated from services provided by Satyam
Computer Services to its subsidiaries and vice-versa.

Revenues continued to increase in all aspects of our services, except for system
maintenance. Our revenue growth primarily reflected the higher proportion of our
service offerings that address the software design and development, packaged
software integration and eBusiness requirements of our customers. In particular,
revenues from eBusiness projects were $74.9 million, or 27.4%, of our revenues
in fiscal 2001 as compared to $30.8 million, or 20.6%, of our revenues in fiscal
2000. The decline in revenues from system maintenance resulted from a reduction
in Year 2000 conversion projects. We derived 0% of our revenues from Year 2000
conversion projects in fiscal 2001 as compared to 5.5% of our revenues in fiscal
2000.

During fiscal 2001, we derived 78.6% of our revenues from the United States,
7.0% from Europe, 2.7% from Japan, 2.2% from India and the remaining 9.5% from
the Middle East, Africa, Singapore and Australia. During fiscal 2000,
we derived 81.4% of our revenues from the United States, 5.7% from Europe, 6.9%
from Japan, 2.1% from India and the remaining 3.9% from the Middle East, Africa,
Singapore and Australia.

For purposes of the remainder of the discussion of the results of operations for
our business segments, except as specifically indicated, we have included all
inter-segment data for all items under discussion. Please refer to the

                                       48

<PAGE>

"Results of Operations" table above for an analysis of consolidation of the
business segments.

Cost of revenues. Cost of revenues increased 102.9% to $181.3 million in fiscal
2001 from $89.4 million in fiscal 2000. Cost of revenues represented 65.5% of
revenues in fiscal 2001 as compared to 57.7% in fiscal 2000. The increase in
cost of revenues as a percentage of revenues was attributable primarily to an
increase in associate compensation and benefits; travel expenses; depreciation
expenses and other expenses. Deferred stock based compensation expense increased
134.0% to $30.9 million, or 11.1% of revenues, in fiscal 2001 from $13.2
million, or 8.5% of revenues, in fiscal 2000 primarily due to higher market
prices of our equity shares on the dates we granted options and reduced vesting
periods for our options. Compensation and benefit expenses increased 95.1% to
$100.2 million, or 36.2% of revenues in fiscal 2001 from $51.4 million, or 33.1%
of revenues, in fiscal 2000 respectively, resulting primarily from a larger
number of technical associates, which increased 74.4% from 4,478 to 7,798, and
an increase in salaries. Travel expenses increased 94.3% to $19.9 million, or
7.2% of revenues, in fiscal 2001 from $10.3 million, or 6.6% of revenues, in
fiscal 2000. Depreciation expense increased 94.0% to $15.4 million, or 5.6% of
revenues, in fiscal 2001 from $8.0 million, or 5.1% of revenues, in fiscal 2000.
Other expenses increased 165.0% to $11.1 million, or 4.0% of revenues, in fiscal
2001 from $4.2 million, or 2.7% of revenues, in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 49.1% to $67.0 million in fiscal 2001 from
$44.9 million in fiscal 2000. Selling, general and administrative expenses
represented 24.2% of revenues in fiscal 2001 as compared to 29.0% in fiscal
2000. The decrease in selling, general and administrative expenses as a
percentage of revenues was attributable primarily to a decrease in marketing
expenses resulting from an increase in our direct marketing efforts, as well as
decreased depreciation expenses, rent expense and compensation and benefit
expenses as a percentage of revenues. Depreciation expenses decreased to 1.6% of
revenues, or $4.4 million, in fiscal 2001 from 5.3% of revenues, or $8.2
million, in fiscal 2000. Marketing expenses decreased to 1.8% of revenues, or
$5.1 million, in fiscal 2001 from 4.3% of revenues, or $6.7 million, in fiscal
2000. Rental expenses decreased to 0.7% of revenues, or $2.0 million, in fiscal
2001 from 2.2% of revenues, or $3.4 million, in fiscal 2000. Compensation and
benefit expenses decreased to 4.2% of revenues, or $11.6 million, in fiscal 2001
from 5.1% of revenues, or $7.9 million, in fiscal 2000. These decreases were
partially offset by an increase in deferred stock based compensation expense and
other expenses as a percentage of revenues. Deferred stock based compensation
expense increased to 4.8% of revenues, or $13.4 million, in fiscal 2001 from
2.1% of revenues, or $3.3 million, in fiscal 2000. Other expenses increased to
4.9% of revenues, or $13.4 million in fiscal 2001 from 4.2% of revenues, or $6.4
million in fiscal 2000.

Amortization of goodwill. Amortization of goodwill was $4.5 million in fiscal
2001 as compared to $2.4 million in fiscal 2000. The goodwill expense reflects
the goodwill associated with the acquisition of the minority interest in SES in
September 1999.

Operating income (loss). As a result of the foregoing, operating income was
$24.2 million in fiscal 2001 as compared to an operating income of $18.4 million
in fiscal 2000. Excluding primary non-cash items of amortization of goodwill
expense and deferred stock based compensation expense, operating income would
have been $72.9 million in fiscal 2001 and $37.2 million in fiscal 2000 and
operating margin would have been 26.3% and 24.0% of revenues in fiscal 2001 and
2000, respectively.

Interest income. Interest income increased to $0.3 million in fiscal 2001 from
$0.2 million in fiscal 2000.

Interest expense. Interest expense was $9.4 million in fiscal 2001 and $10.5
million in fiscal 2000.

Other income. Other income decreased to $3.1 million in fiscal 2001 from $3.8
million in fiscal 2000. The other income was primarily on account of foreign
currency translation gains.

Other expense. Other expenses were $0.3 million in fiscal 2001 and $0.2 million
in fiscal 2000.

Income taxes. Income taxes were $4.1 million in fiscal 2001 and $1.7 million in
fiscal 2000. The increase in income taxes is mainly on account of provision for
foreign taxes payable overseas by offsite and onsite centers, principally in
United States.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $0.9 million in fiscal 2001 as compared to $0.1 million in fiscal
2000 primarily due to proportionate losses associated with our investment in
Satyam Venture Engineering Services Limited.

                                       49

<PAGE>

Net income (loss). As a result of the foregoing, net income was $14.8 million in
fiscal 2001 as compared to net income of $9.8 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, net income would have been $63.5 million in fiscal
2001 and $28.6 million in fiscal 2000 and net margin would have been 22.9% and
18.5% in fiscal 2001 and 2000, respectively.

Internet Services

Revenues. Internet services revenues (including inter-segment revenues)
increased 153.1% to $39.0 million in fiscal 2001 from $15.4 million in fiscal
2000, of which inter-segment revenues were $2.1 million in fiscal 2001 and $0.2
million in fiscal 2000. This increase was attributable primarily to a
significant increase in the corporate services businesses and a significant
number of new orders from prominent customers throughout India. The number of
Internet access subscribers grew from more than 151,000 as of March 31, 2000 to
over 460,000 as of March 31, 2001. Corporate customers grew from more than 500
as of March 31, 2000 to more than 650 as of March 31, 2001.

Cost of revenues. Cost of revenues increased 302% to $27.9 million in fiscal
2001 from $6.9 million in fiscal 2000. Cost of revenues represented 71.5% of
Internet services revenues in fiscal 2001 as compared to 45.0% in fiscal 2000.
The higher level of cost of revenues as a percentage of revenues was
attributable primarily to increases in the cost of hardware and software
purchased from strategic partners for resale, leased line costs resulting
primarily from increased requirement for international bandwidth and last mile
connectivity. The cost of hardware and software purchased for resale was $6.0
million, or 15.4% of revenues, in fiscal 2001 from $1.6 million, or 10.3% of
revenues in fiscal 2000. Leased line costs increased 399% to $15.5 million, or
39.7% of revenues, in fiscal 2001 from $3.1 million, or 20.1% of revenues, in
fiscal 2000. These increases were partially offset by a decrease in direct
personnel costs for web development and customer technical support as a
percentage of revenues. Direct personnel costs for web development and customer
technical support decreased to 9.7% of revenues or $3.8 million, in fiscal 2001
from 11.8% of revenues, or $1.8 million, in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 191.3% to $47.9 million in fiscal 2001 from
$16.4 million in fiscal 2000. Selling, general and administrative expense
represented 122.8% of Internet services revenues in fiscal 2001 as compared to
106.6% in fiscal 2000. This increase was attributable to an increase in indirect
personnel costs, depreciation expenses and marketing expenses. Indirect
personnel costs increased 349% to $9.6 million, or 24.6% of revenues, in fiscal
2001 from $2.1 million, or 13.9% of revenues, in fiscal 2000 primarily due to a
growth in staff from 622 as of March 31, 2000 to 1,044 as of March 31, 2001.
Marketing expenses increased 306% to $9.6 million, or 24.5% of revenues, in
fiscal 2001 from $2.4 million, or 15.3% of revenues, in fiscal 2000 primarily
due to the launch of our consumer Internet Access Services Division and Portals
Division.

Amortization of goodwill expense. Amortization of goodwill was $20.2 million in
fiscal 2001 as compared to $2.7 million in fiscal 2000. The goodwill expense in
fiscal 2001 reflects the amortization of goodwill associated with the
acquisition of IndiaWorld, IndiaPlaza and investment in CricInfo Limited.

Operating income (loss). As a result of the foregoing, operating loss increased
to $57.0 million in fiscal 2001 from $10.6 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, operating loss would have been $34.9 million in
fiscal 2001 and $7.5 million in fiscal 2000.

Interest income. Interest income increased to $5.5 million in fiscal 2001 as
compared to $2.4 million in fiscal 2000. This increase was attributable
primarily to interest earned from short term deposits.

Interest expense. Interest expense decreased to $0.3 million in fiscal 2001 from
$0.6 million in fiscal 2000.

Other Income. Other income increased to $3.7 million in fiscal 2001 from $80
thousand in fiscal 2000.

Minority Interest. Minority interest increased to $25.7 million in fiscal 2001
from $3.1 million in fiscal 2000.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $6.4 million in fiscal 2001 primarily due to amortization of
goodwill associated with our investment in Refco Sify, Placements.com and
CricInfo Limited.

Net income (loss). As a result of the foregoing, net loss increased to $28.8
million in fiscal 2001 from $5.7 million in fiscal 2000. Excluding primary
non-cash items of amortization of goodwill expense and deferred stock based

                                       50

<PAGE>

compensation expense, net loss would have been $6.7 million in fiscal 2001 and
$2.6 million in fiscal 2000.

Software Products

VCI was building its sales and marketing team and generated no revenues in
fiscal 2001. VCI incurred a $13.9 million net loss in fiscal 2001 as compared to
a $11.0 million net loss in fiscal 2000.

The net loss of $13.9 million in fiscal 2001 was attributable primarily to
research and development, selling and general administrative expenses, which
primarily comprised professional charges of $3.4 million and employee
compensation and benefits of $6.3 million. The net loss of $11.0 million in
fiscal 2000 was attributable primarily to professional charges and software
product research and development expenses of $8.7 million, most of which were
costs paid to Satyam for development work undertaken on the product.

Liquidity and Capital Resources

Net cash provided by (used in) operating activities. Net cash provided by
operating activities was $116.4 million, $5.9 million and $14.1 million in
fiscal 2002, 2001 and 2000, respectively.

In fiscal 2000, non-cash adjustments to reconcile the $6.9 million net loss to
net cash provided by operating activities consisted primarily of depreciation
and amortization of $25.3 million and deferred stock based compensation expenses
of $16.9 million. These adjustments were partially offset by an increase in
working capital, consisting mainly of an increase in net accounts receivable and
unbilled revenues of $23.2 million, and an increase in pre-paid expenses, other
receivables and inventory of $10.3 million. Net accounts receivable and unbilled
revenues increased primarily as a result of a significant increase in our
revenues. Pre-paid expenses, other receivables and inventory increased primarily
as a result of increased prepayments relating to Infoway's use of leased
telecommunications lines, satellite link charges and insurance premiums.

In fiscal 2001, non-cash adjustments to reconcile the $27.9 million net loss to
net cash provided by operating activities consisted primarily of deferred stock
based compensation expenses of $46.1 million and depreciation and amortization
of $54.5 million. These adjustments were partially offset by an increase in net
accounts receivable and unbilled revenues of $49.5 million. Net accounts
receivable and unbilled revenues increased primarily as a result of a
significant increase in our revenues.

In fiscal 2002, non-cash adjustments to reconcile the $25.9 million net income
to net cash used in operating activities consisted primarily of deferred stock
based compensation expense of $10.8 million and depreciation, amortization and
impairment of goodwill expense of $136.3 million.

Net cash used in investing activities. Net cash used in investing activities was
$40.4 million, $137.8 million and $83.6 million in fiscal 2002, 2001 and 2000,
respectively. Net cash used in investing activities was primarily related to
purchases of premises and equipment of $40.8 million and acquisitions and
investments in associated companies of $40.2 million in fiscal 2000. Net cash
used in investing activities in fiscal 2001 was primarily related to
acquisitions and investments in associated companies of $52.5 million; and
purchases of premises and equipment of $84.8 million consisted primarily of
infrastructure, computers and other equipment associated with the expansion in
headcount as we continued to grow. Net cash used in investing activities in
fiscal 2002 was primarily related to acquisitions and investments in associated
companies of $4.6 million; and purchases of premises and equipment of $34.2
million consisted primarily of infrastructure, computers and other equipment
associated with the expansion.

Net cash provided by financing activities. Net cash provided by financing
activities was $110.7 million, $14.2 million and $251.7 million in fiscal 2002,
2001 and 2000, respectively. In addition to using cash generated from
operations, we financed our continuing expansion primarily through capital
raising activities in fiscal 2000, through sale of investments in fiscal 2001
and through capital raising activities in fiscal 2002.

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) at a price of $9.71 per ADS. We received approximately
$152.7 million in cash, net of underwriting discounts, commissions and
other offering costs. Our Securities Act registration statement on Form F-1 with
respect to the offering was declared effective by the Securities and Exchange
Commission on May 14, 2001 (Registration No. 333-13464). As of April 30, 2002,
approximately $64.3 million of these proceeds have been used for prepayment of
loans ($26.9 million); strategic investments in our subsidiaries and others
($10.6 million); development of facilities and infrastructure ($7.2 million) and
working capital and general corporate purposes ($19.6 million). We intend to use
the balance of the net proceeds

                                       51

<PAGE>

to fund expansion of our existing facilities and communication network in
different locations in India and outside India; to develop new facilities within
and outside India; to invest in joint ventures and other strategic investments;
and for working capital and general corporate purposes. None of the net proceeds
from our ADS offering were paid, directly or indirectly, to any of our
directors, officers or general partners or any of their associates, or to any
persons owning ten percent or more of any class of our equity securities, or any
affiliates.

As of March 31, 2002, we had $243.5 million in cash and cash equivalents (of
which $16.7 million was held by Infoway and therefore may not be accessible to
us), $1.8 million in short term debt, $5.5 million in other outstanding rupee
denominated loans. As of March 31, 2002, we have unused short term working
capital line of credit of $7.2 million from a bank and unused non-funded lines
of credit of $4.8 million from banks.

The following table describes our outstanding credit facilities as at March 31,
2002 :

<TABLE>
<CAPTION>
                                                                        Amount          Interest         Computation
                                                                     -------------------------------------------------
Loan Type                            Lenders                          Outstanding      (per annum)          Method
---------                            -------                         -----------------------------          ------
                                                                     (in thousands)
<S>                             <C>                                  <C>           <C>                   <C>
Rupee Loan of Satyam            Citibank N.A. and                        $4,155       13.0% to 14.25%      Variable
Associates Trust                    ICICI Bank

Other loans                       Various parties                         1,344      different interest     Fixed
                                                                                           rates

Short Term Debt of Satyam
Manufacturing Technology Inc         T R W Inc                              789                  6.0%       Fixed

Short term Overdraft of
Satyam Europe Ltd., .........                                               975


Total .......................                                            $7,263
</TABLE>

We expect Infoway to continue incurring losses in the near future. Based upon
Infoway's present business and funding plans and a May 2001 government policy
change that increased the permissible foreign ownership in certain internet
service providers, including Infoway, from 49.0% to 74.0%, we believe that
Infoway's cash and cash equivalents of $16.7 million as of March 31, 2002 and,
if necessary, other resources believed to be available, are sufficient to meet
its currently known requirements through March 31, 2003, and we do not expect to
have to provide it with any funds. In light of the highly dynamic nature of
Infoway's business, however, we cannot assure you that its capital requirements
and sources will not change significantly in the future or whether or not it may
seek future financial support from us.

In order to provide further financial flexibility, Infoway is actively
investigating opportunities to raise additional capital, which could be in
the form of debt, equity, or a combination. Infoway's ability to raise funds
through the sale of equity is limited by foreign ownership restrictions
imposed on it by Indian law and the terms of its Internet service provider
license.  Government of India policies previously limited the total foreign
equity in an Internet service provider to 49%. In May 2001, the Department
of Commerce and Industry increased the limit on foreign direct investment
for Internet companies, such as Infoway,  from 49% to 74%.  Infoway's
license was reissued in April 2002, increasing the maximum permitted level
of foreign equity investment in Infoway to 74% and also permitting Infoway
to provide Internet telephony, subject to the terms of operation as detailed
in the license. If additional funds are raised through the issuance of
equity or convertible debt securities, the percentage ownership of Infoway's
stockholders and the holders of its ADSs will be reduced and these
securities may have rights, preferences or privileges senior to those of
Infoway's stockholders and the holders of its ADSs.  We cannot assure you
that additional financing will be available on terms favorable to Infoway,
at all. If adequate funds are not available on acceptable terms, Infoway's
ability to fund and expand its operations, take advantage of unanticipated
opportunities, develop or enhance Internet content, features or services, or
otherwise respond to competitive pressures will be significantly limited.
Infoway's business, results of operations and financial condition could be
materially adversely affected by any such limitation.

We anticipate capital expenditures of approximately $40.0 million during fiscal
2003, principally to finance construction of new facilities in our offshore
centres; expand facilities in offshore centers in India and establish offsite
centers outside India. We believe that existing cash and cash equivalents, net
proceeds from our May 2001 ADS offering and funds generated from operations will
be sufficient to meet these requirements. However, we may significantly alter
our proposed capital expenditures plans and accordingly, may require additional
financing to meet our requirements. After fiscal 2003, we may require additional
financing to fund our working capital and capital expenditure requirements. In
either case, we cannot assure you that additional financing will be available at
all or, if available, that such financing will be obtained on terms favorable to
us or that any additional financing will not be dilutive to our shareholders.

The following table sets forth our contractual obligations and commitments to
make future payments as of March 31, 2002. The following table does not give
effect to the issuance of our convertible notes and excludes our accounts
payable, accrued operating expenses and other current liabilities which are
payable in normal course of operations.

<TABLE>
<CAPTION>
                                                              Fiscal ended March 31, 2002, Payments due
                                        ------------------------------------------------------------------------------
                                        within 1 year   2-3 years       4-5 years      after 5 years         Total
                                        -------------  -------------   -------------   ---------------   -------------
                                                                       (thousands)
<S>                                     <C>            <C>             <C>             <C>               <C>
Long term debt                              $2,787        $2,712             -           -                  $5,499
Capital leases                                  82            84             2           -                     168
Operating leases
Unconditional purchase obligations:
    Other commercial commitments             1,034           500             -           -                   1,534
</TABLE>

                                       52

<PAGE>

<TABLE>
<S>                                     <C>       <C>       <C>        <C>         <C>
    Bank guarantees                     1,356        281       173         -        1,810
    Letters of credit                     754          -         -         -          754
Total contractual cash obligations      6,001      3,589       175         -        9,765
</TABLE>

In April 2001, following the completion of the latest version of VisionCompass,
we decided to restructure VCI by reducing product development and general and
administrative expenses. As part of the restructuring, the services of
approximately forty personnel, including the Chief Executive Officer, Dr. Robert
Bismuth, were terminated.

Following the restructuring, VCI put in place a business development plan that
has begun to show results. VCI recorded revenues of $0.9 million in fiscal 2002.

Income Tax Matters

As of March 31, 2002, we had an operating loss carry forward of approximately
$35.1 million for tax purposes including valuation allowance. Under Indian law,
loss carry forwards from a particular year may be used to offset taxable income
over the next eight years.

The statutory corporate income tax rate in India is currently 35.0%. This tax
rate is presently subject to a 2.0% surcharge resulting in an effective tax rate
of 35.7%. However, we cannot assure you that additional surcharges will not be
implemented by the government of India. Satyam Computer Services benefits from
certain significant tax incentives provided to software entities under Indian
tax laws. These incentives presently include: (i) an exemption from payment of
Indian corporate income taxes for a period of ten consecutive years of
operations of software development facilities designated as "Software Technology
Parks" ("STP units"); and (ii) a tax deduction for profits from exporting
computer software. The benefits of these tax incentives have historically
resulted in an effective tax rate for Satyam Computer Services well below
statutory rates. Further, most of Satyam Computer Services operations are from
STP units which are entitled to a tax holiday of ten years from the date of
commencement of operations. STP units registered after March 31, 2001 are not
entitled to the above exemption. In case of Satyam Computer Services for various
registered STP units these exemptions expire starting from fiscal 2006 through
fiscal 2010. However, Satyam Computer Services earns certain other income and
domestic income, which are taxable irrespective of the tax holiday as stated
above. Satyam Computer Services subsidiaries are subject to income taxes of the
countries in which they operate.

Effects of Inflation

Inflation has not had a significant effect on our results of operations and
financial condition to date. However, India has experienced relatively high
rates of inflation in the recent past. According to the Economist Intelligence
Unit, the rates of inflation in India for 1997, 1998, 1999 and 2000 were 7.2%,
13.2%, 4.7% and 5.1%, respectively, and the projected rate of inflation in India
for 2001 is 5.3%.

Under Infoway's Internet service provider license, Infoway is given the right to
establish the prices it charges to its subscribers, as determined by market
forces. However, under the conditions of Infoway's license, the TRAI may review
and fix the prices Infoway charges its subscribers at any time. If the TRAI were
to fix prices for the Internet service provider services Infoway provides,
Infoway might not be able to increase the prices it charges its subscribers to
mitigate the impact of inflation, which could seriously harm Infoway's business.

Exchange Rates

The following table sets forth, for each of the months indicated, information
concerning the number of Indian rupees for which one U.S. dollar could be
exchanged based on the average of the noon buying rate in the City of New York
on the last day of each month during each of such months for cable transfers in
Indian rupees as certified for customs purposes by the Federal Reserve Bank of
New York:

<TABLE>
<CAPTION>
            Month                              Month End    Average        High     Low
            -----                              ---------    -------        ------------
                                                           (in Rupees)
<S>                                           <C>          <C>           <C>       <C>
March 2001 ...............................      46.85         46.64       46.85     46.43
April 2001 ...............................      46.86         46.80       47.05     46.48
May 2001 .................................      47.00         46.94       47.05     46.74
June 2001 ................................      47.09         47.04       47.09     47.00
July 2001 ................................      47.18         47.18       47.21     47.11
</TABLE>

                                       53

<PAGE>

<TABLE>
<S>                                                <C>       <C>        <C>       <C>
August 2001 ...................................     47.17     47.17      47.19      47.11
September 2001 ................................     47.90     47.75      48.91      47.20
October 2001 ..................................     48.04     48.05      48.17      47.96
November 2001 .................................     47.98     48.04      48.11      47.98
December 2001 .................................     48.27     47.93      48.29      47.80
January 2002 ..................................     48.56     48.35      48.56      48.27
February 2002 .................................     48.76     48.72      48.90      48.55
March 2002 ....................................     48.83     48.77      48.83      48.71
</TABLE>

The following table sets forth, for the fiscal years indicated, information
concerning the number of Indian rupees for which one U.S. dollar could be
exchanged based on the average of the noon buying rate in the City of New York
on the last day of each month during the period for cable transfers in Indian
rupees as certified for customs purposes by the Federal Reserve Bank of New
York:

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,                       Period End       Average      High     Low
---------------------------                       ----------       -----------------     ---
<S>                                               <C>              <C>       <C>       <C>
1996 (from December 12, 1995) .................      34.22           35.49    38.35    .33.65
1997 ..........................................      35.94           35.52    35.98     33.75
1998 ..........................................      39.50           37.18    40.40     35.33
1999 ..........................................      42.44           42.08    43.68     39.25
2000 ..........................................      43.63           43.34    43.82     42.20
2001 ..........................................      46.85           45.70    46.91     43.56
2002 ..........................................      48.83           47.71    48.91     46.58
</TABLE>

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. The following is a brief discussion of the more
significant accounting policies and methods used by us. In addition, Financial
Reporting Release No. 61 was recently released by the SEC to require all
companies to include a discussion to address, among other things, liquidity,
off-balance sheet arrangements, contractual obligations and commercial
commitments.

We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations is discussed
throughout management's Discussion and Analysis of Financial Condition and
Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 1 in the Notes to the Consolidated Financial
Statements in Item 17 of this Annual Report on Form 20-F, beginning on page
F-10.

Note that our preparation of this Annual Report on Form 20-F requires us to make
estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Management bases its estimates and judgements on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgements about the carrying values of assets and liabilities that are
not readily apparent from other sources. There can be no assurance that actual
results will not differ from those estimates.

Management believes the following critical accounting policies, among others,
affect its more significant judgements and estimates used in the preparation of
its consolidated financial statements.

Revenue recognition

Our revenue recognition policy is significant because our revenue is a key
component of our results of operations. We follow very specific and detailed
guidelines in measuring revenue; however, certain judgments affect the
application of our revenue policy. Revenue results are difficult to predict, and
any shortfall in revenue or delay in recognizing revenue could cause our
operating results to vary significantly from quarter to quarter and could result
in future operating losses.

We derive our revenue from primarily two sources (i) IT services, which includes
software development, system maintenance, package software implementation,
engineering design services and ebusiness, and (ii) internet services

                                       54

<PAGE>

which includes consumer internet access services, corporate network / data and
e-consulting services, and online portal and content offerings.

Revenues from IT services

Revenues earned from services performed on a "time and material" basis are
recognized as the services are performed. IT services performed on time bound
fixed-price engagements, require accurate estimation of the costs which include
salaries and related expenses of technical associates, related communication
expenses, travel costs, scope and duration of each engagement. Revenue and the
related costs for these projects are recognized on percentage of completion,
with revisions to estimates reflected in the period in which changes become
known. Provisions for estimated losses on such engagements are made during the
period in which a loss becomes probable and can be reasonably estimated. We
recognize revenue based on the completed-contract method where the work to
complete cannot be reasonably estimated.

We provide our clients with one to three months warranty as post-sale support
for its fixed price engagements. Costs associated with such services are accrued
at the time the related revenues are recorded. Historically, Satyam has not
incurred any expenditure on account of warranties and since the customer is
required to formally sign off on the work performed, any subsequent work is
usually covered by an additional contract.

Revenues from Internet services

Revenues from corporate network services, which include providing e-commerce
solutions, electronic data interchange and other network based services, are
recognized upon actual usage of such services by customers and are based on
either the time for which the network is used or the volume of data transferred,
or both.

Revenues from web-site hosting are recognized ratably over the period for which
the site is hosted. Revenue from development of internet networking solutions
comprise income from time and material contracts and fixed price contracts.
Revenues are recognized in accordance with the revenue recognition policy of IT
Services.

Internet access is provided to customers either for unlimited hours or for a
specified number of hours, which is to be utilized within a specified period of
time. Customers purchase a CD-ROM that allows them to access the Internet. The
amounts received from customers on the sale of these CD-ROMs are not refundable.
Satyam recognizes revenue based on usage by the customer over the specified
period. At the end of the specified period, the remaining unutilized hours, if
any, are recognized as revenue. Unlimited internet access and electronic mail
access is sold to customers for a specified period of time over which the
related revenue is recognized.

Revenues from banner advertisements and sponsorship contracts are recognized
ratably over the period in which the advertisements are displayed. Revenues from
electronic commerce transactions are recognized when the transaction is
completed.

Impairment of Goodwill

We assess the impairment of identifiable intangibles, long-lived assets and
related goodwill and enterprise level goodwill whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors
we consider important which could trigger an impairment review include the
following:

..  significant underperformance relative to expected historical or projected
   future operating results;

..  significant changes in the manner of our use of the acquired assets or the
   strategy for our overall business;

..  significant negative industry or economic trends;

..  significant decline in our stock price for a sustained period; and

..  our market capitalization relative to net book value.

When we determine that the carrying value of intangibles, long-lived assets and
related goodwill and enterprise level goodwill may not be recoverable based upon
the existence of one or more of the above indicators of impairment, we
measure any impairment based on a projected discounted cash flow method using a
discount rate determined by our management to be commensurate with the risk
inherent in our current business model.

In 2002, Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets" became effective and upon adoption of SFAS 142,
amortization of goodwill recorded for business combinations

                                       55

<PAGE>

consummated prior to July 1, 2001 will cease, and intangible assets acquired
prior to July 1, 2001 that do not meet the criteria for recognition under SFAS
141 will be reclassified to goodwill. We adopted SFAS 142 on April 1, 2002. As a
result of the adoption of SFAS 142, amortization of goodwill will be lower by
approximately US$4.3 million in the year ending March 31, 2003 as compared to
the year ended March 31,2002.

In lieu of amortization, we are required to perform an initial impairment review
of our goodwill in 2002 and an annual impairment review thereafter.

Future events could cause us to conclude that impairment indicators exist and
that goodwill associated with our acquired businesses is impaired. Any resulting
impairment loss could have a material adverse impact on our financial condition
and results of operations.

Accounts Receivable

The Company also estimates the amount of uncollectable receivables each period
and establishes an allowance for uncollectable amounts. The amount of the
allowance is based on the age of unpaid amounts, information about the
creditworthiness of customers, and other relevant information. Estimates of
uncollectable amounts are revised each period, and changes are recorded in the
period they become known. A significant change in the level of uncollectable
amounts would have a significant effect on the Company's results of operations.

Accounting for income taxes.

As part of the process of preparing our consolidated financial statements we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves us estimating our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items for tax and accounting purposes. These differences result in deferred
tax assets and liabilities, which are included within our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be
recovered from future taxable income and to the extent we believe that recovery
is not likely, we must establish a valuation allowance. To the extent we
establish a valuation allowance or increase this allowance in a period, we must
include an expense within the tax provision in the statement of operations.

The provision for foreign taxes is due to income taxes payable in overseas tax
jurisdictions by its offsite and onsite centers, principally in the United
States. Satyam Computer Services benefits from certain significant tax
incentives provided to software entities under Indian tax laws. These incentives
presently include: (i) an exemption from payment of Indian corporate income
taxes for a period of ten consecutive years of operations of software
development facilities designated as "Software Technology Parks"; and (ii) a tax
deduction for profits from exporting computer software. The benefits of these
tax incentives have historically resulted in an effective tax rate for Satyam
Computer Services well below statutory rates. Further, most of Satyam Computer
Services' operations are from "Software Technology Parks" ("STP units") which
are entitled to a tax holiday of ten years from the date of commencement of
operations. STP units registered after March 31, 2001 are not entitled to the
above exemption. In Satyam Computer Services various registered STP units these
exemptions expire starting from fiscal 2006 through fiscal 2010. However, Satyam
Computer Services earns certain other income and domestic income, which are
taxable irrespective of tax holiday as stated above. Satyam Computer Services
subsidiaries are subject to income taxes of the countries in which they operate.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. The valuation allowance
is based on our estimates of taxable income by jurisdiction in which we operate
and the period over which our deferred tax assets will be recoverable. In the
event that actual results differ from these estimates or we adjust these
estimates in future periods we may need to establish an additional valuation
allowance which could materially impact our financial position and results of
operations.

Impact of Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued FASB
Statements Nos. 141 and 142 ("SFAS 141" and "SFAS 142"), "Business Combinations"
and "Goodwill and Other Intangible Assets". SFAS 141 replaces APB 16 and
eliminates pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill. Adoption of SFAS No. 141 did not have an
impact on our financial position and results of operations.

SFAS 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Under SFAS 142, goodwill and indefinite-lived
intangibles will be tested annually and whenever events or circumstances occur
indicating that they might be impaired. Goodwill is tested for impairment
employing a two-step method. First

                                       56

<PAGE>

the fair value of the reporting unit is compared to its carrying amount. If the
fair value is less than the carrying amount, the impairment is measured as the
excess of recorded goodwill over its implied fair value. Indefinite-lived
intangibles are tested for impairment by comparing the carrying amount to the
fair value. SFAS 141 and SFAS 142 are effective for all business combinations
completed after June 30, 2001. Upon adoption of SFAS 142, amortization of
goodwill recorded for business combinations consummated prior to July 1, 2001
will cease, and intangible assets acquired prior to July 1, 2001 that do not
meet the criteria for recognition under SFAS 141 will be reclassified to
goodwill. We adopted SFAS 142 on April 1, 2002, the beginning of fiscal 2002. As
a result of the adoption of SFAS 142, amortization of goodwill will be lower by
approximately $4.3 million in the year ending March 31, 2003 as compared to the
year ended March 31, 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 144 applies to all long-lived assets (including
discontinued operations) and consequently amends APB No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Division of a
Business". SFAS No. 144 develops an accounting model for long-lived assets that
are to be disposed of by sale and requires the measurement to be at the lower of
book value or fair value, less the cost to sell the assets. Additionally, SFAS
No. 144 expands the scope of discontinued operations to include all components
of an entity with operations that (1) can be distinguished from the rest of the
entity and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. We do not expect the provisions of SFAS No. 144 to have a
significant impact on our financial position or operating results following its
adoption on April 1, 2002.

Item 6. DIRECTORS, AND OFFICERS OF REGISTRANT

Directors and Officers

The following table sets forth the name, age, and position of each director and
executive officer of Satyam Computer Services, as of April, 25, 2002:

<TABLE>
<CAPTION>
   Name                                Age     Position Held
   ----                                ---     -------------
<S>                                    <C>     <C>
Directors

B. Ramalinga Raju .................    46      Chairman
B. Rama Raju ......................    43      Managing Director and Chief Executive Officer (3)
C. Srinivasa Raju. ................    41      Director
V. P. Rama Rao ....................    68      Director (1) (2) (3)
C. Satyanarayana ..................    73      Director (1) (2) (3)
Dr. Mangalam Srinivasan ...........    64      Director (1) (2)

Executive Officers

Anil Kekre ........................    51      Executive Vice President--Regional Business Unit--Europe
Jayaraman G .......................    46      Vice President (Corp. Affairs) & Company Secretary
Kalyan Rao K. .....................    49      Executive Vice President & Chief Technical Officer--Vertical
                                               Business Unit--Telecom
Mohan Eddy F. S. ..................    52      Director--Horizontal Business Unit--Collaborative Enterprise
                                               Solutions
Murty A. S. .......................    43      Director & Senior Vice President--Global Human Resources
Prabhat G. B. .....................    36      Director--Horizontal Business Unit--Enterprise Business Solutions
Ram Mynampati. ....................    44      Executive Vice President & Chief Operating Officer--Vertical
                                               Business Unit--Insurance, Banking & Financial Services, Healthcare
Srinivas V. .......................    42      Senior Vice President & Chief Financial Officer
Thiagarajan K. ....................    49      Director & Senior Vice President--Corporate Planning and Strategy
</TABLE>

(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Investors Grievance Committee

B. Ramalinga Raju has been on our board of directors since our inception in
1987. He became Chairman of our board of directors in 1995. Before this, he was
with the Satyam Corporate Group as Vice Chairman. Mr. Ramalinga Raju

                                       57

<PAGE>

also sits on the board of directors of Satyam Infoway Limited, VCI and
Telecommunications Consultants India Limited. Mr. Ramalinga Raju holds a master
of business administration degree from Ohio University and has attended the
owner/president management course at Harvard Business School.

B. Rama Raju has been on our board of directors since our inception in 1987. He
became the Managing Director and Chief Executive Officer of our company in 1991.
Before 1997, he was with Maytas Infra Limited as one of its Directors. Mr. Rama
Raju also sits on the board of directors of Maytas Infra Limited, Satyam Venture
Engineering Services Private Limited and Gautami Power Limited. Mr. Rama Raju
holds a master of economics from Loyola College, Chennai and a master of
business administration from Loredo State University, Texas and has also
attended the owner/president management course at Harvard Business School. Mr.
Rama Raju is the younger brother of Mr. B. Ramalinga Raju, the Chairman of our
company.

C. Srinivasa Raju has been on our board of directors since 1990. He became the
Executive Director of our company in 1993. Effective September 1, 2000, Mr.
Srinivasa Raju relinquished his full time position as Executive Director to
devote his time to other independent projects. Mr. Srinivasa Raju will continue
to serve on the board of directors as a non-Executive director. Mr. Srinivasa
Raju also sits on the board of directors of Infoway. He has served as the Chief
Executive Officer of Dun & Bradstreet Satyam Software (Pvt) Limited, formerly a
joint venture company of Dun & Bradstreet and our company. He has also served as
Director of SES. Before this, he worked for Aqua Terra Consultants in Palo Alto,
California, as a consultant. Mr. Srinivasa Raju holds a master of engineering
degree and a master of science degree from Utah State University. Mr. Srinivasa
Raju is related by marriage to Mr. B. Ramalinga Raju, the Chairman of our
company.

V. P. Rama Rao has been on our board of directors since July 1991. Before this,
he was with the Indian Administrative Service and was the Chief Secretary to the
government of Andhra Pradesh. He was closely involved with the industrial
development of Andhra Pradesh for over two decades. He also worked as the Chief
of Industrial Infrastructure Corporation. Mr. Rama Rao holds a post-graduate
degree in arts, a bachelor degree in civil laws and a post-graduate diploma in
technical science and industrial administration, from Manchester University,
located in the United Kingdom.

C. Satyanarayana has been on our board of directors since July 1991. Before
this, he was with the Indian Revenue Service as the Assistant Commissioner of
Income Tax. Mr. Satyanarayana also sits on the boards of several leading
companies in India. Mr. Satyanarayana holds a bachelor degree in engineering
from the University of Madras.

Dr. Mangalam Srinivasan has been on our board of directors since July 1991. She
is a management consultant and a visiting professor at several U.S.
universities. Dr. Mangalam Srinivasan holds a Ph.d. in technology from George
Washington University, a master of business administration degree (international
finance and organization) from the University of Hawaii, a master of arts degree
(English) from Presidency College, Madras University and was an advanced special
scholar (astronomy and physics) at the University of Maryland. Currently, Dr.
Mangalam Srinivasan is an advisor to Center for Kennedy School of Government of
Harvard University where she is a distinguished fellow.

Anil Kekre has been our Executive Vice President--Regional Business Unit--Europe
since November 2000. Prior to this, he was our Senior Vice President, Strategic
Business Unit 5 from 1997. Before this, he was with Tata Information Systems
Ltd. as General Manager. Mr. Anil holds a master in technology (electronics and
computer science) degree from Indian Institute of Technology, Kanpur and a
master of business administration degree from the Faculty of Management Studies,
New Delhi.

Jayaraman G. has been our Vice President (Corp. Affairs) & Company Secretary
since October, 2000. From March 2000 to September, 2000 he was Asst. Vice
President and Company Secretary. Before this, he was with Samrat Spinner Limited
as Director (Finance) & Company Secretary. Mr. Jayaraman holds a Bachelor of
Science degree and is a fellow member of the Institute of Chartered Accountants
of India and the Institute of Cost and Works Accountants of India He is also an
associate member of Institute of Company Secretaries of India.

Kalyan Rao K. has been our Executive Vice President & Chief Technical
Officer--Vertical Business Unit--Telecom since November 2000. Prior to this, he
was our Director and Chief Technical Officer from 2000. Before this, he served
in various positions since joining our company in 1992. Mr. Kalyan Rao holds a
master of engineering (ECE) degree from Indian Institute of Science, Bangalore.

Mohan Eddy F. S. has been our Director--Horizontal Business Unit--Collaborative
Enterprise Solutions since November 2000. Prior to this, he was a Director,
Strategic Business Unit--Satyam Renaissance Consulting from 1995. Before this,
he was with Advent Computer Services Limited as its Chief Executive Officer. He
is also a director of

                                       58

<PAGE>

Satyam Asia Pte Ltd. Mr. Mohan Eddy holds a bachelor of engineering degree and a
post-graduate diploma in management from Indian Institute of Management,
Calcutta.

Murty A. S. has been our Director & Senior Vice President--Global Human
Resources since November 2000. Prior to this, he was our Senior Vice President,
Human Resources from 1999. Before this, he was our Senior Vice-President of
Strategic Business Unit 1 since 1994. He is also a director of Satyam (Europe)
Limited. Before joining our company, Mr. Murty worked for Tata Consulting
Services for over 12 years. Mr. Murty holds a master of engineering degree from
Indian Institute of Science, Bangalore.

Prabhat G. B. has been our Director--Horizontal Business Unit--Enterprise
Business Solution since November 2000. Prior to this, he was a Director,
Strategic Business Unit--Satyam Renaissance Consulting from 1995. Mr. Prabhat
holds a master of science (computer sciences) degree from Indian Institute of
Technology, Chennai.

Ram Mynampati has been our Executive Vice President & Chief Operating
Officer--Vertical Business Unit--Insurance, Banking & Financial Services,
Healthcare since November 2000. Prior to this, he was our Executive Vice
President, Strategic Business Units 1, 2 & 4 from 1999. Before this, he was with
Metamor Global Solutions, USA as Senior Vice President, Operations. Mr.
Mynampati holds a master of computer science degree from California State
University.

Srinivas V. has been our Senior Vice President & Chief Financial Officer since
November 2000. Prior to this, he was our Vice President and Chief Financial
Officer from 1998. Before this, he was our General Manager, Finance. Mr.
Srinivas is a fellow member of the Institute of Chartered Accountants of India
and the Institute of Company Secretaries of India. He is also an associate
member of the Institute of Cost and Works Accountants of India. He is also a
director of Satyam--GE Software Services Private Limited. In addition, he holds
a bachelor of law degree and a master of commerce degree from Osmania
University.

Thiagarajan K. has been our Director & Senior Vice President--Corporate Planning
and Strategy since April 2001. Prior to this, he was President--E Training of
Satyam Infoway Ltd., since January, 2000. Before this, he was with Sanmar
Weighing Systems Ltd., as President. Mr. Thiagarajan holds a Bachelor of
Technology degree from Indian Institute of Technology, Chennai and Post Graduate
Diploma in Business Management from Indian Institute of Management, Ahmedabad.

Compensation

Executive Compensation

Under the Companies Act, our shareholders must approve the salary, bonus and
benefits of all associate directors at an annual general meeting of
shareholders. At our general meeting held in May 28, 1999, our shareholders
approved the employment terms and conditions for each of our associate directors
including the monthly salary, benefits, medical reimbursement and pension fund
contributions. These terms are made for a five-year period. The employment terms
of Mr. B. Ramalinga Raju, the chairman of our board of directors, and Mr. Rama
Raju, our managing director and chief executive officer, were renewed for a
period of five years with effect from April 1, 1999.

No remuneration was paid to our non-executive directors. There are no loans to,
or guarantees in favor of, directors.

The following table sets forth all compensation awarded to, earned by or paid to
Mr. B. Rama Raju, our managing director and chief executive officer, during
fiscal 2002 for services rendered in all capacities to us. Mr. Raju was
appointed as managing director and chief executive officer of our company in
1991. With the exception of three executive officers who are serving overseas,
none of our other executive officers earned a combined salary and bonus in
excess of $100,000 during any of the last three fiscal years. With respect to
the three key managerial personnel , we have not provided individual
compensation information because their compensation is attributed predominantly
to their overseas assignments, and if they were based in India, their individual
compensation would not exceed $100,000. In accordance with the rules of the
Securities Exchange Commission, other compensation in the form of perquisites
and other personal benefits has been omitted because the aggregate amount of
such perquisites and personal benefits constituted less than the lesser of
$50,000 or 10.0% of the total of annual salary and bonuses in fiscal 2001. The
total remuneration received by our executive officers and directors for their
services to us for the fiscal year ended March 31, 2002 was $0.93 million. The
total remuneration and the amounts in the following table are in dollars based
on the noon buying rate of Rs.48.83 per dollar on March 31, 2002.

                                       59

<PAGE>

Annual Compensation

<TABLE>
<CAPTION>
Name and Principal Position                                                    Salary     Bonus       Other(1)
                                                                                          -----       --------
<S>                                                                           <C>         <C>          <C>
B. Rama Raju, Managing Director and Chief Executive Officer                   $34,405       --          $ 50,018
</TABLE>

(1) Includes commissions, membership fees and housing allowance.

Option Grants In Last Year

During the fiscal 2002, stock options granted and outstanding to our key
managerial personnel were 602,500 under the ASOP B plan and 133,000 under ASOP -
ADS plan.

Employee Benefit Plans

We have instituted an incentive plan, and intend to institute additional
incentive plans, to reward associates' performance through cash payments and,
since September 1999, stock options. Associate performance is measured by
reference to the associate's contribution to (1) profits and his or her tenure
of service, (2) organizational development and (3) customer satisfaction. An
associate must score a minimum number of points in each performance criterion to
be eligible for a reward. Since the introduction of stock options, cash bonuses
have decreased and we expect cash bonuses to continue to decrease in the future
as we place more emphasis on the granting of stock options.

Associate Stock Option Plan. The ASOP provides for the grant of warrants to
eligible associates, entitling such associates to apply for and receive 10
equity shares of our company per warrant. All full-time associates of our
company and our subsidiary companies are eligible associates.

Our ASOP was approved at the annual general meeting of shareholders in May 1998.
Associates may exercise warrants issued under the ASOP at the times and upon the
dates determined by a committee of our board of directors. The Trust acts as the
operating agency for administering the ASOP. In accordance with the resolutions
passed at our annual general meeting, we allotted to the Trust warrants for
equity shares in an amount not to exceed 13,000,000 shares. The Trust holds
these warrants on behalf of our associates and those of our subsidiaries. A
committee of directors constituted and authorized by our board of directors, or
advisory board, is in charge of studying and assessing eligible associates. The
advisory board identifies and recommends associates to the Trust according to
guidelines framed and approved by the board of directors. Factors considered for
the assessment of associates are performance, organizational development and
customer satisfaction. The advisory board can also recommend awards as
incentives to new associates joining us, and to associates who have shown
exceptional performance. On the recommendations of the advisory board, the Trust
advises us of offer of warrants to identified associates.

An associate must pay consideration of one rupee per warrant to the Trust before
the warrant can be transferred to the associate. These warrants are
non-transferable by the associate. However, if the associate ceases to be an
associate of our company by reason of resignation, dismissal or severance, the
warrants will be transferred back to the Trust for the same consideration paid
by the associate. If the associate ceases to be an employee by retirement or
death, the rights and obligations under the warrants accrue to the associate or
his or her legal heirs. The conversion date of warrants is determined by the
advisory board. The conversion price to be paid by the associate upon conversion
has been determined by the board of directors under the SEBI guidelines to be
Rs.450, or approximately $9.22 per share (translated at the noon buying rate of
Rs.48.83 per $1.00 on March 31, 2002). The SEBI guidelines apply to the pricing
of shares issued under employee stock option plans. Under the guidelines, the
minimum exercise price to acquire shares under our ASOP is the higher of the
following:

     (i) the average of the weekly high and low of the closing prices of the
     underlying shares quoted on the relevant Indian stock exchange during the
     six months period before the date which is 30 days before the date of our
     shareholders meeting at which the plan was approved (or April 24, 1998 in
     the case of our ASOP); and

     (ii) the average of the weekly high and low of the closing prices of the
     underlying shares quoted on the relevant Indian stock exchange during the
     two weeks period before the date which is 30 days before the date of our
     shareholders meeting at which the plan was approved (or April 24, 1998 in
     the case of our ASOP).

Shares transferred to the associate after conversion from warrants become the
absolute property of the associate. In the

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<PAGE>

event of a bonus or rights issue or any other issue of securities to the
existing holders, the warrant holders may be given an opportunity to exercise
the conversion warrant, even before the conversion date to enable the warrant
holder to be eligible for the issue of securities. Such shares allotted upon
conversion would be in the custody of the Trust, to be released to the associate
after the conversion date.

Associates Stock Option Plan B. In May 1999, the shareholders at our annual
general meeting approved the ASOP B. ASOP B provides for the grant of options to
eligible associates, which entitles these associates to apply for and receive
five equity shares of our company per option. All full-time associates of our
company and our subsidiary companies are eligible associates. Options granted to
eligible associates under the ASOP B become vested and exercisable within time
periods selected by a committee of our board of directors.

Under our ASOP B, 13,000,000 equity shares were set aside for associate stock
options. Stock options carry a minimum vesting period decided by the committee
of our board of directors.

The ASOP B may be administered by a committee of the board. The committee has
the power to determine the terms of the options granted, including the exercise
price, the number of equity shares subject to each option, the exercisability
thereof and the form of consideration payable upon such exercise (which may be
less than the fair market value of our equity shares on the date of grant) in
accordance with the SEBI guidelines described above. In addition, the committee
has the authority to amend, suspend or terminate our ASOP B.

ASOP ADR. Our ASOP ADR provides for the grant of incentive stock options (within
the meaning of Section 422 of the Internal Revenue Code) and non-statutory
options to acquire ADRs of Satyam Computer Services to our associates, officers
and directors as well as to employees, officers and directors of our parent or
subsidiary entities. The establishment of our ASOP ADR was approved at our
annual general meeting of shareholders in May 1999, subject to a $25.0 million
limit on the aggregate market value of the equity shares initially reserved
pursuant to the ASOP ADR. Accordingly, the total equity shares reserved for
issuance may be reduced by the board of directors from time to time to comply
with the $25.0 million limit. All options under our ASOP ADR will be exercisable
for ADSs represented by ADRs.

Our ASOP ADR may be administered by the board of directors or a committee of the
board. The committee has the power to determine the terms of the options
granted, including the exercise price, the number of ADSs subject to each
option, the exercisability thereof and the form of consideration payable upon
such exercise. In addition, the committee has the authority to amend, suspend or
terminate our ASOP ADR, provided that no such action may affect any ADS
previously issued and sold or any option previously granted under our ASOP ADR.

Options granted under our ASOP ADR are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under our ASOP ADR must generally be
exercised within three months of the end of the optionee's status as an
associate of our company, but in no event later than the expiration of the
option's term. In the event of an optionee's termination as a result of death or
disability, the vesting and exercisability of the optionee's option will
accelerate in full and the option must be exercised within 12 months after such
termination, but in no event later than the expiration of the option's term. The
exercise price of incentive stock options granted under our ASOP ADR must be at
least equal to the fair market value of our ADSs on the date of grant. The
exercise price of non-statutory stock options granted under our ASOP ADR must be
at least equal to 90.0% of the fair market value of our ADSs on the date of
grant. With respect to any participant owning stock possessing more than 10.0%
of the voting power of all classes of our outstanding capital stock, the
exercise price of any incentive stock option granted must equal at least 110.0%
of the fair market value on the grant date and the term of such incentive stock
option must not exceed five years. The term of all other options granted under
our ASOP ADR may not exceed 10 years.

Our ASOP ADR provides that in the event of a merger of our company with or into
another corporation, a sale of substantially all of our assets or a like
transaction involving our company, each option shall be assumed or an equivalent
option substituted by the successor corporation. If the outstanding options are
not assumed or substituted as described in the preceding sentence, the vesting
and exercisability of each option will accelerate in full.

IASOP. In fiscal 1999, Infoway established the IASOP which provides for the
issuance of warrants to purchase Infoway shares to eligible associates of
Infoway. The IASOP is substantially similar to the ASOP and is administered by
an employee welfare trust, the Infoway Trust. Infoway issued to the Infoway
Trust 825,000 warrants of Rs.1 each to purchase equity shares in Infoway. In
turn, the Infoway Trust from time to time grants to eligible associates warrants
to purchase equity shares held by or reserved for issuance to the Infoway Trust.
An associate must pay consideration of Rs.1 per warrant to the Infoway Trust and
each warrant entitles the associate-holder to purchase one

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<PAGE>

share of Infoway at an exercise price decided by the board of directors. The
board of directors has determined that in no event will the exercise price be
less than 90.0% of the market price of the shares on the Nasdaq National Market
as of the grant date. The warrants and the shares received upon the exercise of
warrants are subject to progressive vesting over a three year period from the
date the warrants were issued to the associate. The exercise period for these
warrants is 30 days from the vesting period. The intrinsic value of each warrant
is the market price of the shares underlying the warrants on the date of the
grant. The warrants allotted and the underlying shares are not subject to any
repurchase obligations by Infoway. We account for the IASOP as a fixed warrant
plan. We expect that the exercise price of warrants granted in the future will
not be less than 90.0% of the fair market value of the underlying shares and
therefore we do not expect to incur a compensation expense with respect to those
future grants.

VCI ASOP Plan. In April 2000, VCI established the VCI Stock Option Plan, or the
VCI Plan. The VCI Plan provides for the grant of incentive stock options (within
the meaning of Section 422 of the Internal Revenue Code) and non-statutory
options to acquire shares of common stock of VCI to VCI employees, directors and
consultants as well as to employees, directors and consultants of VCI's parent
or subsidiary entities, including our employees, directors and consultants. The
option price is determined by the board of directors at the time the option is
granted, and, in the case of incentive stock options, in no event is less than
the fair market value of the shares at the date of grant as determined by the
board of directors. The shares acquired through the exercise of options are
subject to the restrictions specified in the VCI Plan. Options generally vest
over a four-year period and expire ten years from the date of grant.

The VCI board of directors or a committee of the VCI board may administer the
VCI Plan. Options granted under the VCI Plan are not generally transferable by
the optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. The exercise price of options granted under the VCI Plan
is determined by the administrator of the VCI Plan; provided that the exercise
price of incentive stock options granted under the VCI Plan must be at least
equal to the fair market value of VCI shares on the date of grant. With respect
to any participant who owns stock possessing more than 10.0% of the voting power
of all classes of VCI's outstanding stock, the exercise price of any incentive
stock option granted must equal at least 110.0% of the fair market value of
VCI's shares on the grant date. The term of options granted under the VCI Plan
is determined by the administrator of the VCI Plan; provided that the term of
any incentive stock option may not exceed 10 years, and may not exceed five
years if granted to any participant owning more than 10.0% of the voting power
of all classes of VCI's outstanding stock.

The VCI Plan provides that in the event of a merger of VCI with or into another
corporation, a sale of substantially all of VCI's assets or a like transaction
involving VCI, each option shall be assumed or an equivalent option substituted
by the successor corporation. If the outstanding options are not assumed or
substituted as described in the preceding sentence, the vesting and
exercisability of each option will accelerate in full. A total of 25,000,000
shares of VCI common stock are currently reserved for issuance. The exercise
prices of the prior options grants have been at fair value of the underlying
shares. We expect that the exercise prices of all options granted under the VCI
Plan will be equal to the fair market value of the underlying shares and
therefore we do not expect to incur compensation expense with respect to those
future grants.

The SEBI guidelines, effective June 1999, has removed the limits on the amount
of stock options or warrants a company can grant to its employees and the amount
of discount to market price at which a company can grant such options. The
guideline requires companies to account for the difference between the market
price of its shares and the exercise price of its employee stock options as
personnel expenses in its profit and loss accounts.

Board Practices

Board Composition

Our Articles of Association set the minimum number of directors at three and the
maximum number of directors at 12. We currently have six directors. The
Companies Act and our Articles of Association require the following:

     .  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.

Messrs. B. Ramalinga Raju and B. Rama Raju are permanent directors and are not
subject to retirement by rotation. The term of Mr. C. Srinivasa Raju expired and
he was re-elected to an additional 4 year term at our AGM in June, 2001. The
terms of Messrs. C. Satyanarayana, V.P. Rama Rao and Dr. Managalam Srinivasan
will expire, and each of them is up for re-election to an additional 4 year term
at our Annual General Meetings to be held in 2002, 2003 and

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<PAGE>

2004 respectively.

Board Committees

The audit committee of board of directors reviews, acts on and reports to the
board of directors with respect to various auditing and accounting matters,
including the recommendation of our independent auditors, the scope of the
annual audits, fees to be paid to the independent auditors, the adequacy and
effectiveness of the accounting and financial controls of our company and our
accounting practices. The members of the audit committee are Mr. V.P. Rama Rao,
Mr. C. Satyanaryana and Dr. Mangalam Srinivasan, each of whom is an independent
director.

The compensation committee of the board of directors determines the salaries and
benefits for our executive directors and some of our key managerial personnel
and the stock options for all associates. The members of the compensation
committee are Mr. V.P. Rama Rao, Mr. C. Satyanaryana and Dr. Mangalam
Srinivasan, each of whom is an independent director.

The investors grievance committee of the board of directors formed in January
2001 focuses on strengthening investor relations and addressing investors'
concerns. The members of the committee are Mr. V.P. Rama Rao and Mr. C.
Satyanarayana, each of whom is an independent director, and Mr. B. Rama Raju,
Managing Director and CEO of the Company.

Director Compensation

Our Articles of Association provides that each of our directors shall receive a
sitting fee not exceeding the maximum amount allowed under the Companies Act.
Currently, our directors receive Rs.5,000 for every board and committee meeting.
Independent directors do not receive any additional compensation for their
service on our board of directors. Directors are reimbursed for travel and
out-of-pocket expenses in connection with their attendance at board and
committee meetings.

Employment, Severance And Other Agreements

Our Articles of Association provides that directors are appointed by the
shareholders by resolutions passed at general meetings; however, the board of
directors has the power to appoint additional directors for a period up to the
date of the next annual general meeting. Key managerial personnel are appointed
by the management. There are no severance and other agreements.

Employees

Our success depends in large part on our ability to attract, develop, motivate
and retain highly skilled technical associates. We offer competitive salaries,
incentive pay, including, since May 1998, stock options, extensive training, an
entrepreneurial work environment and opportunities to work overseas. As of March
31, 2002, we had 8,634 employees whom we refer to as "associates," including
7,898 technical associates. We had 5,107 and 8,593 associates as of March 31,
2000 and 2001, respectively. As of date, we had none of our associates are
represented by a union. We believe that our relationship with our associates is
good.

Recruiting. We recruit top graduates from the engineering departments of India's
universities and engineering and technical colleges. India has over 1,500 such
schools and, with the rapid growth of the IT services industry in India, the
number of students pursuing education in software engineering has increased in
recent years. This has allowed us to recruit from a large pool of qualified
applicants who undergo our demanding selection process involving a series of
tests and interviews. In fiscal 2000, we received approximately 32,000 job
applications, from both recent graduates and those with previous experience,
tested and/or interviewed approximately 2,400 and extended job offers to 1,336,
of whom 1,073 joined our company. In fiscal 2001, we received approximately
25,000 job applications, from both recent graduates and those with previous
experience, tested and/or interviewed approximately 15,000 and extended job
offers to 5,458 of whom 3,660 joined our company. In fiscal 2002, we received
approximately 90,543 job applications, from both recent graduates and those with
previous experience, tested and/or interviewed approximately 4,722,
extended job offers to 1,259 and 1,287 joined our company.

Training of associates. We devote significant resources to training our
associates. We established the Satyam Learning Center, which is responsible for
conducting training programs. To assist our technical associates to better
understand and implement new technologies, each new technical associate must
participate in a three to six-month software engineering training program and
all technical associates are expected to undertake between 40 and 80 hours per
year

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<PAGE>

of development training. Through such ongoing training, we build the
competencies in emerging disciplines necessary to meet customers' project needs.
At the Satyam Learning Center, our technical associates are trained on skill
sets and encompassing Microsoft, Sun, IBM, Linux and other platforms. Training
is done keeping in view project requirements and proactive competency
development based on forecasted market needs. This expertise allows us the
flexibility to ramp up to meet the demands of particular projects and to
redeploy our personnel among projects. We also recruit managers in non-software
engineering fields for positions as project leaders and project managers and
provide them with extensive training, usually over a six-month period, in
software engineering and project management skills. To focus our associates on
selecting the best technologies to match customer requirements, all of our
associates are also required to undergo a customer orientation program.

Retention. To attract, retain and motivate our associates, we seek to provide an
environment that rewards entrepreneurial initiative and performance. We also
provide competitive salaries and benefits as well as incentives in the form of
cash bonuses and stock options. In fiscal 2000, fiscal 2001 and fiscal 2002, we
experienced associate attrition at a rate of 12.9%, 15.1% and 13.2%,
respectively. As the pool of software engineers in India becomes larger and as
we increase the opportunities for our associates to work overseas, either for
onsite work at the customers' premises or in the offsite centers which we are
establishing as one of our strategic priorities, we believe our current rates of
turnover will continue.

At any given time, our technical associates are working overseas, either onsite
at customer premises or at our offsite centers, while the balance are working in
the offshore centers in India. On average, approximately 14.5%, 17.6% and 20.0%
of our technical associates worked overseas, primarily in the United States, in
fiscal 2000, fiscal 2001 and fiscal 2002, respectively. As at March 31, 2002, we
employed 1,894 technical and 173 support staff in our onsite and offsite centers
in the United States, Japan, the United Kingdom, Singapore and Australia. We
have staffed the offsite centers mainly through local hiring, supplemented by
associates from India. Our professionals who work onsite at customers' premises
in the United States on temporary and extended assignments are typically
required to obtain visas. H-1B visas are generally used for sending personnel to
the United States for onsite work, and L-1 visas are typically used only for
inter-company transfers of high level managers. Although there is no limit to
new L-1 petitions, there is a limit to the number of new H-1B petitions that the
United States Immigration and Naturalization Service may approve in any
government fiscal year and in recent years this limit has been reached well
before the end of the fiscal year. We are generally able to obtain H-1B and L-1
visas within two to four months of applying for such visas, which remain valid
for three years and can be extended for a further three years. We plan for our
visa requirements by forecasting our annual needs for such visas in advance and
applying for such visas as soon as practicable. We do not anticipate any
problems obtaining enough visas for our needs in the current U.S. government
fiscal year. In addition, we utilize L-1 visas whenever available and redeploy
existing H-1B visa holders to minimize the number of new H-1B visas we need.

Share Ownership

The following table sets forth information with respect to the beneficial
ownership of our equity shares as of April, 25, 2002 by each of our directors
and our chief executive officer and all of our directors and executive officers
as a group. The table gives effect to equity shares issuable within 60 days of
April 25, 2002 upon the exercise of all options and other rights beneficially
owned by the indicated shareholders on that date. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to equity
shares. Unless otherwise indicated, the persons named in the table have sole
voting and sole investment control with respect to all equity shares
beneficially owned.

<TABLE>
<CAPTION>
                                                                                               Equity
                                                                                               ------
                                                                                               Shares
                                                                                               ------
                                                                                            Beneficially
                                                                                            ------------
                                                                                               Owned
                                                                                               -----
   Beneficial Owner                                                                  Number             Percent
   ----------------                                                                                     -------
<S>                                                                              <C>                  <C>
B. Rama Raju ...............................................................       15,102,000 (1)          4.9
B. Ramalinga Raju ..........................................................       13,746,000 (2)          4.4
C. Srinivasa Raju ..........................................................        5,121,904              1.6
V.P. Rama Rao ..............................................................               --               --
C. Satyanarayana ...........................................................           14,000                *
Dr. Mangalam Srinivasan ....................................................               --               --
All directors and executive officers as a group (15 persons)                        5,212,949            11.31
</TABLE>

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<PAGE>

     (1) Includes 3,874,000 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) Includes 4,047,000 equity shares held by B. Ramalinga Raju's wife, B.
     Nandini Raju. B. Ramalinga Raju disclaims beneficial ownership of any
     equity shares held by B. Nandini Raju.
*    Less than 0.1% of total

Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Share Ownership

The only person or group of affiliated persons who is known to us to
beneficially own 5% or more of our equity shares as of April 25, 2002 is Unit
Trust of India which holds 6.54%. Unit Trust of India has the same voting rights
as our other shareholders.

As of April 25, 2002, 431,705 of our equity shares, representing 0.14% of our
outstanding shares, were held by a total of 126 holders of record with addresses
in the United States. As of April 25, 2002, we have issued 16,675,000 ADSs
(representing 33,350,000 equity shares), which represent 10.71% of our
outstanding equity shares and which are held by 1,476 beneficial holders and 3
registered holders.

Related Party Transactions

In December 1998, we entered into a joint venture with GE Pacific (Mauritius)
Ltd, an affiliate of GE Industrial Systems. The joint venture company, called
Satyam-GE Software Services Private Limited, provides GE Industrial Systems with
engineering design services, software development and system maintenance. Under
our joint venture agreement, we granted GE Pacific an option to purchase our
interest in the joint venture. Subject to the joint venture meeting performance
targets and other conditions, In January 2002 we have initiated the process of
transfer of our 50% shareholding in Satyam GE Software Services Private Limited
in accordance with the shareholders' agreement. The transfer is subject to
fulfillment of terms and conditions specified in the agreement and obtaining
necessary approvals from appropriate authorities. The sale value is
approximately $ 4.0 million.

For fiscal 2001 and fiscal 2002, we provided infrastructure and other services
to Satyam-GE, which amounted to $461 thousand and $142 thousand respectively. As
of March 31, 2002, Satyam-GE owes $189 thousand to us.

In October, 1999, we entered into a joint venture with Venture Global
Engineering LLC, USA. The joint venture company, called Satyam Venture
Engineering Services Private Limited ("Satyam Venture"), formed in January 2000,
provides engineering services and computer services to the automotive industry.
We hold 50% stake in the Joint venture company. For fiscal 2001 and fiscal 2002,
we provided infrastructure and other services to Satyam Venture, which amounted
to $1,031 thousand and $928 thousand respectively. As of March 31, 2002, Satyam
Venture owes $267 thousand to us.

In December 2000, we entered an agreement with Computer Associates
International, Inc. ("CA") to form an equally held joint venture company CA
Satyam ASP Private Limited ("CA Satyam"). The joint venture was formed in
January 2001 at Mumbai, India. As per the agreement, we and CA are to invest $
1,500 thousand each in the joint venture. During the year ended March 31, 2002
we invested $ 500 thousand in CA Satyam. As of March 31, 2002, we owe $287
thousand to CA Satyam.

We acquired Infoway's software services division with effect from January 1,
2002 in a transaction approved by Infoway's shareholders. This acquisition
included the purchase of specified tangible and intangible fixed assets, current
assets and current liabilities of the division as well as the assignment of its
continuing business in favour of Satyam. The objective of the acquisition is to
permit us to concentrate on our core business of software services and to permit
Infoway to concentrate on Internet services. The acquisition was valued by an
independent valuer at US$6.9 million, which was the amount paid to Infoway.

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<PAGE>

Item 8. FINANCIAL INFORMATION

Financial Statements

We have elected to provide financial statements pursuant to Item 18 of Form 20 -
F.

Legal Proceedings

As of the date of this document, we are not a party to any legal proceedings
that could reasonably be expected to seriously harm our company.

Dividends

Although the amount varies, it is customary for public companies in India to pay
cash dividends. Under Indian law, a corporation pays dividends upon a
recommendation by the board of directors and approval by a majority of the
shareholders, who have the right to decrease but not increase the amount of the
dividend recommended, by the board of directors. However, approval of
shareholders is not required for distribution of Interim dividend. Under the
Companies Act, dividends may be paid out of profits of a company in the year in
which the dividend is declared or out of the undistributed profits of previous
fiscal years. We paid out dividends of Rs.54.0 million ($1.3 million), Rs.91.6
million ($2.2 million), Rs.120.0 million ($2.8 million), Rs.187.8 million ($4.1
million) and Rs. 279.0 million ($ 6.4 million.) in fiscal 1998, fiscal 1999,
fiscal 2000, fiscal 2001 and fiscal 2002 respectively. These dividends include
interim dividends for the current fiscal year and dividends paid with respect to
previous fiscal year. Under Indian law, dividends are declared with respect to
the shares outstanding during the prior fiscal year and are paid in the
subsequent fiscal year after approval by shareholders in the Annual General
Meeting. The dividend is paid on the outstanding shares as at the end of fiscal
year and is prorated for shares issued during the fiscal year to take into
account the amount of time such shares have been issued. For example, our ADSs
were issued in May, 2001 and therefore our ADS holders were not entitled to
receive the dividend payment made on July 14, 2001 for the fiscal year ended
March 31, 2001. However, the ADS holders will be entitled to receive their share
of any dividends for the fiscal year ending March 31, 2002 prorated from May
until March. Although we have no current intention to discontinue dividend
payments, we cannot assure you that any future dividends will be declared or
paid or that the amount thereof will not be decreased. Some of our loan
documents restrict us from paying dividends other than from profits generated
from the then current fiscal year.

Owners of ADSs will be entitled to receive dividends payable in respect of the
equity shares represented by such ADSs. Cash dividends in respect of the equity
shares represented by the ADSs will be paid to the depositary in rupees and,
will generally be converted by the depositary into U.S. dollars and distributed,
net of depositary fees and expenses, to the holders of such ADSs.

Item 9. THE OFFER AND LISTING

Trading Markets

Our equity shares are traded in India on the Stock Exchange, Mumbai, the
National Stock Exchange and the Hyderabad Stock Exchange. Our ADSs evidenced by
American Depositary Receipts, or ADRs, are traded in the United States on the
New York Stock Exchange. Each ADS represents two equity shares. The ADRs
evidencing ADSs were issued by our depositary, Citibank, N.A., pursuant to a
Deposit Agreement.

The number of outstanding equity shares (including the underlying shares for
ADSs) in our company as of April, 25, 2002 was 311,391,210 . As of April, 25,
2002, there were 16,675,000 ADSs outstanding (representing 33,350,000 equity
shares).

Price History

The information presented in the table below represents, for the periods
indicated: (1) the reported high and low sales prices quoted in Indian rupees
for the equity shares on the BSE; and (2) the imputed high and low sales prices
for the equity shares based on such high and low sales prices, translated into
U.S. dollars based on the noon buying rate on the last date of each period
presented.

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<PAGE>

<TABLE>
<CAPTION>
                                                      Rupee Price per         U.S. Dollar Price
                                                     Equity Share (1)          Per Equity Share
                                                     ----------------          ----------------
Annual high and low market prices                  High            Low         High       Low
---------------------------------                  ----            ---         ----       ---
Fiscal Year Ended March 31, (2)
-------------------------------
<S>                                               <C>            <C>          <C>         <C>
1999                                               169.50         24.70        4.03        0.59
2000                                              1445.99         99.20       33.13        2.28
2001                                               901.98        291.50       20.18        3.84
2002                                               331.15        111.00        6.78        2.27


Fiscal year 2001
First Quarter                                      901.98        383.96       20.18        8.59
Second Quarter                                     680.00        420.15       14.76        9.12
Third Quarter                                      511.00        291.50       10.93        6.23
Fourth Quarter                                     429.70        179.00        9.22        3.84

Fiscal year 2002
First Quarter                                      271.95        148.60        5.77        3.15
Second Quarter                                     198.80        145.00        4.15        3.03
Third Quarter                                      278.00        200.40        5.76        4.15
Fourth Quarter                                     331.15        255.75        6.78        5.24

<CAPTION>
                                                                     Price Range
Month high and low market prices                                   High                     Low
<S>                                                          <C>                     <C>
November, 2001                                               Rs. 233.00              Rs. 141.80
December, 2001                                                   278.00                  200.40
January, 2002                                                    331.15                  225.00
February, 2002                                                   304.00                  251.25
March, 2002                                                      300.50                  255.75
April, 2002                                                      280.15                  250.45
May, 2002                                                        269.90                  208.10
</TABLE>

(1) Data derived from the BSE website. The prices and volumes quoted on the
National Stock Exchange and the Hyderabad Stock Exchange may be different.

(2) For comparative purposes, the price per equity share data above is adjusted
for the September 1, 1999 two-for-one stock split which took effect on the BSE
on August 16, 1999 and the August 25, 2000 five-for-one stock split which took
effect on the BSE on August 7, 2000. The average daily equity share trading
volume has not been adjusted.

Our ADSs commenced trading on the New York Stock Exchange on May 15, 2001 at an
initial offering price of $9.71 per ADS. The tables below set forth, for the
periods indicated, high and low trading prices for our ADS.

<TABLE>
<CAPTION>
                                                                   Price Range
Fiscal Year ended March 31, 2002                               High             Low
--------------------------------
<S>                                                          <C>              <C>
Quarterly High and low market prices of ADSs
First Quarter (beginning May 15)                             $12.57             7.90
Second Quarter                                                 9.80             7.24
Third Quarter                                                 13.74             9.75
Fourth Quarter                                                14.74            11.60

<CAPTION>

                                                                       Price Range
Monthly High and low market prices of ADSs                    High               Low
<S>                                                           <C>              <C>
November, 2001                                                10.70             6.64
December, 2001                                                13.74             9.45
January, 2002                                                 14.74            11.10
February, 2002                                                13.90            11.12
March, 2002                                                   14.45            11.60
April, 2002                                                   12.56            11.25
</TABLE>

                                       67

<PAGE>


May, 2002                                               12.06            9.46

Item 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

The following are summaries of our Articles of Association and Memorandum of
Association and the Companies Act which govern our affairs. Our Articles of
Association provides that the regulations contained in Table "A" of the
Companies Act apply to our company, so long as the regulations do not conflict
with the provisions of our Articles of Association. We have filed complete
copies of our Memorandum of Association and Articles of Association, as well as
Table "A" of the Companies Act, as exhibits to our registration statement on
Form F-1 filed with the Securities and Exchange Commission on May 7, 2001
(Registration No. 333-13464).

Objects and Purposes

Under clause III(A) of our Memorandum of Association, the main objectives of our
company include, but are not limited to:

.. manufacturing and selling computer systems, peripherals, accessories,
  consumables and other computer products;

.. 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

.. providing electronic data processing centers, word processing, software
  consultancy, system studies, management consultancy, feasibility studies and
  computer training.

Board of Directors

At each annual general meeting at least, one-third of our directors must retire
from office by rotation. A retiring director is eligible for re-election and the
directors to retire every year are those who have been longest in office since
their last re-election or appointment. No shares are required to be held by a
director for qualification as a director. In addition, save in respect of the
following managerial personnel, there are no age-limit requirements for serving
on our board of directors. Under the Companies Act, no person under the age of
25 or over the age of 70 is eligible for appointment as a managing director or a
whole-time director or a manager of our Company, provided that persons under the
age of 25 or over age 70 may be appointed with either the approval of our
shareholders by a special resolution or with the approval of the Central
Government. Under the Companies Act, our directors must refrain from
participating in discussions and voting on any matters in which they are
interested party. In addition, directors are also required to disclose such
interests, if any, at meetings of the board of directors.

Managerial Remuneration

Under the Companies Act, the remuneration payable to our directors is to be
determined either by the articles of the company or by an ordinary resolution
passed by the company in the general meeting, unless the articles require a
special resolution for the same.

As a public company, the total managerial remuneration in any year cannot exceed
11 per cent of our profits in that year. In addition, the remuneration payable
to a managing or any whole-time director in any year cannot exceed 5 per cent of
our net profits in that year. If there is more than one managing or whole-time
director, then the aggregate remuneration to all of them cannot exceed 10 per
cent of our net profits.

In addition, where a company has made no or inadequate profits, there are
additional limits on the maximum remuneration payable to the directors. Approval
of the Central Government would be required for payment of remuneration in
excess of the limits prescribed.

Under our Articles of Association, our board of directors may, at its discretion
and by means of a resolution, borrow funds on behalf of the company, create
mortgages or liens on the company's property or uncalled capital and issue
debentures. However, the Companies Act imposes some restrictions on the powers
of the board to act without the consent of the shareholders including, for
example, the ability to borrow money beyond the aggregate of our paid up

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<PAGE>

capital and free reserves.

Equity Shares

Our authorized share capital is 375,000,000 equity shares, par value Rs.2 per
share. The equity shares are our only class of share capital. However, our
Articles of Association and the Companies Act permit us to issue preference
shares in addition to the equity shares. The rights attached to a class of
shares may, subject to the provisions of the Companies Act, be varied only with
either the written consent of the holders of 75% of the issued shares of that
class or by special resolution passed at a separate meeting of the holders of
that class.

Our equity shares are under the control of our board of directors, who may, with
prior approval from the shareholders at a general meeting, allot or otherwise
dispose of new equity shares in its discretion, including allotments of shares
at a premium or discount in accordance with the provisions of the Companies Act.
Our Articles of Association permit our board of directors to make calls on our
equity shares, but only in respect of unpaid amounts unpaid on equity shares
which are not fully paid-up. All of our issued and outstanding equity shares are
fully paid-up.

Dividends

We paid out dividends of Rs.54.0 million ($1.3 million) in fiscal 1998, Rs.91.6
million ($2.2 million) in fiscal 1999, Rs.120.0 million ($2.8 million) in fiscal
2000, Rs. 187.8 million ($ 4.1 million) in fiscal 2001 and Rs. 279.0 million
($6.4 million) in fiscal 2002.

Under the Companies Act, unless our board of directors recommends the payment of
a dividend, we may not declare a dividend. Similarly, under our Articles of
Association, although the shareholders may, at the annual general meeting,
approve a dividend in an amount less than that recommended by the board, they
cannot increase the amount of the dividend. In India, dividends generally are
declared as a percentage of the par value of a company's equity shares. The
dividend recommended by the board, if any, and subject to the limitations
described above, is distributed and paid to shareholders in proportion to the
paid up value of their shares within 30 days of the approval by the shareholders
at the annual general meeting. Pursuant to our Articles of Association and the
Companies Act, our board has discretion to declare and pay interim dividends
without shareholder approval. With respect to equity shares issued during a
particular fiscal year (including any equity shares underlying ADSs issued to
the depositary), cash dividends declared and paid for such fiscal year generally
will be prorated from the date of issuance to the end of such fiscal year. Under
the Companies Act, dividends can only be paid in cash to the registered
shareholder at a record date fixed during or before the annual general meeting
or to his order or his banker's order.

Under the Companies Act, dividends and interim dividends may be paid out of
profits of a company in the year in which the dividend and/or interim dividend
is declared or out of the undistributed profits of previous fiscal years. Before
declaring a dividend and/or interim dividend greater than 10.0% of the par value
of its equity shares, a company is required under the Companies Act to transfer
to its reserves a minimum percentage of its profits for that year, ranging from
2.5% to 10.0% depending upon the dividend percentage to be declared in such
year. The Companies Act further provides that, in the event of an inadequacy or
absence of profits in any year, a dividend and/or interim dividend may be
declared for such year out of the accumulated profits, subject to the following
conditions:

     .  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;

     .  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

     .  the balance of reserves after withdrawals shall not fall below 15.0% of
        its paid up capital.

For additional information regarding dividends, please see "Item 8. Financial
Information.

Bonus Shares

In addition to permitting dividends to be paid out of current or retained
earnings as described above, the Companies Act permits us to distribute an
amount transferred from the general reserve or surplus in our profit and loss
account to

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<PAGE>

our shareholders in the form of bonus shares, which are similar to a
stock dividend. The Companies Act also permits the issuance of bonus shares from
a share premium account. Bonus shares are distributed to shareholders in the
proportion recommended by the board. Shareholders of record on a fixed record
date are entitled to receive such bonus shares. The last bonus shares issued by
us was in September 1999.

Preemptive Rights and Issue of Additional Shares

The Companies Act gives shareholders the right to subscribe for new shares in
proportion to their respective existing shareholding unless otherwise determined
by a special resolution passed by a general meeting of the shareholders. For
approval, a special resolution must be approved by a number of votes which is
not less than three times the number of votes against the special resolution. If
we issue equity shares and a special resolution is not approved by our
shareholders, the new shares must first be offered to the existing shareholders
as of a fixed record date. The offer must include: (1) the right, exercisable by
the shareholders of record, to renounce the shares offered in favor of any other
person; and (2) the number of shares offered and the period of the offer, which
may not be less than 15 days from the date of offer. If the offer is not
accepted it is deemed to have been declined. Our board is authorized under the
Companies Act to distribute any new shares not purchased by the preemptive
rights holders in the manner that it deems most beneficial to our company.

Annual General Meetings of Shareholders

We must convene an annual general meeting of shareholders within six months
after the end of each fiscal year to adopt the accounts for such fiscal year and
to transact other businesses and may convene an extraordinary general meeting of
shareholders when necessary or at the request of a shareholder or shareholders
holding at least 10.0% of our paid up capital carrying voting rights. The annual
general meeting of the shareholders is generally convened by our Secretary
pursuant to a resolution of the board. Written notice setting out the agenda of
the meeting must be given at least 21 days (excluding the day of mailing) before
the date of the general meeting to the shareholders on record. Shareholders who
are registered as shareholders on the date of the general meeting are entitled
to attend or vote at such meeting. Our Articles of Association provides that a
quorum for a general meeting is the presence of at least five shareholders in
person.

The annual general meeting of shareholders must be held at our registered office
or at such other place within the city in which the registered office is
located; meetings other than the annual general meeting may be held at any other
place if so determined by the board. Our registered office is located at Mayfair
Centre, S P Road, Secunderabad 500 003, Andhra Pradesh, India.

Voting Rights

At any general meeting, voting is by show of hands unless a poll is demanded by
a shareholder or shareholders present in person or by proxy holding at least
10.0% of the total shares entitled to vote on the resolution or by those holding
shares with an aggregate paid up value of at least Rs.50,000. Upon a show of
hands, every shareholder entitled to vote and present in person has one vote
and, on a poll, every shareholder entitled to vote and present in person or by
proxy has voting rights in proportion to the paid up capital held by such
shareholder. The chairman of our board has a deciding vote in the case of any
tie.

Any shareholder may appoint a proxy. The instrument appointing a proxy must be
delivered to us at least 48 hours before the meeting. A proxy may not vote
except on a poll. A corporate shareholder may appoint an authorized
representative who can vote on behalf of the shareholder, both upon a show of
hands and upon a poll.

Ordinary resolutions may be passed by simple majority of those present and
voting at any general meeting for which the required period of notice has been
given. However, special resolutions such as amendments to our Articles of
Association and the object clause of the Memorandum of Association, commencement
of a new line of business, the waiver of preemptive rights for the issuance of
any new shares and a reduction of share capital, require that votes cast in
favor of the resolution (whether by show of hands or poll) are not less than
three times the number of votes, if any, cast against the resolution. Under a
recent amendment to the Indian Companies Act, certain resolutions may and
certain resolutions must be passed by means of a postal ballot instead of a vote
at a meeting of shareholders.

Audit and Annual Report

At least 21 days before the date of the annual general meeting of shareholders
(excluding the day of mailing), we must distribute to our shareholders a
detailed version of our audited balance sheet and profit and loss account and
the related

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<PAGE>

reports of the board and the auditors, together with a notice convening the
annual general meeting. Under the Companies Act, we must file the balance sheet
and annual profit and loss account presented to the shareholders within 30 days
of the conclusion of the annual general meeting with the Registrar of Companies
in Andhra Pradesh, India, which is the state in which our registered office is
located. We must also file an annual return containing a list of our
shareholders and other information, within 60 days of the conclusion of the
meeting.

Register of Shareholders; Record Dates; Transfer of Shares

We maintain a register of shareholders. For the purpose of determining the
shares entitled to annual dividends, the register is closed for a specified
period before the annual general meeting. The date on which this period begins
is the record date.

To determine which shareholders are entitled to specified shareholder rights, we
may close the register of shareholders. The Companies Act and our listing
agreements with the Indian stock exchanges require us to give at least seven
days' prior notice to the public before such closure. We may not close the
register of shareholders for more than 30 consecutive days, and in no event for
more than 45 days in a year.

Following the introduction of the Depositories Act, 1996, and the repeal of
Section 22A of the Securities Contracts (Regulation) Act, 1956, which enabled
companies to refuse to register transfers of shares in some circumstances, the
equity shares of a public company are freely transferable, subject only to the
provisions of Section 111A of the Companies Act. Because we are a public
company, the provisions of Section 111A apply to us. Our Articles currently
contain provisions which give our directors discretion to refuse to register a
transfer of shares in some circumstances. According to our Articles, our
directors are required to exercise this right in the best interests of our
company. While our directors are not required to provide a reason for any such
refusal in writing, they must give notice of the refusal to the transferee
within one month after receipt of the application for registration of transfer
by our company. In accordance with the provisions of Section 111A(2) of the
Companies Act, our directors may exercise this discretion if they have
sufficient cause to do so. If our directors refuse to register a transfer of
shares, the shareholder wishing to transfer his, her or its shares may file a
civil suit or an appeal with the Company Law Board, or CLB. Pursuant to Section
111A(3), if a transfer of shares contravenes any of the provisions of the
Securities and Exchange Board of India Act, 1992 or the regulations issued
thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 or
any other Indian laws, the CLB may, on application made by the company, a
depositary incorporated in India, an investor, the Securities and Exchange Board
of India or other parties, direct the rectification of the register of records.
The CLB may, in its discretion, issue an interim order suspending the voting
rights attached to the relevant shares before making or completing its
investigation into the alleged contravention. Notwithstanding such
investigation, the rights of a shareholder to transfer the shares will not be
restricted.

There are no maximum limits on foreign direct equity participation in the
business in which our Company is engaged. With regard to share transfers, if a
person resident outside India were to sell its shares to a person resident in
India, approval of the RBI would be required unless the sale is made on a stock
exchange or in connection with an offer made under the regulations regarding
takeovers. For additional information regarding ownership restrictions, please
see "Investment by Foreign Institutional Investors" below.

Our shares in excess of 500 are required to be transferred in dematerialized
form. Under the Companies Act, unless the shares of a company are held in a
dematerialized form, a transfer of shares is effected by a duly stamped
instrument of transfer in the form prescribed by the Companies Act and the rules
thereunder together with delivery of the share certificates.

We have entered into listing agreements with three of the Indian stock
exchanges: the BSE, the National Stock Exchange and the Hyderabad Stock
Exchange. Clause 40A of each of the listing agreements provides that if an
acquisition of a listed company's shares results in the acquirer and its
associates holding 5.0% or more of the company's outstanding equity shares or
voting rights, the acquirer must report its holding to the company and the
relevant stock exchanges. If an acquisition results in the acquirer and its
associates holding equity shares that have 15.0% or more of the voting rights,
then the acquirer must, before acquiring such equity shares, make an offer, in
accordance with clause 40B of the listing agreements, on a uniform basis to all
remaining shareholders of the company to acquire equity shares that have at
least an additional 20.0% of the voting rights of the total equity shares of the
company at a prescribed price. The acquisition of shares of a company listed on
an Indian stock exchange may be subject to regulations governing takeovers of
Indian companies. Although clauses 40A and 40B and such regulations will not
apply to the equity shares so long as they are represented by ADSs, holders of
ADSs may be required to comply with such notification and disclosure obligations
pursuant to the provisions of the deposit agreements.

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<PAGE>

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian
companies who are not holders of record to declare to us details of the holder
of record and the nature and details of the beneficial owner's interest in the
shares. Any person who fails to make the required declaration within 30 days may
be liable for a fine of up to Rs.1,000 for each day the declaration is not made.
Any lien, promissory note or other collateral agreement created, executed or
entered into with respect to any equity share by its registered owner, or any
hypothecation by the registered owner of any equity share, shall not be
enforceable by the beneficial owner or any person claiming through the
beneficial owner if such declaration is not made. Failure to comply with Section
187C will not affect our obligation to register a transfer of shares or to pay
any dividends to the registered holder of any shares pursuant to which the
declaration has not been made. While it is unclear under Indian law whether
Section 187C applies to holders of ADSs, investors who exchange ADSs for the
underlying equity shares will be subject to the restrictions of Section 187C.
Additionally, holders of ADSs may be required to comply with the notification
and disclosure obligations pursuant to the provisions of the deposit agreement
covering the ADSs.

Company Acquisition of Equity Shares

Under the Companies Act, approval of at least 75.0% of our shareholders voting
on the matter and approval of the High Court of Andhra Pradesh is required to
reduce our share capital. We may, under some circumstances, acquire our own
equity shares without seeking the approval of the High Court. However, we would
have to extinguish any shares we have so acquired within the prescribed time
period. Generally, a company is not permitted to acquire its own shares for
treasury operations. An acquisition of our own shares (without having to obtain
the approval of the High Court) must comply with prescribed rules, regulations
and conditions as laid down in the Companies Act and the Securities and Exchange
Board of India (Buy-back of Securities) Regulations, 1998, or Buy-back
Regulations.

Liquidation Rights

Subject to the rights of creditors, employees and the holders of any shares
entitled by their terms to preferential repayment over the equity shares, if
any, in the event of our winding-up the holders of the equity shares are
entitled to be repaid the amounts of paid up capital or credited as paid up on
those equity shares. All surplus assets after payments due to the holders of any
preference shares at the commencement of the winding-up shall be paid to holders
of equity shares in proportion to their shareholding.

Takeover Code

Disclosure and mandatory bid obligations under Indian law are governed by the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, the Takeover Code, which prescribes the thresholds
or trigger points that give rise to these obligations. The Takeover Code is
under constant review by the Securities and Exchange Board of India and was
recently amended.

The most important features of the Takeover Code, as amended, are as follows:

Any acquirer (meaning a person who, directly or indirectly, acquires or agrees
to acquire shares or voting rights in a company, either by himself or with any
person acting in concert) who acquires shares or voting rights that would
entitle him to more than 5.0% of the shares or voting rights in a company is
required to disclose the aggregate of his shareholding or voting rights in that
company to the company (which in turn is required to disclose the same to each
of the stock exchanges on which the company's shares are listed) within four
working days of (a) the receipt of allotment information, or (b) the
acquisitions of shares or voting rights, as the case may be.

   . A person who holds more than 15.0% of the shares or voting rights in any
     company is required to make annual disclosure of his holdings to that
     company (which in turn is required to disclose the same to each of the
     stock exchanges on which the company's shares are listed).

   . Promoters or persons in control of a company are also required to make
     annual disclosure of their holdings in the same manner.

   . An acquirer cannot acquire shares or voting rights which (taken together
     with existing shares or voting rights,

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<PAGE>

     if any, held by him or by persons acting in concert with him) would entitle
     such acquirer to exercise 15.0% or more of the voting rights in a company,
     unless such acquirer makes a public announcement offering to acquire a
     further 20.0% of the shares of the company.

   . An acquirer who, together with persons acting in concert with him, holds
     between 15.0% and 75.0% of the shares cannot acquire additional shares or
     voting rights that would entitle him to exercise a further 5.0% of the
     voting rights in any period of 12 months unless such acquirer makes a
     public announcement offering to acquire a further 20.0% of the shares of
     the company.

   . Any further acquisition of shares or voting rights by an acquirer who holds
     75.0% of the shares or voting rights in a company triggers the same public
     announcement requirements.

   . In addition, regardless of whether there has been any acquisition of shares
     or voting rights in a company, an acquirer acting in concert cannot
     directly or indirectly acquire control over a company (for example, by way
     of acquiring the right to appoint a majority of the directors or to control
     the management or the policy decisions of the company) unless such acquirer
     makes a public announcement offering to acquire a minimum of 20.0% of the
     shares of the company.

The Takeover Code sets out the contents of the required public announcements as
well as the minimum offer price.

The Takeover Code permits conditional offers as well as the acquisition and
subsequent delisting of all shares of a company and provides specific guidelines
for the gradual acquisition of shares or voting rights. Specific obligations of
the acquirer and the board of directors of the target company in the offer
process have also been set out. Acquirers making a public offer are also
required to deposit in an escrow account a percentage of the total consideration
which amount will be forfeited if the acquirer does not fulfill his obligations.
In addition, the Takeover Code introduces the "chain principle" by which the
acquisition of a holding company will obligate the acquirer to make a public
offer to the shareholders of each subsidiary company which is listed.

The general requirements to make such a public announcement do not, however,
apply entirely to bail-out takeovers when a promoter (i.e., a person or persons
in control of the company, persons named in any offer document as promoters and
specified corporate bodies and individuals) is taking over a financially weak
company but not a "sick industrial company" pursuant to a rehabilitation scheme
approved by a public financial institution or a scheduled bank. A "financially
weak company" is a company which has at the end of the previous financial year
accumulated losses, which have resulted in erosion of more than 50.0% but less
than 100.0% of the total sum of its paid up capital and free reserves at the end
of the previous financial year. A "sick industrial company" is a company
registered for more than five years which has at the end of any financial year
accumulated losses equal to or exceeding its entire net worth.

The Takeover Code does not apply to acquisitions involving the acquisition of
shares (i) by allotment in a public, rights and preferential issue, (ii)
pursuant to an underwriting agreement, (iii) by registered stockbrokers in the
ordinary course of business on behalf of customers, (iv) in unlisted companies,
(v) pursuant to a scheme of reconstruction or amalgamation or (vi) pursuant to a
scheme under Section 18 of the Sick Industrial Companies (Special Provisions)
Act, 1985. The Takeover Code does not apply to acquisitions in the ordinary
course of business by public financial institutions either on their own account
or as a pledgee. In addition, the Takeover Code does not apply to the
acquisition of ADSs so long as they are not converted into equity shares.

Material Contracts

Except as described herein, we have not entered into any material contracts,
other than contracts entered into in the ordinary course of business. For a
description of Satyam's material joint venture agreement with TRW Inc., please
see "Item 5.-Operating and Financial Review and Prospects-Joint Venture with TRW
Inc.".

Exchange Controls

General

Prior to June 1, 2000, investment in Indian securities was regulated by the
Indian Foreign Exchange Regulation Act, 1973. Under Section 29(1)(b) of the
Indian Foreign Exchange Regulation Act, 1973, no person or company resident
outside India that is not incorporated in India (other than a banking company)
could purchase the shares of any company carrying on any trading, commercial or
industrial activity in India without the permission of the Reserve Bank of
India. Also, under Section 19(1)(d) of the Indian Foreign Exchange Regulation
Act, 1973, the transfer and

                                       73

<PAGE>

issuance of any security of any Indian company to a person resident outside
India required the permission of the Reserve Bank of India. Under Section 19(5)
of the Indian Foreign Exchange Regulation Act, 1973, no transfer of shares in a
company registered in India by a non-resident to a resident of India was valid
unless the transfer was confirmed by the Reserve Bank of India upon application
filed by the transferor or the transferee. Furthermore, the issuance of rights
and other distributions of securities to a non-resident also requires the prior
consent of the Reserve Bank of India. However, the Reserve Bank of India has
issued notifications over the past few years relaxing the restrictions on
foreign investment in Indian companies.

As of June 1, 2000, the Indian Foreign Exchange Regulation Act, 1973 was
replaced by the Indian Foreign Exchange Management Act, 1999. The Indian Foreign
Exchange Management Act, 1999 contains provisions regarding current account
convertibility and amendments to the definition of a resident of India. However,
some of the preexisting controls and restrictions on capital account
transactions remain in force. While many of the restrictions imposed by the
Indian Foreign Exchange Regulation Act, 1973 have been relaxed under this new
legislation, the Notifications and Guidelines issued by the Reserve Bank of
India which are not inconsistent with the Indian Foreign Exchange Management
Act, 1999 continue to be in force. The purchase and the transfer of shares of
Indian companies continues to be regulated by the RBI. Therefore, transaction
involving foreign investment in Indian securities is regulated by the provisions
of the Indian Foreign Exchange Management Act, 1999 and continues to be
regulated by the Reserve Bank of India.

ADR Guidelines

Shares of Indian companies represented by ADSs are no longer required to be
approved for issuance to foreign investors by the either Ministry of Finance or
the Reserve Bank of India under the Issue of Foreign Currency Convertible Bonds
and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993, as
modified from time to time, notified by the Government of India. This change was
effected through the guidelines for ADR and GDR issues by Indian companies
issued by the Ministry of Finance on January 19, 2000 and a notification issued
by the Reserve Bank of India. Hence we do not require the approval of the
Ministry of Finance and the Reserve Bank of India under the Issue of Foreign
Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993. However, we will be required to furnish full
particulars of the issue, including the underlying equity shares representing
the ADRs, to the Ministry of Finance and the Reserve Bank of India within 30
days of the completion of an offering.

The Issue of Foreign Currency Convertible Bonds and Ordinary Shares Scheme is
distinct from other policies or facilities, as described below, relating to
investments in Indian companies by foreign investors. The issuance of ADSs
pursuant to the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme also affords to owners of ADSs the benefits of Section 115AC of the
Indian Income-tax Act, 1961 for purposes of the application of Indian tax law.
For additional information, please see "Taxation -- Indian Taxation."

Foreign Direct Investment

Currently, due to recent changes in Indian policy, subject to certain
exceptions, foreign direct investment and investment by individuals of Indian
nationality or origin residing outside India, or non-resident Indians, and
overseas corporate bodies at least 60% owned by such persons, or overseas
corporate bodies, in Indian companies do not require the approval of the Foreign
Investment Promotion Board, or FIPB, a body formed by the Government of India to
negotiate with large foreign companies interested in making long-term
investments in India. Furthermore, henceforth no prior approval of the Reserve
Bank of India is required although a post-investment declaration in giving
details of the foreign investment in the company pursuant to the ADR issue must
be filed with the Reserve Bank of India within thirty days of our ADR offering.

In cases where FIPB approval is obtained, no prior approval of the Reserve Bank
of India is required, although a declaration in the prescribed form as mentioned
above must be filed with the Reserve Bank of India once the foreign investment
is made in the Indian company. In cases where no prior approval of the FIPB is
required, prior approval of the Reserve Bank of India would also not be
required. However, a declaration in the prescribed form giving details of the
foreign investment must be filed with the Reserve Bank of India once the foreign
investment is made in the Indian company.

In May 1994, the Government of India announced that purchases by foreign
investors of ADSs and foreign currency convertible bonds of Indian companies
will be treated as foreign direct investment in the equity issued by Indian
companies for such offerings.

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In November 1998, the Reserve Bank of India issued a notification to the effect
that foreign investment in preferred shares will be considered as part of the
share capital of a company and the provisions relating to foreign direct
investment in the equity shares of a company discussed above would apply.
Investments in preferred shares are included as foreign direct investment for
the purposes of sectoral caps on foreign equity, if such preferred shares carry
a conversion option. If the preferred shares are structured without a conversion
option, they would fall outside the foreign direct investment limit.

The discussion on the foreign direct investment regime in India set forth above
applies only to a new issuance of shares made by Indian companies, not to a
transfer of shares.

Investment by Non-Resident Indians and Overseas Corporate Bodies

A variety of special facilities for making investments in India in shares of
Indian companies is available to individuals of Indian nationality or origin
residing outside India, or non-resident Indians, and to overseas corporate
bodies ("OCBs"), at least 60% owned by such persons. These facilities permit
non-resident Indians and overseas corporate bodies to make portfolio investments
in shares and other securities of Indian companies on a basis not generally
available to other foreign investors. These facilities are different and
distinct from investments by foreign direct investors described above.

Apart from portfolio investments in Indian companies, non-resident Indians and
overseas corporate bodies may also invest in Indian companies through foreign
direct investments. For additional information, please see "--Foreign Direct
Investment.". Under the foreign direct investment rules, non-resident Indians
and overseas corporate bodies may invest up to 100% in high-priority industries
in which other foreign investors are permitted to invest only up to 50%, 51%,
74% or 100%, depending on the industry category.

Investment by Foreign Institutional Investors

In September 1992, the Government of India issued guidelines which enable
foreign institutional investors, including institutions such as pension funds,
investment trusts, asset management companies, nominee companies and
incorporated/institutional portfolio managers, to make portfolio investments in
all the securities traded on the primary and secondary markets in India. Under
the guidelines, foreign institutional investors must obtain an initial
registration from the Securities and Exchange Board of India to make these
investments. Foreign institutional investors must also comply with the
provisions of the Securities Exchange Board of India Foreign Institutional
Investors Regulations, 1995. When it receives the initial registration, the
foreign institutional investor also obtains general permission from the Reserve
Bank of India to engage in transactions regulated under the Indian Foreign
Exchange Regulation Act. Together, the initial registration and the Reserve Bank
of India's general permission enable the registered foreign institutional
investor to buy, subject to the ownership restrictions discussed below, and sell
freely securities issued by Indian companies whether or not they are listed, to
realize capital gains on investments made through the initial amount invested in
India, to subscribe or renounce rights offerings for shares, to appoint a
domestic custodian for custody of investments held and to repatriate the
capital, capital gains, dividends, income received by way of interest and any
compensation received towards sale or renunciation of rights offerings of
shares. The foreign institutional investor regulations also set out the general
obligations and responsibilities and investment conditions and restrictions
applicable to foreign institutional investors. One such restriction is that
unless the foreign Institutional Investor is registered as a debt fund with the
Securities Exchange Board of India, the total investment in equity and
equity-related instruments should not be less than 70% of the aggregate of all
investments of a foreign institutional investor in India.

Apart from making portfolio investments in Indian companies as described above,
foreign institutional investors may direct foreign investments in Indian
companies. For additional information, please see "--Foreign Direct Investment."

Ownership Restrictions

The Securities and Exchange Board of India and Reserve Bank of India regulations
restrict portfolio investments in Indian companies by foreign institutional
investors, non-resident Indians and overseas corporate bodies, all of which we
refer to as foreign portfolio investors. The Reserve Bank of India issued a
circular in August 1998 stating that foreign institutional investors in
aggregate may hold no more than 30% of the equity shares of an Indian company
and non-resident Indians and overseas corporate bodies in aggregate may hold no
more than 10% of the shares of an Indian company through portfolio investments.
Under current Indian law, foreign institutional investors in the aggregate may
hold no more than 24% of the equity shares of an Indian company, and
non-resident Indians and overseas corporate bodies in aggregate may hold no more
than 10% of the shares of an Indian company through portfolio investments. The
24% limit referred to above can be entirely removed, if the stockholders of the
company pass a special resolution

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to that effect. The Reserve Bank of India circular also states that no single
foreign institutional investor may hold more than 10% of the shares of an Indian
company and no single non-resident Indian or overseas corporate body may hold
more than 5% of the shares of an Indian company.

There is uncertainty under Indian law about the tax regime applicable to foreign
institutional investors that hold and trade ADSs. Foreign institutional
investors are urged to consult with their Indian legal and tax advisers about
the relationship between the foreign institutional investor regulations and the
ADSs and any equity shares withdrawn upon surrender of ADSs.

Under the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 approved by the Securities and Exchange
Board of India in January 1997 and notified by the Government of India in
February 1997, which replaced the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, upon the
acquisition of more than 5% of the outstanding shares of a public Indian
company, a purchaser is required to notify the company and the company and the
purchaser are required to notify all the stock exchanges on which the shares of
the company are listed. Upon the acquisition of 15% or more of such shares or a
change in control of the company, the purchaser is required to make an open
offer to the other stockholders offering to purchase at least 20% of all the
outstanding shares of the company at a minimum offer price as determined
pursuant to the new regulations. Upon conversion of ADSs into equity shares, an
ADS holder will be subject to the Takeover Code. However, since we are an
unlisted company, the provisions of the new regulations will not apply to us. If
our shares are listed on an Indian stock exchange in the future, the new
regulations will apply to the holders of our ADSs.

Open market purchases of securities of Indian companies in India by foreign
direct investors or investments by non-resident Indians, overseas corporate
bodies and foreign institutional investors above the ownership levels set forth
above require Government of India approval on a case-by-case basis.

Voting Rights of Deposited Equity Shares Represented by ADSs

Holders of ADSs generally have the right under the deposit agreement to instruct
the depositary bank to exercise the voting rights for the equity shares
represented by the related ADSs.

At our request, the depositary bank will mail to the holders of ADSs any notice
of stockholders' meeting received from us together with information explaining
how to instruct the depositary bank to exercise the voting rights of the
securities represented by ADSs.

If the depositary bank timely receives voting instructions from a holder of
ADSs, it will endeavor to vote the securities represented by the holder's ADSs
in accordance with such voting instructions. In the event that voting takes
place by a show of hands, the depositary bank will cause the custodian to vote
all deposited securities in accordance with the instructions received by holders
of a majority of the ADSs for which the depositary bank receives voting
instructions.

Please note that the ability of the depositary bank to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure you that ADS holders will receive
voting materials in time to enable them to return voting instructions to the
depositary bank in a timely manner. Securities for which no voting instructions
have been received will not be voted except as discussed above.

Taxation

Indian Taxation

General. The following relates to the principal Indian tax consequences for
holders of ADSs and equity shares received upon withdrawal of such equity shares
who are not resident in India, whether of Indian origin or not. We refer to
these persons as non-resident holders. The following is based on the provisions
of the Income-tax Act, 1961, including the special tax regime contained in
Section 115AC and the Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (through Depository Receipt Mechanism) Scheme, 1993. The Income-tax Act
is amended every year by the Finance Act of the relevant year. Some or all of
the tax consequences of the Section 115AC may be amended or changed by future
amendments of the Income-tax Act.

This section is not intended to constitute a complete analysis of the individual
tax consequences to non-resident holders under Indian law for the acquisition,
ownership and sale of ADSs and equity shares. Personal tax consequences of an
investment may vary for non-resident holders in various circumstances, and
potential investors

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<PAGE>

should therefore consult their own tax advisers on the tax consequences of such
acquisition, ownership and sale, including specifically the tax consequences
under the law of the jurisdiction of their residence and any tax treaty between
India and their country of residence.

Residence. For purposes of the Income-tax Act, an individual is considered to be
a resident of India during any fiscal year if he or she is in India in that year
for:

     .  a period or periods amounting to 182 days or more; or

     .  60 days or more and, in case of a citizen of India or a person of Indian
        origin, who, being outside India, comes on a visit to India, is in India
        for 182 days or more effective April 1, 1995 and in each case within the
        four preceding years has been in India for a period or periods amounting
        to 365 days or more.

A company is a resident of India if it is registered in India or the control and
the management of its affairs is situated wholly in India. A firm or other
association of persons is resident in India except where the control and
management of its affairs is situated wholly outside India. Individuals,
companies, firms and other associations of persons that are not residents of
India would be treated as non-residents for purposes of the Income-tax Act.

Taxation of Distributions. Until March 31, 2002 there was no withholding tax on
dividends paid to stockholders and the company paying the dividends was subject
to a dividend distribution tax of 10% and applicable surcharge. The recent
Indian Finance Bill, 2002, provides for a withholding tax on dividends payable
by Indian Companies, which exceed Rs. 1000. The applicable tax rates to be
withheld is dependent on status of the stockholders receiving the dividend,
categorized as Indian resident individuals, Non resident Indians/foreign
nationals, Indian companies or foreign companies. The applicable withholding tax
on dividends payable to ADS holders is 10.5% including the present surcharge of
5%. Consequently, effective April 1, 2002, Indian companies will no longer be
taxed on declared dividends.

Any distributions of additional ADSs, equity shares or rights to subscribe for
equity shares made to non-resident holders with respect to ADSs or equity shares
will not be subject to Indian tax. Similarly, the acquisition by a non-resident
holder of equity shares upon redemption of ADSs will not constitute a taxable
event for Indian income tax purposes. Such acquisition will, however, give rise
to a stamp duty as described below under "Stamp Duty and Transfer Tax."

Taxation of Capital Gains. Any gain realized on the sale of ADSs or equity
shares by a non-resident holder to any non-resident outside India is not subject
to Indian capital gains tax.

Since our ADS offerings were approved by the Government of India under the Issue
of Foreign Currency Convertible Bonds and Ordinary Shares Scheme, non-resident
holders of the ADSs have the benefit of tax concessions available under Section
115AC. As a result, gains realized on the sale of ADSs will not be subject to
Indian taxation. The effect of the Scheme in the context of Section 115AC is
unclear as to whether such tax treatment is available to a non-resident who
acquires equity shares outside India from a non-resident holder of equity shares
after receipt of the equity shares upon surrender of the ADSs. If concessional
tax treatment is not available, gains realized on the sale of such equity shares
will be subject to customary Indian taxation on capital gains as discussed
below. The Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme provides that if the equity shares are sold on a recognized stock
exchange in India against payment in Indian rupees, they will no longer be
eligible for such concessional tax treatment.

Subject to any relief provided pursuant to an applicable tax treaty, any gain
realized on the sale of equity shares to an Indian resident or inside India
generally will be subject to Indian capital gains tax which is to be withheld at
the source by the buyer. However, the acquisition by non-resident holders of
equity shares in exchange for ADSs will not be subject to Indian capital gains
tax. Under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme, the cost of acquisition of equity shares received in exchange for ADSs
will be the cost of the underlying shares on the date that the depositary gives
notice to the custodian of the delivery of the equity shares in exchange for the
corresponding ADSs. In the case of companies listed in India, the cost of
acquisition of the equity shares would be the price of the equity shares
prevailing on the Stock Exchange, Mumbai or the National Stock Exchange on the
date the depositary gives notice to the custodian of the delivery of the equity
shares in exchange for the corresponding ADSs. However, the Issue of Foreign
Currency Convertible Bonds and Ordinary Shares Scheme and Section 115AC do not
provide for determination of the cost of acquisition for the purposes of
computing capital gains tax where the shares of the Indian company are not
listed on the Stock Exchange, Mumbai or the National Stock Exchange in India.
Therefore, in the case of our company, which is not listed on either the Stock
Exchange, Mumbai or the National Stock

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Exchange, the mode of determination of the cost of acquisition of equity shares
is unclear. Therefore, the original cost of acquisition of the ADSs may be
treated as the cost of acquisition for the purposes of determining the capital
gains tax. According to the Issue of Foreign Currency Convertible Bonds and
Ordinary Shares Scheme, a non-resident holder's holding period for purposes of
determining the applicable Indian capital gains tax rate in respect of equity
shares received in exchange for ADSs commences on the date of the notice of the
redemption by the depositary to the custodian. The India-U.S. Treaty does not
provide an exemption from the imposition of Indian capital gains tax.

Under Section 115AC, taxable gain realized in respect of equity shares held for
more than 12 months, or long-term gain, is subject to tax at the rate of 10%.
Taxable gain realized in respect of equity shares held for 12 months or less, or
short-term gain, is subject to tax at variable rates with a maximum rate of 48%.
The actual rate of tax on short-term gain depends on a number of factors,
including the residential status of the non-resident holder and the type of
income chargeable in India.

Buy-back of Securities. Currently, Indian companies are not subject to any tax
in respect of the buy-back of their shares. However, the stockholders will be
taxed on any gain at the long-term or short-term, as applicable, capital gains
rates. For additional information, please see "--Taxation of Capital Gains."

Stamp Duty and Transfer Tax. Upon issuance of the equity shares underlying our
ADSs, we are required to pay a stamp duty of 0.1% of the aggregate value of the
shares issued, provided that the issue of dematerialized shares is not subject
to Indian stamp duty. A transfer of ADSs is not subject to Indian stamp duty.
However, upon the acquisition of equity shares in physical form from the
depositary in exchange for ADSs, the non-resident holder will be liable for
Indian stamp duty at the rate of 0.5% of the market value of the equity shares
on the redemption date. Similarly upon a sale of shares in physical form, stamp
duty at the rate of 0.5% of the market value of the equity shares on the trade
date is payable, although customarily such duty is borne by the purchaser.
Blocks of 500 or less of our equity shares may be issued and traded in physical
form, and are thus subject to Indian stamp duty. Blocks of more than 500 of our
equity shares must be issued and traded in dematerialized form and are not
subject to Indian stamp duty.

Wealth Tax. The holding of the ADSs in the hands of non-resident holders and the
holding of the underlying equity shares by the depositary as a fiduciary will be
exempt from Indian wealth tax. Non-resident holders are advised to consult their
own tax advisers in this context.

Gift Tax and Estate Duty. Indian gift tax was abolished in October 1998. In
India, there is no estate duty law. As a result, no estate duty would be
applicable to non-resident holders. Non-resident holders are advised to consult
their own tax advisors in this context.

Service Tax. Brokerage or commissions paid to stockbrokers in connection with
the sale or purchase of shares is subject to a service tax of 5.0%. The
stockbroker is responsible for collecting the service tax and paying it to the
relevant authority.

United States Federal Taxation

The following is a summary of the material U.S. federal income and estate tax
consequences that may be relevant with respect to the acquisition, ownership and
disposition of equity shares or ADSs. This summary addresses the U.S. federal
income and estate tax considerations of holders that are U.S. persons, i.e.,
citizens or residents of the United States, partnerships or corporations created
in or under the laws of the United States or any political subdivision thereof
or therein, estates, the income of which is subject to U.S. federal income
taxation regardless of its source and trusts for which a U.S. court exercises
primary supervision and a U.S. person has the authority to control all
substantial decisions and that will hold equity shares or ADSs as capital
assets. We refer to these persons as U.S. holders. This summary does not address
tax considerations applicable to holders that may be subject to special tax
rules, such as banks, insurance companies, dealers in securities or currencies,
tax-exempt entities, persons that hold equity shares or ADSs as a position in a
"straddle" or as part of a "hedging" or "conversion" transaction for tax
purposes, persons that have a "functional currency" other than the U.S. dollar
or holders of 10% or more, by voting power or value, of the stock of our
company. This summary is based on the tax laws of the United States as in effect
on the date of this Annual Report and on United States Treasury

Regulations in effect or, in some cases, proposed, as of the date of this Annual
Report, as well as judicial and administrative interpretations thereof available
on or before such date and is based in part on representations of the depositary
and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. All of the foregoing
are subject to change, which change could apply retroactively and could affect
the tax consequences described below.

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Each prospective investor should consult his, her or its own tax advisor with
respect to the U.S. Federal, state, local and foreign tax consequences of
acquiring, owning or disposing of equity shares or ADSs.

Ownership of ADSs. For U.S. federal income tax purposes, holders of ADSs will be
treated as the owners of equity shares represented by such ADSs.

Dividends. Subject to special rules discussed below governing passive foreign
investment companies, distributions of cash or property (other than equity
shares, if any, that are distributed pro rata to all stockholders of our
company, including holders of ADSs and also meet certain conditions) with
respect to equity shares will be includible in income by a U.S. holder as
foreign source dividend income at the time of receipt, which in the case of a
U.S. holder of ADSs generally will be the date of receipt by the depositary, to
the extent such distributions are made from the current or accumulated earnings
and profits of our company as determined under U.S. federal income tax
principles. Such dividends will not be eligible for the dividends received
deduction generally allowed to corporate U.S. holders. To the extent, if any,
that the amount of any distribution by our company exceeds our company's current
and accumulated earnings and profits, it will be treated first as a tax-free
return of the U.S. holder's tax basis in the equity shares or ADSs and
thereafter as capital gain.

A U.S. holder will not be eligible for a foreign tax credit against its U.S.
federal income tax liability for Indian dividend distribution taxes paid by our
company, unless it is a U.S. company holding at least 10% of our company paying
the dividends. U.S. holders should be aware that dividends paid by our company
generally will constitute "passive income" for purposes of the foreign tax
credit (or, in the case of certain holders, "financial services income").

If dividends are paid in Indian rupees, the amount of the dividend distribution
includible in the income of a U.S. holder will be in the U.S. dollar value of
the payments made in Indian rupees, determined at a spot exchange rate between
Indian rupees and U.S. dollars applicable to the date of distribution,
regardless of whether the payment is in fact converted into U.S. dollars.
Generally, gain or loss, if any, resulting from currency exchange fluctuations
during the period from the date the dividend is paid to the date such payment is
converted into U.S. dollars will be treated as ordinary income or loss.

Sale or Exchange of equity shares or ADSs. A U.S. holder generally will
recognize gain or loss on the sale or exchange of equity shares or ADSs equal to
the difference between the amount realized on such sale or exchange and the U.S.
holder's tax basis in the equity shares or ADSs. Subject to special rules
described below governing passive foreign investment companies, such gain or
loss will be capital gain or loss, and will be long-term capital gain or loss if
the equity shares or ADSs were held for more than one year. Gain or loss, if
any, recognized by a U.S. holder generally will be treated as U.S. source gain
or loss for U.S. foreign tax credit purposes. The deductibility of capital
losses may be subject to limitation.

Estate Taxes. An individual stockholder who is a citizen or resident of the
United States for U.S. federal estate tax purposes will have the value of the
equity shares or ADSs owned by such holder included in his or her gross estate
for U.S. federal estate tax purposes.

Passive Foreign Investment Company. A non-U.S. corporation will be classified as
a passive foreign investment company for U.S. Federal income tax purposes if
either:

     .  75% or more of its gross income for the taxable year is passive income;
        or

     .  on a quarterly average for the taxable year by value (or, if it is not a
        publicly traded corporation and so elects, by adjusted basis) 50% or
        more of its assets produce or are held for the production of passive
        income.

We do not believe that we satisfy either of the tests for passive foreign
investment company status. If we were to be a passive foreign investment company
for any taxable year, U.S. holders would be required to either:

     .  pay an interest charge together with tax calculated at maximum ordinary
        income rates on "excess distributions," which is defined to include gain
        on a sale or other disposition of equity shares;

     .  if a qualified electing fund election is made, to include in their
        taxable income their pro rata share of undistributed amounts of our
        income; or

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<PAGE>

     .  if the equity shares are "marketable" and a mark-to-market election is
        made, to mark-to-market the equity shares each taxable year and
        recognize ordinary gain and, to the extent of prior ordinary gain,
        ordinary loss for the increase or decrease in market value for such
        taxable year.

Backup Withholding Tax and Information Reporting Requirements. Dividends paid on
equity shares to a holder who is not an "exempt recipient," if any, may be
subject to information reporting and, unless a holder either furnishes its
taxpayer identification number or otherwise establishes an exemption, may also
be subject to U.S. backup withholding tax. In addition, information reporting
will apply to payments of proceeds from the sale or redemption of equity shares
or ADSs by a paying agent, including a broker, within the United States to a
U.S. holder, other than an "exempt recipient." An "exempt recipient" includes a
corporation. In addition, a paying agent within the United States will be
required to withhold 31% of any payments of the proceeds from the sale or
redemption of equity shares or ADSs within the United States to a holder, other
than an "exempt recipient," if such holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with such backup withholding
requirements.

The above summary is not intended to constitute a complete analysis of all tax
consequences relating to ownership of equity shares or ADSs. You should consult
your own tax advisor concerning the tax consequences of your particular
situation.

DOCUMENTS ON DISPLAY

Publicly filed documents concerning our company which are referred to in this
document may be inspected and copied at the public reference facilities
maintained by the SEC at:

Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

Copies of these materials can also be obtained from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.

The SEC maintains a website at www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that make
electronic filings with the SEC using its EDGAR system. As a foreign private
issuer, we are not required to use the EDGAR system but we have done so in the
past and will continue to do in order to make our reports available over the
Internet.

Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our currency, maturity and interest rate information relative to our short-term
and long-term debt are disclosed in Note "Borrowings" to our consolidated
financial statements.

The table below provides information about our financial instruments that are
sensitive to changes in interest rates and foreign currencies as of the dates
shown. Weighted average variable rates were based on average interest rates
applicable to the loans. The information is presented in U.S. dollar
equivalents, which is our reporting currency, based on the applicable exchange
rates as of the relevant period end. Actual cash flows are denominated in
various currencies, including U.S. dollars and Indian rupees.

<TABLE>
<CAPTION>
                                                        As of March 31, 2001       As of March 31, 2002
                                                        --------------------       --------------------
                                                          Total                     Total
                                                          -----                     -----
                                                        Recorded                   Recorded
                                                        --------                   --------
                                                         Amount   Fair Value        Amount   Fair Value
                                                         -------------------        -------------------
    ($equivalent in thousands)
<S>                                                     <C>        <C>             <C>       <C>
Debt:
Fixed rate short-term debt ...........................       --         --              --       --
Average interest rate ................................
Variable rate short-term debt ........................  $ 7,358    $ 7,358         $ 1,764   $1,764
Average interest rate ................................     12.7%                       9.5%
Fixed rate long-term debt ............................  $24,384    $24,411         $ 5,499   $5,516
Average interest rate ................................     14.1%                      12.7%
</TABLE>

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<PAGE>

<TABLE>
<S>                                                     <C>        <C>             <C>       <C>
Variable rate long-term debt .........................  $18,458    $18,458              --       --
Average interest rate ................................     12.1%
</TABLE>

Limitations. Fair value estimates are made at a specific point in time and are
based on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.

We also face market risk relating to foreign exchange rate fluctuations,
principally relating to the fluctuation of U.S. dollar to Indian rupee exchange
rate. Our foreign exchange risk principally arises from accounts payable to
overseas vendors. This risk is partially mitigated as we have receipts in
foreign currency from overseas customers and hold balances in foreign currency
with overseas banks.

During fiscal 2001 and the Fiscal 2002, 89.8% and 92.3%, respectively, of our
revenues were generated outside of India. Using sensitivity analysis, a
hypothetical 10.0% increase in the value of the Indian rupee against all other
currencies would decrease revenue by 1.8%, or $ 5.6 Million, in fiscal 2001 and
1.7% or $ 7.2 Million in the Fiscal 2002, while a hypothetical 10.0% decrease in
the value of the Indian rupee against all other currency would increase revenue
by 1.8%, or $ 5.6 Million, in fiscal 2001 and 1.7%, or $ 7.2 Million, in the
Fiscal 2002. In the opinion of management, a substantial portion of this
fluctuation would be offset by expenses incurred in local currencies. As a
result, a hypothetical 10.0% movement of the value of the Indian rupee against
all other currencies in either direction would have impacted our earnings before
interest and taxes by $ 5.6 Million in fiscal 2001 and $ 7.2 Million in the
Fiscal 2002. This amount would be offset, in part, from the impacts of local
income taxes and local currency interest expense. As at March 31, 2002, we had
approximately $222.0 million of non-Indian rupee denominated cash and cash
equivalents.

Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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                                    PART II

Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) at a price of $9.71 per ADS. We received approximately
$152.7 million in cash, net of underwriting discounts, commissions and other
offering costs. Our Securities Act registration statement on Form F-1 with
respect to the offering was declared effective by the Securities and Exchange
Commission on May 14, 2002 (Registration No. 333-13464). As of April 30, 2002,
approximately $64.3 million of these proceeds has been used for prepayment of
loans ($26.9 million); strategic investments in our subsidiaries ($10.6
million); development of facilities and infrastructure ($7.2 million) and
working capital and general corporate purposes ($19.6 million). We intend to use
the balance of the net proceeds to fund expansion of our existing facilities and
communication network in different locations in India and outside India; to
develop new facilities within and outside India; to investment in joint ventures
and other strategic investments; and for working capital and general corporate
purposes. None of the net proceeds from our ADS offering were paid, directly or
indirectly, to any of our directors, officers or general partners or any of
their associates, or to any persons owning ten percent or more of any class of
our equity securities, or any affiliates.

Item 15. RESERVED

Item 16. RESERVED

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                                    PART III

Item 17. FINANCIAL STATEMENTS

See Item 18 for a list of financial statements filed under Item 17.

Item 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this document, together
with the report of the independent auditors:

          Independent Auditor's Report

          Consolidated Balance Sheets as of March 31, 2001 and 2002

          Consolidated Statements of Operations and Comprehensive Income (Loss)
          for the years ended March 31, 2000, 2001, 2002.

          Consolidated Statements of Shareholder's Equity for the years ended
          March 31, 2000, 2001 and 2002.

          Consolidated Statements of Cash Flows for the years ended March 31,
          2000, 2001, 2002.

          Notes to Consolidated Financial Statements

Item 19. EXHIBITS

Number                  Description
------                  -----------

1.1       Memorandum and Articles of Association of Satyam Computer Services.
          (1)

1.2       Schedule 1 - Table A: Regulations for Management of a Company Limited
          by Shares. (1)

2.1       Specimens of Share Certificates. (1)

2.2       Deposit Agreement dated May 14, 2001, by and among Satyam Computer
          Services, Citibank, N.A. and the holders from time to time of American
          Depositary Receipts issued thereunder (including as an exhibit, the
          form of American Depositary Receipt).(4)

4.1       Associate Stock Option Plan (including Deed of Trust). (1)

4.2       Associate Stock Option Plan B. (1)

4.3       Associate Stock Option Plan ADR. (1)

4.4       Joint Venture Agreement between TRW Inc. and Satyam Computer Services,
          dated September 26, 2000. (1) *

4.5       Agreement for the Sale of Shares in CricInfo Limited, dated April 5,
          2000, by and between Indigo Holdings Limited and Satyam Infoway
          Limited. (2)

4.6       Subscription Agreement, dated May 26, 2000, by and among CricInfo
          Limited, Satyam Infoway Limited and the Senior Management. (2)

4.7       Agreed Form of Shareholders Agreement by and among CricInfo Limited,
          Satyam Infoway Limited and the Non-SIL Shareholders. (2)

                                       83

<PAGE>

4.8       Letter Agreement, dated May 2000, between Satyam Infoway Limited and
          Indigo Holdings Limited. (2)

4.9       Share Purchase Agreement, dated November 29, 1999, by and among Satyam
          Infoway Limited, IndiaWorld Communications Private Limited, Rajesh
          Jain and the other shareholders of IndiaWorld Communications Private
          Limited listed on the signature pages thereto. (3)

4.10      Agreement For Option to Purchase Shares, dated November 29, 1999, by
          and among Satyam Infoway Limited, IndiaWorld Communications Private
          Limited, Rajesh Jain and the other shareholders of IndiaWorld
          Communications Private Limited listed on the signature pages thereto.
          (3)

4.11      Share Purchase Agreement, dated as of June 30, 2000, by and among
          Rajesh Jain, Bhavana Jain, C.M. Jain Impex and Investments Private
          Limited, Satyam Infoway Limited and IndiaWorld Communications Private
          Limited. (2)

8.1       List of Subsidiaries. (5)

10.1      Consent of Price Waterhouse, Independent Accountants. (5)

(1) 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.

(2) Previously filed by Satyam Infoway Limited with the Commission as an exhibit
to the Registration Statement on Form F-2 (File No. 333-42292) filed on July 26,
2000 and incorporated herein by reference.

(3) Previously filed by Satyam Infoway Limited with the Commission as an exhibit
to Form 6-K (File No. 000-27663) filed on December 6, 1999 and incorporated
herein by reference.

(4) Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed
on August 13, 2001 and incorporated herein by reference.

(5) Filed herewith.

* Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the SEC. The omitted potions have been
separately filed with the SEC.

                                       84

<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and authorized the undersigned to sign this annual report on its
behalf.

                        SATYAM COMPUTER SERVICES LIMITED

                                       By:     /s/ G. Jayaraman
                                               ----------------
                                       Name:   G. Jayaraman
                                       Title:  Vice President (Corp. Affairs) &
                                               Company Secretary

     Date: July 1, 2002

                                       85

<PAGE>

                        SATYAM COMPUTER SERVICES LIMITED

            INDEX TO THE U.S. GAAP CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                  Page
    <S>                                                                                                           <C>
    Report of Price Waterhouse, Independent Accountants ......................................................     F-2

    Consolidated Balance Sheets as of March 31, 2001 and 2002 ................................................     F-3

    Consolidated Statements of Operations for the years ended March 31, 2000, 2001 and 2002 ..................     F-4

    Consolidated Statements of Shareholders' Equity and Comprehensive Income for the  years ended
    March 31, 2000, 2001 and 2002 ............................................................................     F-5

    Consolidated Statements of Cash Flows for the years ended March 31, 2000, 2001 and 2002 ..................     F-8

    Notes to the Consolidated Financial Statements ...........................................................    F-10
</TABLE>

                                      F-1

<PAGE>

Report of Independent Accountants

To the Board of Directors of:
Satyam Computer Services Limited

In our opinion, based upon our audits and the report of other independent
auditors', the accompanying consolidated balance sheets, the related
consolidated statements of operations, of cash flows and of shareholders' equity
and comprehensive income present fairly, in all material respects, the financial
position of Satyam Computer Services Limited and its subsidiaries as at March
31, 2001 and 2002, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Satyam Infoway Limited,
a 52.51% owned subsidiary, as at March 31, 2002 and for the year then ended,
which statements reflect total assets of US$84,953 thousands as at March 31,
2002 and total revenues of US$33,050 thousands for the year then ended. Those
statements were audited by other independent auditors' whose report thereon has
been furnished to us, and our opinion expressed herein, insofar as it relates to
the amounts included for Satyam Infoway Limited as at March 31, 2002 and for the
year then ended, is based solely on the report of the other independent
auditors'. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the report of
other independent auditors' provide a reasonable basis for our opinion.

Price Waterhouse

/s/




Secunderabad, India

April 24, 2002

                                      F-2

<PAGE>

Satyam Computer Services Limited
Consolidated Balance Sheets
(Thousands of US Dollars except per share data and as stated otherwise)

<TABLE>
<CAPTION>
                                                                                                       As of March 31
                                                                                        -------------------------------
                                                                                               2001               2002
ASSETS
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                <C>
Current assets
Cash and cash equivalents                                                                  $ 66,068           $243,454
Accounts receivable, net of allowance for doubtful debts                                     92,564             88,209
Unbilled revenue on contracts                                                                 4,676              3,860
Inventory                                                                                     2,350                725
Deferred income taxes                                                                           966              3,151
Prepaid expenses and other receivables, net of allowances                                    22,556             13,439
-----------------------------------------------------------------------------------------------------------------------
Total current assets                                                                        189,180            352,838

Premises and equipment, net                                                                 133,231            123,507
Goodwill and other intangible assets, net                                                   109,995             14,697
Investments                                                                                   2,708              3,423
Investments in associated companies                                                          33,989             10,735
Other assets                                                                                 11,996             10,302
=======================================================================================================================
Total assets                                                                               $481,099           $515,502
=======================================================================================================================

Liabilities and Shareholders' Equity
-----------------------------------------------------------------------------------------------------------------------

Current liabilities
Short-term and current portion of long-term debts                                          $ 40,575           $  4,551
Accounts payable                                                                             13,780             11,077
Accrued expenses and other current liabilities                                               33,908             39,740
Unearned and deferred revenue                                                                 4,132              3,079
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                    92,395             58,447

Long-term debt, excluding current portion                                                     9,625              2,712
Deferred income taxes                                                                        36,777             36,682
Excess of cash received over carrying value of investment in Infoway,
net of taxes (Note No.6 )                                                                    35,156                  -
Other liabilities                                                                             5,408             16,935
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                           179,361            114,776
-----------------------------------------------------------------------------------------------------------------------

Contingencies and Commitments (Note No 20)

Minority interest                                                                           107,043             30,884
Shareholders' equity

Common stock - par value Rs.2 (US$0.041*) per equity share;
(375 million and 375 million equity shares authorized and 281,190,000
and 314,540,000 equity shares issued as of March 31, 2001 and 2002 respectively)             15,726             17,144
Additional paid-in capital                                                                  253,409            405,530
Deferred stock based compensation                                                           (11,787)            (2,511)
Accumulated deficit                                                                         (29,456)            (9,996)
Accumulated other comprehensive loss                                                        (21,659)           (36,727)
-----------------------------------------------------------------------------------------------------------------------
                                                                                            206,233            373,440
Shares held by the SC-Trust under associate stock option plan
(11,170,070 and 3,483,820 equity shares as of March 31, 2001 and 2002
respectively)                                                                               (11,538)            (3,598)
-----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                                  194,695            369,842
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                                 $481,099           $515,502
=======================================================================================================================
</TABLE>

 * the par value in US$ has been converted at the closing rate as of March 31,
2002, 1US$ = Rs.48.83

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

                                      F-3

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Operations
(Thousands of US Dollars except per share data and as statd otherwise)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------


                                                                                                Year ended March 31
                                                                    -----------------------------------------------
                                                                      2000               2001               2002

-------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>                <C>
Revenues                                                             $164,455          $310,307           $414,491

Cost of revenues
(Includes deferred stock- based compensation of $13,356,
$31,336 and $7,212 for the years ended March 31, 2000, 2001
and 2002 respectively)                                                 90,449           208,121            238,996
-------------------------------------------------------------------------------------------------------------------
Gross profit                                                           74,006           102,186            175,495

Selling, general and administrative expenses
(Includes deferred stock- based compensation of US$3,575,
US$14,782 and US$3,582 for the years ended March 31, 2000,
2001 and 2002 respectively)                                            69,592           124,100            140,896

Amortization of goodwill                                                5,043            24,728             16,997
Impairment of goodwill                                                      -                 -             81,115
-------------------------------------------------------------------------------------------------------------------
Total operating expenses                                               74,635           148,828            239,008

-------------------------------------------------------------------------------------------------------------------
Operating loss                                                           (629)          (46,642)           (63,513)

Interest income                                                         2,625             5,732              3,806
Interest expense                                                      (11,290)           (9,632)            (2,856)
Gain on sale of shares in Infoway (Note No.6 )                              -                 -             45,594
Other income                                                            1,471             6,806             12,168
Other expense                                                            (418)             (344)               (78)
-------------------------------------------------------------------------------------------------------------------
Loss before income taxes, minority interest and equity in
earnings/ (losses) of associated companies                             (8,241)          (44,080)            (4,879)

Income taxes                                                           (1,619)           (4,137)           (17,234)
Minority Interest                                                       2,785            25,772             73,406
-------------------------------------------------------------------------------------------------------------------
Income/ (loss) before equity in earnings/ (losses) of
associated companies                                                   (7,075)          (22,445)            51,293

Equity in earnings/ (losses) of associated companies,
net of taxes                                                              135            (5,467)           (25,401)
-------------------------------------------------------------------------------------------------------------------
Net income / (loss)                                                  $ (6,940)         $(27,912)          $ 25,892
===================================================================================================================

Earnings / (loss) per share:

Basic and Diluted                                                    $  (0.03)         $  (0.10)          $   0.08
                                                                     ========          ========           ========
Weighted average shares used in computing earnings /
(loss) per share -(in thousands)*
       Basic                                                          264,720           269,943            305,751
       Diluted                                                        264,720           269,943            307,113
-------------------------------------------------------------------------------------------------------------------
</TABLE>

*on an adjusted basis

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

                                      F-4

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                     --------------------------------------------------------------------------------------
                                           Common Stock            Additional     Deferred       Retained    Accumulated
                                                                paid-in capital  stock-based     earnings /     Other
                                                                                 compensation   accumulated  Comprehensive
                                                                                                 (deficit)   Income/(loss)
                                         Shares      Par Value
                                     --------------------------------------------------------------------------------------
<S>                                  <C>             <C>          <C>             <C>             <C>          <C>
Balance as of March 31, 1999         260,190,000      $ 8,765         $ 26,394       $(11,164)      $18,749        $(6,852)

Net loss                                       -            -                -              -        (6,940)             -
Other comprehensive income
    Loss on foreign currency
    translation                                -            -                -              -             -         (2,362)
    Unrealized gains on securities,
    net of taxes                               -            -                -              -             -             20

Total Comprehensive loss                       -            -                -              -             -              -

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes                    -            -          101,839              -             -              -
Acquisition of minority interest       8,000,000          183           24,878              -             -              -
Stock Split (effected in the form
of a dividend)                                 -        6,480                -              -        (6,480)             -

Deferred stock-based compensation              -            -           23,265        (23,265)            -              -

Amortization of deferred
stock-based compensation                       -            -                -         16,457             -              -

Shares issued to the SC-Trust for
stock based compensation plan         13,000,000          298           13,132              -             -              -

Shares transferred by SC-Trust to
employees on vesting                           -            -                -              -             -              -

Cash dividend paid at the rate of
US$0.012 per share                                                                                   (2,766)

---------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2000         281,190,000      $15,726         $189,508       $(17,972)      $ 2,563        $(9,194)
===========================================================================================================================

<CAPTION>
-------------------------------------------------------------------------------
                                      Shares held by       Total
                                         SC- Trust      Shareholders'
                                                           Equity
-------------------------------------------------------------------------------
<S>                                   <C>               <C>
Balance as of March 31, 1999                     -       $ 35,892

Net loss                                         -         (6,940)
Other comprehensive income
    Loss on foreign currency
    translation                                  -         (2,362)
    Unrealized gains on securities,
    net of taxes                                 -             20
                                                         --------
Total Comprehensive loss                         -         (9,282)

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes                      -        101,839
Acquisition of minority interest                 -         25,061
Stock Split (effected in the form
of a dividend)                                   -              -

Deferred stock-based compensation                -              -

Amortization of deferred
stock-based compensation                         -         16,457

Shares issued to the SC-Trust for
stock based compensation plan                 (13,430)          -

Shares transferred by SC-Trust to
employees on vesting                            1,273       1,273

Cash dividend paid at the rate of
US$0.012 per share                                         (2,766)
-------------------------------------------------------------------------------
Balance as of March 31, 2000                 $(12,157)   $168,474
===============================================================================
The accompanying notes are an integral part of these consolidated financial statements.               (Continuing on following page)
</TABLE>

                                      F-5

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                            Common Stock        Additional        Deferred     Retained       Accumulated
                                                              paid-in capital    stock-based   earnings/         Other
                                                                                compensation  accumulated    Comprehensive
                                                                                               (deficit)     Income/(loss)
                                          Shares  Par Value
                                    -----------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>              <C>              <C>           <C>
Balance as of March 31, 2000         281,190,000    $15,726          $189,508      $ (17,972)    $  2,563         $ (9,194)

Net loss                                       -          -                 -              -      (27,912)               -
Other comprehensive income
    Loss on foreign currency
    translation                                -          -                 -              -            -          (12,429)
    Unrealized losses on
    securities, net of taxes                   -          -                 -              -            -              (36)

Total Comprehensive loss

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No. 4)                                         -          -            24,599              -            -                -
Loss on sale of Infoway shares held
by CricInfo                                    -          -             (466)              -            -                -
Warrants issued to TRW (Note No.5)             -          -             1,657              -            -                -
Deferred stock-based compensation              -          -            38,034        (38,034)           -                -
Amortization of deferred
stock-based compensation                       -          -                 -         44,219            -                -
Shares transferred by SC-Trust to
employees on vesting                           -          -                77              -            -                -
Cash dividend paid at the rate of
US$0.008 per share                             -          -                 -              -       (4,107)               -
-----------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2001         281,190,000    $15,726          $253,409      $ (11,787)    $(29,456)        $(21,659)
=============================================================================================================================

<CAPTION>
                                     ---------------------------------
                                     Shares held by        Total
                                       SC- Trust        Shareholders'
                                                           Equity
                                     ---------------------------------
<S>                                  <C>                 <C>
Balance as of March 31, 2000               $(12,157)        $ 168,474

Net loss                                          -           (27,912)
Other comprehensive income
    Loss on foreign currency
    translation                                   -           (12,429)
    Unrealized losses on
    securities, net of taxes                      -               (36)
                                                     ----------------
Total Comprehensive loss                                      (40,377)

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No. 4)                                            -            24,599
Loss on sale of Infoway shares held
by CricInfo                                       -              (466)
Warrants issued to TRW (Note No.5)                -             1,657
Deferred stock-based compensation                 -                 -
Amortization of deferred
stock-based compensation                          -            44,219
Shares transferred by SC-Trust to
employees on vesting                            619               696
Cash dividend paid at the rate of
US$0.008 per share                                -            (4,107)
---------------------------------------------------------------------
Balance as of March 31, 2001               $(11,538)        $194,695
=====================================================================
The accompanying notes are an integral part of these consolidated financial statements.         (Continuing on following page)
</TABLE>

                                      F-6

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                            -------------------------------------------------------------------------------------
                                                   Common Stock             Additional    Deferred      Retained       Accumulated
                                                                             paid-in     stock-based   earnings /         Other
                                                                             capital     compensation  accumulated    Comprehensive
                                                Shares        Par Value                                 (deficit)    Income / (loss)
                                            ----------------------------------------------------------------------------------------
<S>                                          <C>             <C>           <C>           <C>            <C>            <C>
Balance as of March 31, 2001                 281,190,000     $    15,726   $   253,409   $   (11,787)   $   (29,456)   $   (21,659)

Net income                                             -               -             -             -         25,892              -
Other comprehensive income
    Loss on foreign currency
    translation                                        -               -             -             -              -        (15,063)
    Unrealized losses on
    securities, net of taxes                           -               -             -             -              -             (5)

Total Comprehensive income
Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No.4 )                                                 -               -           375             -              -              -
Loss on sale of Infoway shares held
by CricInfo                                            -               -          (645)            -              -              -
Issuance of common stock, net of
issuance cost                                 33,350,000           1,418       149,196             -              -              -
Deferred stock-based compensation                      -               -         1,203        (1,203)             -              -
Amortization of deferred
stock-based compensation                               -               -             -        10,479              -              -
Shares transferred by SC-Trust to
employees on vesting                                   -               -         1,992             -              -              -
Cash dividend paid at the rate of
US$ 0.01 per share (Note No. 23)                       -               -             -             -         (6,432)             -
----------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2002                 314,540,000     $    17,144   $   405,530   $    (2,511)   $    (9,996)   $   (36,727)
==================================================================================================================================

<CAPTION>
                                            --------------------------------
                                             Shares held by      Total
                                                SC-Trust     Shareholders'
                                                                 Equity

                                            --------------------------------
<S>                                          <C>                <C>
Balance as of March 31, 2001                 $   (11,538)       $   194,695

Net income                                             -             25,892
Other comprehensive income
    Loss on foreign currency
    translation                                        -            (15,063)
    Unrealized losses on
    securities, net of taxes                           -                 (5)
                                                                -----------
Total Comprehensive income                                           10,824
Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No.4 )                                                 -                375
Loss on sale of Infoway shares held
by CricInfo                                            -               (645)
Issuance of common stock, net of
issuance cost                                          -            150,614
Deferred stock-based compensation                      -                  -
Amortization of deferred
stock-based compensation                               -             10,479
Shares transferred by SC-Trust to
employees on vesting                               7,940              9,932
Cash dividend paid at the rate of
US$ 0.01 per share (Note No. 23)                       -             (6,432)
---------------------------------------------------------------------------
Balance as of March 31, 2002                 $    (3,598)       $   369,842
===========================================================================
</TABLE>

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

                                      F-7

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Cash Flows
(Thousands of US Dollars except per share data and as stated otherwise)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                  Year  ended March 31
                                                                                --------------------------------------
                                                                                    2000          2001            2002
  <S>                                                                           <C>          <C>              <C>
  Cash Flows From Operating Activities
  Net income / (loss)                                                           $ (6,940)    $ (27,912)       $ 25,892
  Adjustments to reconcile net income / (loss) to net cash provided by
  operating activities:
     Depreciation, amortization and impairment of goodwill                        25,268        54,493         136,318
     Deferred stock based compensation                                            16,931        46,118          10,794
     Deferred income taxes                                                           261           154            (427)
     (Gain) / loss on sale of investments                                             (2)           (1)              2
     (Gain) / loss on sale of premises and equipment                                  72            43             (59)
     Foreign currency translation on excess of amount received on sale
     of shares of Infoway over its carrying value                                      -         1,014             928
     Excess of cash received over carrying value of investment in
     Infoway, net of taxes                                                             -             -         (35,156)
     Amortization of discount on share warrants issued to TRW and change
     in fair value of put option                                                       -         2,685          10,144
     Minority Interest                                                            (2,785)      (25,772)        (73,406)
     Equity in share of (earnings) / losses of associated companies                 (135)        5,467          25,401
  Changes in assets and liabilities:
     Accounts receivable, net and unbilled revenues                              (23,199)      (49,452)          1,262
     Prepaid expenses, other receivables, and inventory                          (10,330)      (10,164)          9,840
     Other assets, non-current                                                      (694)       (9,797)          1,356
     Accounts payable                                                              9,141         4,584          (4,363)
     Accrued expenses and other liabilities                                        4,261        20,348           8,342
     Unearned and deferred revenue                                                 1,531           937            (904)
     Other liabilities, non-current                                                  735        (6,810)            407
----------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                       14,115         5,935         116,371

  Cash Flows From Investing Activities
----------------------------------------------------------------------------------------------------------------------
  Purchase of premises and equipment                                            $(40,847)    $ (84,764)       $(34,157)
  Expenditure on license fees                                                          -          (612)         (1,238)
  Proceeds from sale of premises and equipment                                        32            68             503
  Acquisitions and investments in associated companies                           (40,176)      (52,470)         (4,608)
  Purchase of investments                                                         (2,641)            -          (3,131)
  Proceeds from sale of investments                                                   13             3           2,271
----------------------------------------------------------------------------------------------------------------------
  Net cash used in investing activities                                          (83,619)     (137,775)        (40,360)

  Cash Flows From Financing Activities
----------------------------------------------------------------------------------------------------------------------
  Proceeds from / (repayments of) short-term debt                               $ 14,318     $   8,330        $(35,725)
  Share warrant consideration                                                          -           500               -
  Issuance of common stock, net of issuance cost                                                     -         150,614
  Issuance of common stock under Associate Stock Option Plans                      1,273           696           9,932
  Issuance of common stock by Infoway and other subsidiaries, net
  of issuance cost                                                               232,534           240               -
  Proceeds from long-term debts                                                   30,582             -               -
  Repayment of long-term debts                                                   (24,277)      (40,425)         (7,642)
  Proceeds from sale of shares of Infoway, net of cost                                 -        48,978               -
  Cash dividends paid                                                             (2,766)       (4,107)         (6,432)
----------------------------------------------------------------------------------------------------------------------
  Net cash provided by financing activities                                      251,664        14,212         110,747
</TABLE>

                                                  (Continuing on following page)

                                      F-8

<PAGE>

Satyam Computer Services Limited
Consolidated Statements of Cash Flows
(Thousands of US Dollars except per share data and as stated otherwise)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                             Year ended March 31
                                                                           --------------------------------------
                                                                              2000          2001           2002
<S>                                                                        <C>          <C>             <C>
  Effect of exchange rate changes on cash and cash equivalents               (3,071)       (8,608)         (9,372)
  Net change in cash and cash equivalents                                   179,089      (126,236)        177,386

  Cash and cash equivalents at beginning of the year                         13,215       192,304          66,068
  Cash and cash equivalents at end of the year                             $192,304     $  66,068       $ 243,454

Supplementary information:
-----------------------------------------------------------------------------------------------------------------

Cash paid during the period for:

Income taxes                                                               $  1,591     $   4,898       $   7,744
Interest                                                                      9,826         9,250           2,859

Non-cash items:

Shares issued on acquisition of minority interest                          $ 25,061             -               -
Shares issued by Infoway on acquisitions                                          -     $  69,815       $   1,044
Capital leases and hire purchase                                                657         1,624           1,300
</TABLE>

 For a number of reasons, principally the effects of translation differences and
 acquisitions, certain items in the statements of cash flows do not correspond
 to the differences between the balance sheet amounts for the respective items.

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

                                      F-9

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


1. Description of Business

Satyam Computer Services Limited and its consolidated subsidiaries and
associated companies (hereinafter referred to as "Satyam") are engaged in
providing information technology services, internet services and developing
software products.

Satyam Computer Services Limited (hereinafter referred to as "Satyam Computer
Services") is an information technology ("IT") services provider that uses a
global infrastructure to deliver value-added services to its customers, to
address IT needs in specific industries and to facilitate electronic business,
or eBusiness, initiatives. Satyam Computer Services was incorporated on June 24,
1987 in Hyderabad, Andhra Pradesh, India. Satyam Computer Services has offshore
development centers located throughout India that enable it to provide high
quality and cost-effective solutions to clients. It also has offsite centers
located in the United States, Europe, Japan, Singapore, Australia, China,
Malaysia, Hongkong, Dubai and Germany. Satyam offers a comprehensive range of IT
services, including software development, packaged software integration, system
maintenance and engineering design services. Satyam Computer Services has
established a diversified base of corporate customers in a wide range of
industries including insurance, banking and financial services, manufacturing,
telecommunications, transportation and engineering services.

Satyam Infoway Limited (hereinafter referred to as "Infoway"), a subsidiary of
Satyam Computer Services, is engaged in providing various services such as
corporate network and technology services, internet access services, online
portal and content offerings.

In August 2001 Satyam Computer Services decided to close down four of its wholly
owned subsidiaries. Consequent to this decision Satyam Computer Services has
initiated legal formalities and the process of transfer of substantial business
of three marketing subsidiaries namely Satyam (Europe) Limited, Satyam Asia Pte.
Limited and Satyam Japan KK to its offsite centers. The assets and liabilities
will be transferred at book value and management does not expect significant
costs to arise as a result of cessation of operations of these marketing
subsidiaries. In respect of the fourth subsidiary Dr. Millennium Inc., an
application for its dissolution was made with the appropriate authorities and
approval for the same has been obtained.

2. Summary of Significant Accounting Policies

a) Principles of Consolidation and Basis of Presentation

The consolidated financial statements of Satyam Computer Services and its
majority owned domestic and foreign subsidiaries are prepared in accordance with
Generally Accepted Accounting Principles applicable in the United States ("U.S.
GAAP"). All significant inter-company balances and transactions are eliminated.

Minority interest in subsidiaries represents the minority shareholders'
proportionate share of the net assets and the results of operations of Satyam's
majority owned subsidiaries.

Investments in business entities in which Satyam does not have control, but has
the ability to exercise significant influence over operating and financial
policies (generally 20-50 percent ownership), are accounted for by the equity
method.

On occasion, a subsidiary or associated company accounted for by the equity
method ("offering company") may issue its shares to third parties as either a
public offering or private placement at per share amounts in excess of or less
than Satyam's average per share carrying value. With respect to such
transactions, the resulting gains or losses arising from the change in interest
are recorded in additional paid-in capital. Gains or losses arising on the
direct sales by Satyam of its investment in its subsidiaries or associated
companies to third parties are recognized as income in the statement of
operations. Such gains or losses are the difference between the sale proceeds
and net carrying value of investments.

The excess of the cost over the underlying net equity of investments in
subsidiaries and associated companies accounted for on an equity basis is
allocated to identifiable assets based on fair values at the date of
acquisition. The unassigned residual value of the excess of the cost over the
underlying net equity is recognized as goodwill.

                                      F-10

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


b)  Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as of the date of the financial statements and the reported amount
of revenues and expenses during the reported period. Examples of such estimates
include: estimates of expected contract costs to be incurred to complete
software development, allowance for doubtful debts, future obligations under
employee benefit plans, valuation allowances for deferred taxes, useful lives of
premises and equipment (fixed assets) and goodwill. Actual results could differ
materially from those estimates.

Certain items previously reported in specific financial statement captions have
been reclassified to conform to the 2002 presentation.

c)  Foreign Currency Translation

The accompanying consolidated financial statements are reported in U.S. dollars.
The Indian rupee is the functional currency for Satyam Computer Services, its
domestic subsidiaries and associated companies. However, the Japanese Yen, U.S.
Dollar, Pound Sterling and Singapore Dollar are the functional currencies for
its foreign subsidiaries located in Japan, U.S., UK and Singapore respectively.
The translation of the functional currencies into U.S. dollars (reporting
currency) is performed for assets and liabilities using the current exchange
rates in effect at the Balance Sheet date and for revenues, costs and expenses
using average exchange rates prevailing during the reporting periods.
Adjustments resulting from the translation of functional currency financial
statements to reporting currency are accumulated and reported as other
comprehensive income/(loss), a separate component of shareholders' equity.

Transactions in foreign currency are recorded at the exchange rate prevailing on
the date of transaction. Monetary assets and liabilities denominated in foreign
currencies are expressed in the functional currency at the exchange rates in
effect at the Balance Sheet date. Revenues, costs and expenses are recorded
using average exchange rates prevailing during the reporting periods. Gains or
losses resulting from foreign currency transactions are included in the
statement of operations.

d)  Revenue Recognition

i) IT Services

Revenues from IT services, which includes software development, system
maintenance, package software implementation, engineering design services and
ebusiness consist of revenues earned from services performed either on a "time
and material" basis or time bound fixed price engagements.

Revenues earned from services performed on a "time and material" basis are
recognized as the services are performed. IT services performed on time bound
fixed-price engagements, require accurate estimation of the costs which include
salaries and related expenses of technical associates, related communication
expenses, travel costs, scope and duration of each engagement. Revenue and the
related costs for these projects are recognized on percentage of completion,
with revisions to estimates reflected in the period in which changes become
known. Provisions for estimated losses on such engagements are made during the
period in which a loss becomes probable and can be reasonably estimated. Satyam
recognizes revenue based on the completed-contract method where the work to
complete cannot be reasonably estimated.

Amounts included in the financial statements, which relate to recoverable costs
and accrued profits not yet billed on contracts, are classified in current
assets as "Unbilled revenue on contracts". Billings on uncompleted contracts in
excess of accrued cost and accrued profit are classified in current liabilities
under the heading "Unearned and deferred revenue". Satyam provides its clients
with one to three months warranty as post-sale support for its fixed price
engagements. Costs associated with such services are accrued at the time the
related revenues are recorded. Satyam has not provided for any warranty costs
for the years ended March 31, 2001 and 2002 as historically Satyam has not
incurred any expenditure on account of warranties and since the customer is
required to formally sign off on the work performed, any subsequent work is
usually covered by an additional contract.

In accordance with EITF Topic D 103, "Income Statement Characterization of
Reimbursements Received for "Out-of-Pocket" Expenses Incurred", Satyam has
accounted for reimbursements received for out-of-pocket expenses incurred as
revenues in the statement of operations. Because these additional revenues are
offset by the reimbursable expenses incurred, adoption of EITF Topic D-103 does
not impact loss from operations or net income / (loss).

                                      F-11

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


ii) Internet Services

Revenues from corporate network services, which include providing e-commerce
solutions, electronic data interchange and other network based services, are
recognized upon actual usage of such services by customers and are based on
either the time for which the network is used or the volume of data transferred,
or both.

Revenues from web-site hosting are recognized ratably over the period for which
the site is hosted. Revenue from development of internet networking solutions
comprise income from time and material contracts and fixed price contracts.
Revenues are recognized in accordance with the revenue recognition policy of IT
Services.

Internet access is provided to customers either for unlimited hours or for a
specified number of hours, which is to be utilized within a specified period of
time. Customers purchase a CD-ROM that allows them to access the Internet. The
amounts received from customers on the sale of these CD-ROMs are not refundable.
Satyam recognizes revenue based on usage by the customer over the specified
period. At the end of the specified period, the remaining unutilized hours, if
any, are recognized as revenue. Unlimited internet access and electronic mail
access is sold to customers for a specified period of time over which the
related revenue is recognized.

Revenues from banner advertisements and sponsorship contracts are recognized
ratably over the period in which the advertisements are displayed. Revenues from
electronic commerce transactions are recognized when the transaction is
completed.

e)  Cash and Cash Equivalents

Satyam considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Cash equivalents are stated at
cost, which approximates their fair value due to the short maturity of the
investments. Cash and claims to cash that are restricted as to withdrawal or use
in the ordinary course of business are classified as other receivables under
current assets, unless they are to be utilized for other than current operations
in which case they are classified as other assets, non-current.

f)  Inventory

Inventories are generally stated at the lower of cost as determined using the
first-in-first-out method (FIFO), and net realisable value.

g)  Premises, Equipment and Depreciation

Premises and equipment are stated at actual cost less accumulated depreciation.
Assets under capital leases are stated at the present value of minimum lease
payments. Depreciation is computed using the straight-line method over the
estimated useful lives. Assets under capital leases and leasehold improvements
are amortized straight-line over their estimated useful life or the lease term,
as appropriate.

Costs of application software for internal use are generally charged to income
as incurred due to its estimated useful lives being relatively short, usually
less than one year. The third party software expense amounted to US$1,038
thousand, US$885 thousands and US$836 thousands for the years ended March 31,
2000, 2001 and 2002 respectively.

The cost and the accumulated depreciation for premises and equipment sold,
retired or otherwise disposed off are removed from the stated values and the
resulting gains and losses are included in the statement of operations. Interest
related to the construction of qualifying assets is capitalized. Advances paid
towards the acquisition of premises and equipment outstanding at each balance
sheet date and the cost of premises and equipment not put to use before such
date are disclosed as Assets under Construction.

                                      F-12

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


h) Software Development Costs

Satyam capitalizes internally generated software development costs under the
provisions of Statement of Financial Accounting (SFAS) 86, "Accounting for Costs
of Computer Software to be Sold, Leased or Otherwise Marketed." Capitalization
of computer software development cost begins upon the establishment of
technological feasibility, which Satyam has defined as the completion of a
prototype. Costs incurred prior to establishment of technological feasibility
and other research and development expenses are charged to income as incurred.
Costs incurred by Satyam between completion of the prototype and the point at
which the product is ready for general release have been insignificant.

Research and development expenses charged to income amounted to US$5,787
thousand, US$3,124 thousands and US$2,156 thousands for the years ended March
31, 2000, 2001and 2002 respectively.

i) Goodwill and Other Intangible Assets

Goodwill represents the difference between either a) the purchase price and the
fair value of assets and liabilities acquired and/or b) the purchase price and
additional interest in subsidiaries acquired from minority shareholders.
Goodwill is amortized on a straight-line basis principally over a period of 5
years based on management estimate. Other intangible assets include licensing
fees, which are being amortized over the license period of 5 years.

j) Impairment of Long-lived Assets

Satyam has adopted the provisions of SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of". Satyam reviews
long-lived assets, including goodwill and identifiable intangibles, for
impairment whenever events or changes in business circumstances indicate the
carrying amount of assets may not be fully recoverable. Each impairment test is
based on a comparison of the undiscounted cash flows expected to be generated
from the use of the asset to its recorded value. If an impairment is indicated,
the asset is written down to its fair value. Assets to be disposed are reported
at the lower of the carrying value or the fair value less cost to sell.

k) Investments

Satyam has evaluated its investment policies consistent with the provisions of
SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities",
and determined that all of its marketable investment securities are to be
classified as available-for-sale. Accordingly, such securities are carried at
fair value with unrealized gains and losses, net of taxes, reported as a
separate component of other comprehensive income/(loss) until realized. Realized
gains and losses and declines in value judged to be other-than-temporary are
included in other income. The cost of securities sold is based on the
first-in-first-out (FIFO) method. Interest and dividends on securities
classified as available-for-sale are recognized when earned and included in
other income. Other investments that are not marketable are carried at cost,
subject to tests of other than temporary impairment.

l) Cost of Revenues and Selling, General and Administrative Expenses

Cost of revenues primarily include the compensation cost of technical staff,
depreciation on dedicated assets and system software, travel costs, data
communication expenses and other expenses incurred that are related to the
generation of revenue.

Selling, general and administrative expenses generally include the compensation
costs of sales, management and administrative personnel, travel costs, research
and development costs, advertising, business promotion, depreciation on assets,
application software costs, rent, repairs, electricity and other general
expenses not attributable to cost of revenues.

m) Advertising Costs

Satyam expenses all advertising costs as incurred. Advertising costs charged to
income amounted to US$3,575 thousand, US$11,301 thousands and US$1,008 thousands
for the years ended March 31, 2000, 2001 and 2002 respectively.

                                      F-13

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


n)    Employee Benefits

i)   Provident Fund

  In accordance with Indian law, all employees in India are entitled to receive
  benefits under the Provident Fund, which is a defined contribution plan. Both
  the employee and the employer make monthly contributions to the plan at a
  predetermined rate (presently 12.0%) of the employees' basic salary. Satyam
  has no further obligations under the plan beyond its monthly contributions.
  These contributions are made to the fund administered and managed by the
  Government of India. Satyam's monthly contributions are charged to income in
  the period they are incurred.

ii)  Gratuity Plan

  Satyam makes contributions to a defined benefit retirement plan (the "Gratuity
  Plan") covering all its employees in India. The Gratuity Plan provides a lump
  sum payment to vested employees at retirement or termination of employment
  based on the respective employee's salary and years of employment with Satyam.
  Satyam provides for the Gratuity Plan on the basis of actuarial valuations.
  The entire Gratuity Plan of Satyam Computer Services is unfunded. Infoway
  makes annual contributions to a fund administered and managed by the Life
  Insurance Corporation of India ("LIC"). Under this scheme, the settlement
  obligation remains with Infoway, although the LIC administers the scheme and
  determines the contribution premium required to be paid by Infoway.

iii) Superannuation Plan

In addition to the above benefits, the senior employees of Satyam Computer
Services in India are entitled to receive benefits under the Superannuation
Plan, a defined contribution plan. Satyam Computer Services makes yearly
contributions under the superannuation plan administered and managed by LIC,
based on a specified percentage (presently 10.0%) of each covered employee's
basic salary. Satyam Computer Services has no further obligations under the plan
beyond its contributions.

iv)  Other Benefit Plans

Satyam maintains a 401(k) retirement plan (the "401(k) Plan") covering all its
employees in the United States. Each participant in the 401(k) Plan may elect to
contribute up to 15.0% of his or her annual compensation to the 401(k) Plan.
Satyam matches 50.0% of employee contributions, subject to a maximum of 3.0% of
gross salary for all employees participating in the 401(k) plan.

o)    Income Taxes

In accordance with the provisions of SFAS 109, "Accounting for Income Taxes",
income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period of change. Based on management's
judgment, the measurement of deferred tax assets is reduced, if necessary, by a
valuation allowance for any tax benefits for which it is more likely than not
that some portion or all of such benefits will not be realized.

p)    Earnings Per Share

In accordance with the provisions of SFAS 128, "Earnings Per Share", basic
earnings per share is computed on the basis of the weighted average number of
shares outstanding during the period. Diluted earnings per share is computed on
the basis of the weighted average number of common and dilutive common
equivalent shares outstanding during the period, using the "treasury stock"
method for options and warrants, except where the results will be anti-dilutive.

                                      F-14

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


q) Stock-Based Compensation

Satyam uses the intrinsic value-based method of Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees", to account for
its employee stock-based compensation plan. Satyam has therefore adopted the pro
forma disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". Pursuant to SFAS No. 123, all equity instruments issued to
non-employees are accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable.

r) Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued FASB
Statements Nos. 141 and 142 ("SFAS 141" and "SFAS 142"), "Business Combinations"
and "Goodwill and Other Intangible Assets". SFAS 141 replaces APB 16 and
eliminates pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill. Adoption of SFAS No. 141 did not have an
impact on our financial position and results of operations.

SFAS 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Under SFAS 142, goodwill and indefinite-lived
intangibles will be tested annually and whenever events or circumstances occur
indicating that they might be impaired. Goodwill is tested for impairment
employing a two-step method. First the fair value of the reporting unit is
compared to its carrying amount. If the fair value is less than the carrying
amount, the impairment is measured as the excess of recorded goodwill over its
implied fair value. Indefinite-lived intangibles are tested for impairment by
comparing the carrying amount to the fair value. SFAS 141 and SFAS 142 are
effective for all business combinations completed after June 30, 2001. Upon
adoption of SFAS 142, amortization of goodwill recorded for business
combinations consummated prior to July 1, 2001 will cease, and intangible assets
acquired prior to July 1, 2001 that do not meet the criteria for recognition
under SFAS 141 will be reclassified to goodwill. We adopted SFAS 142 on April 1,
2002, the beginning of fiscal 2002. As a result of the adoption of SFAS 142,
amortization of goodwill will be lower by approximately US$4,310 thousands in
the year ending March 31, 2003 as compared to the year ended March 31, 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 144 applies to all long-lived assets (including
discontinued operations) and consequently amends APB No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Division of a
Business". SFAS No. 144 develops an accounting model for long-lived assets that
are to be disposed of by sale and requires the measurement to be at the lower of
book value or fair value, less the cost to sell the assets. Additionally, SFAS
No. 144 expands the scope of discontinued operations to include all components
of an entity with operations that (1) can be distinguished from the rest of the
entity and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. We do not expect the provisions of SFAS No. 144 to have a
significant impact on our financial position or operating results following its
adoption on April 1, 2002.

                                      F-15

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


3.  Business Combinations

a)  Acquisition of India World Communication by Infoway

On November 29, 1999, Infoway entered into an agreement with the shareholders of
IndiaWorld Communications Private Limited (IndiaWorld) to acquire 49,000 shares
(equivalent to 24.5%) of IndiaWorld for a consideration of US$28,149 thousand.
Infoway simultaneously made a non-refundable deposit of US$11,801 thousands
towards the acquisition of the remaining shares of IndiaWorld for US$84,654
thousands in conjunction with a purchase Option Agreement, expiring on June 30,
2000, that gave control of IndiaWorld to Infoway over the option period.
Accordingly, Infoway consolidated its accounts with IndiaWorld from December 1,
1999, and completed the acquisition of IndiaWorld on June 30, 2000 upon payment
of US$48,244 thousands in cash and 268,500 equity shares for the balance
amounting to US$24,609 thousand.

The transaction to purchase IndiaWorld has been accounted for, as a two-step
acquisition under the purchase method of accounting. The allocation of purchase
price was almost entirely related to goodwill. Infoway recognized goodwill of
US$40,048 thousands on the acquisition of 24.5% of IndiaWorld on November 29,
1999 equal to the excess of the consideration paid of US$39,950 thousands and
the related expenses of US$141 thousands over the fair value of that portion of
the net assets acquired. Upon completion of the acquisition of IndiaWorld on
June 30, 2000, Infoway recognized additional goodwill of US$73,098 thousands
equal to the excess of consideration of US$72,853 thousands paid in cash and
equity shares of Infoway and other related expenses of US$422 thousands over the
fair value of the net assets acquired at June 30, 2000.

b)  Acquisition of IndiaPlaza.com by Infoway

On July 13, 2000, Infoway entered into an agreement (the "Merger Agreement") to
acquire all the outstanding equity shares of IndiaPlaza.com Inc., an internet
company which through its website operates an online internet shopping mall. The
consideration amounted to 455,192 ADS (113,798 shares) of which 340,192 ADS
(85,048 shares) have been paid and 115,000 ADS (28,750 shares) were placed in
escrow until January 1, 2002 to be adjusted for any breach of representations or
covenants set forth in the merger agreement. Management had considered the
release of the shares held in the escrow to be probable and had accordingly
included them in the computation of the purchase price and net loss per share.
The acquisition, which was consummated on December 15, 2000, upon completion of
regulatory formalities, has been accounted for by the purchase method. The
115,000 ADS (28,750 shares) that were placed in escrow until January 1, 2002
have been subsequently released in January 2002.

Infoway recognized goodwill of US$9,510 thousand, equal to the excess of the
consideration paid of US$7,921 thousand, being the fair value of 113,798 equity
shares of Infoway over the fair value of the net assets acquired of US$(1,589)
thousand.

c)  Acquisition of Kheladi.com by Infoway

On October 12, 2000, Infoway entered into an agreement to acquire a 100% stake
in Kheladi.com (India) Private Limited ("Kheladi"), a sports portal promoted by
sports personalities in India. Infoway's intention is to assimilate the
strengths of Kheladi, including the network of sports personalities, into its
portal, Khel.com. Infoway paid cash and issued an aggregate of 19,073 equity
shares to the shareholders of Kheladi on July 20, 2001 of which 5,019 shares and
10,039 equity shares have been issued which are subject to a lock in until
September 14, 2001 and September 14, 2002, respectively. Infoway paid US$1,108
thousands as consideration for the above acquisition and the acquisition has
been accounted for using the purchase method.

The acquisition was consummated on July 20, 2001, upon issuance of shares and
the completion of regulatory formalities. The cost of acquisition has been
allocated primarily to employment contract-based intangible assets amounting to
US$795 thousands and the excess of cost over fair value of assets acquired has
been recognized as goodwill amounting to US$309 thousand. In accordance with the
provisions of SFAS 142, the goodwill has not been amortized post acquisition.

The intangible assets relate to employment contracts with sports personalities,
which are being amortized over the contract period of 60 months. The terms of
the purchase also provide for contingent consideration of 3,089 equity shares
based on the achievement of certain specified profitability and revenue targets.
Infoway will record contingent payments as compensation for post-combination
services to be expensed in the period in which the contingency is resolved.

                                      F-16

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


4. Sale of shares by Infoway

In the years ended March 31, 2000, 2001 and 2002, Infoway issued new shares to
third parties and Satyam Computer Services, including two public offerings.
After these transactions, Satyam Computer Services' ownership reduced from
56.32% as of March 31, 2000 to 52.55% as of March 31, 2001 and 52.51% as of
March 31, 2002 respectively. In the year ended March 31, 2000 Infoway issued
6,499,425 shares to third parties at amounts per share in excess of Satyam's
average per share carrying value.

In the year ended March 31, 2001 Infoway issued 268,500 shares to shareholders
of IndiaWorld, 551,180 shares to shareholders of CricInfo and 113,797 shares to
shareholders of IndiaPlaza at amounts per share in excess of Satyam's average
per share carrying value. During year ended March 31, 2002 Infoway issued 19,073
shares to the shareholders of Kheladi.com (all of which are described in Note 3)
at amounts per share in excess of Satyam's average per share carrying value.
With respect to these transactions, the resulting gain of US$101,839 thousand,
US$24,599 thousands and US$375 thousand, net of taxes, during the years ended
March 31, 2000, 2001and 2002 respectively arising from the change in interest
has been recorded as additional paid in capital.

5. TRW Inc.

In June 2000, Satyam Computer Services signed a non-binding framework agreement
to form a non-exclusive joint venture with TRW Inc. ("TRW") to be managed by
Satyam Computer Services and to issue warrants for a consideration of US$5
million to TRW that are convertible into equity shares of Satyam Computer
Services in the eighteenth month after issuance. The warrants were
non-forfeitable as of the date of grant.

On August 22, 2000, Satyam Computer Services issued 63,896 warrants (each
warrant exercisable to purchase five equity shares) to ESL Inc., an affiliate of
TRW in exchange of Rs.71.6 (US$1.6) per share totaling to US$500 thousands in
cash representing 10.0% of the total consideration to acquire the underlying
equity shares in accordance with applicable Indian regulations. These warrants
are convertible into 319,480 equity shares of Satyam Computer Services for
Rs.644.4 (US$14.1) per share totaling US$4.5 million during the period from
January 22, 2002 to February 21, 2002. The upfront payment made by ESL Inc., for
these warrants, plus the aggregate exercise price for the 319,480 equity shares
underlying these warrants, will equaled US$5.0 million. The excess of the fair
value of the warrants, as determined at the date of grant, over the
consideration of warrants paid by ESL Inc., amounted to US$1,157 thousand. It is
being amortized ratably over the period, as described below with respect to the
joint venture agreement between Satyam Computer Services and TRW (that is five
years and three months period), starting from the date of signing of the joint
venture agreement (that is September 26, 2000) to December 31, 2005. The
amortization is classified as a reduction of the revenues recognized under the
agreements. However, if the amortization exceeds the amount of revenue
recognized in any period, the excess amortization is recorded as an expense. The
fair value of the warrants has been determined by reference to the prevailing
market price of Satyam Computer Services equity shares on the Indian exchanges
using the Black Scholes model and the following assumptions: volatility of 90.0%
and a risk free interest rate of 10.672%. These warrants for 319,480 equity
shares expired unexercised on February 21, 2002.

Satyam Computer Services has amortized the excess of the fair value of the
warrants over the consideration of the warrants paid ratably in the method
aforementioned. The amortization classified as a deduction of the revenues
amounted to US$ Nil, US$113 thousands and US$221 thousands for the years ended
March 31, 2000, 2001 and 2002 respectively.

On September 26, 2000, the joint venture agreement was signed with equity
participation in the ratio of 76:24 between Satyam Computer Services and TRW,
respectively. After December 31, 2003, TRW has the option to require Satyam
Computer Services to purchase its 24.0% interest ("put option"). The buyout
price of TRW's interest in the joint venture depends on the aggregate amount of
revenue, which TRW will provide to the joint venture from June 1, 2000 to
December 31, 2005. TRW has targeted to outsource to the joint venture at least
US$200 million of revenues from information systems and engineering work over
the five years and seven months period. If the amount of revenues outsourced by
TRW to the joint venture by December 31, 2003 does not meet specified minimum
levels, Satyam Computer Services has the right to buy out TRW's 24.0% interest
in the joint venture for no consideration or lowest nominal consideration.
Satyam Computer Services views that the fair value of the put option is the
amount that Satyam Computer Services would have to pay over and above the fair
value of the 24.0% interest in the joint venture owned by TRW. Satyam Computer
Services records the put option at fair value at each balance sheet date, with
the initial fair value of the put option included as part of the consideration
for its 76.0% interest in the joint venture. The difference between the fair
values of the put option at each valuation date is charged to selling, general
and administration expenses in the statement of operations. Based on the terms
of the agreement the value of put option was US$2,572 thousands and US$12,495
thousands as of March 31, 2001 and 2002 respectively.

                                      F-17

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


If TRW exercises its option to sell the shares to Satyam Computer Services after
December 31, 2003, the purchase price of TRW's 24.0% stake will be determined by
the higher of an independent valuation of the 24.0% interest and a formula based
on the amount of revenues provided to the joint venture by TRW. In the event
that certain minimum cumulative revenues are achieved the price will be equal to
the higher of the amount computed above or an amount not to exceed US$40
million. Satyam Computer Services may, at its own discretion, use either cash or
its equity shares valued at the then prevailing market price as consideration
for TRW's stake. The total amount payable to TRW if it divests its stake cannot
exceed two percent of Satyam Computer Services total market capitalization on
December 31, 2003. If TRW divests its stake, the terms of the joint venture's
supply agreement with TRW will continue until December 31, 2007, if TRW is
satisfied with the joint venture's performance of the supply agreement and TRW
is required to use its best attempts to provide the same levels of business to
the joint venture from January 1, 2006 through December 31, 2007, as it had
provided to the joint venture during the preceding two years.

If Satyam Computer Services undergoes a change in control or bankruptcy, TRW may
terminate the joint venture agreement on or before December 31, 2003 and require
Satyam Computer Services to purchase its shares in the joint venture and all of
Satyam Computer Services securities issued to TRW or its affiliates in
connection with the joint venture agreement at a price equal to US$1 million
plus the total consideration TRW has invested in the shares of the joint venture
(but excluding the initial amount paid for its 24.0% interest) and Satyam
Computer Services securities, net of any amount received by TRW for any sale of
such shares or securities.

In addition, TRW will receive an amount in cash or Satyam Computer Services
equity shares, at its discretion, equal to 33.0% of the excess of actual
revenues received by the joint venture from TRW over targeted revenues, subject
to the ceiling of US$25 million if such targeted revenues are exceeded by 5.0%
or more by December 31, 2005. However, such additional amount together with the
buyout of TRW's 24.0% interest cannot exceed 2.0% of Satyam Computer Services'
total market capitalization as of December 31, 2003. No accrual has been made
for such contingent payment as it is not yet probable that the actual revenues
will exceed the targeted revenues.

TRW will also receive royalties from revenues related to services provided by
the venture to third parties referred to the venture by TRW Such royalties will
be computed at a rate of 5.0% of the first US$25 million of revenues and 8.0%
thereafter. However as of the balance sheet date no such revenues have been
recognized by the joint venture.

6. Sale of shares in Infoway to the Government of Singapore Investment
   Corporation Pte. Ltd.

In May 2000, Satyam Computer Services entered into an agreement for sale of
347,200 equity shares of Infoway at a price of US$144 per share, representing
1.6% of Infoway's outstanding equity shares to the Government of Singapore
Investment Corporation Pte. Ltd. ("GSIC") for a consideration of US$50 million
(before transaction costs). The transaction was consummated and proceeds were
received in June 2000. GSIC had a put option to sell the shares back to Satyam
Computer Services if Infoway did not complete an initial public offering on a
recognized stock exchange in India by September 2001.

Under the terms of this put option, Satyam Computer Services was required, in
the event Infoway fails to fulfill its obligations, to repurchase these equity
shares at a price equal to the Indian Rupee equivalent to the average NASDAQ
closing price during the three days before the exercise of the put option,
discounted by 41.0%. Satyam Computer Services accounted for the put option at
fair value. However, since the exercise price of the put option equaled the
estimated fair value of the shares to be reacquired at the date of exercise,
Satyam Computer Services believed that the fair value of the put option was de
minimus.

In the year ended March 31, 2001, in respect of this transaction Satyam Computer
Services had not recognized US$ 35,156 thousands in the statement of operations
because of the put option held by GSIC. The US$35,156 thousands represented an
amount equal to the excess of sale proceeds received from GSIC over the carrying
value of investments in Infoway in the books of Satyam Computer Services, net of
taxes. It had been classified as liability and presented as "Excess of cash
received over the carrying value of investment in Infoway, net of taxes" in the
balance sheet as of March 31, 2001.

Infoway did not complete an initial public offering on a recognized stock
exchange in India by September 2001, and the put option held by GSIC expired
unexercised on October 15, 2001. Satyam Computer Services has recognized gain of
US$45,594 thousands on the sale of shares in Infoway to GSIC in the statement of
operations for the year ended March 31, 2002.

                                      F-18

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


7.  Premises, Equipment and Depreciation

Premises and equipment at cost less accumulated depreciation consist of:


                                                        (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                          --------------------------------------
                                                     2001                 2002
--------------------------------------------------------------------------------

Freehold land                                    $  7,323             $  7,559
Leasehold land                                         74                1,666
Premises                                           18,989               18,220
Computers including servers                        50,465               73,347
System software                                    11,255               11,640
Office equipment                                   59,652               68,929
Furniture and fixtures                             25,133               25,780
Vehicles                                            2,677                2,968
Leasehold improvements                              2,056                2,235
Assets under construction                          24,449               10,859
--------------------------------------------------------------------------------
Total                                             202,073              223,203
Less: Accumulated depreciation                    (68,842)             (99,696)
--------------------------------------------------------------------------------
Premises and equipment, net                      $133,231             $123,507
================================================================================

Satyam has established the estimated useful lives of assets for depreciation
purposes as follows:

              Premises                              28 years
              Computers including servers          2-5 years
              System Software                        3 years
              Office equipment                       5 years
              Furniture and fixtures                 5 years
              Vehicles                               5 years

Depreciation expense amounted to US$20,170 thousand, US$29,637 thousands and
US$37,486 thousands for the years ended March 31, 2000, 2001 and 2002
respectively.

                                      F-19

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


8.  Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of:


                                                        (US$ in thousands)
------------------------------------------------------------------------------
                                                               As of March 31
                                              --------------------------------
                                                       2001              2002
------------------------------------------------------------------------------
Goodwill
  Acquisition of minority interest                 $ 21,957           $21,066
  Acquisition of IndiaWorld                         106,833                 -
  Acquisition of IndiaPlaza                           9,490                 -
  Others                                                 59               830
License fees and others                                 852             4,532
------------------------------------------------------------------------------
Total                                               139,191            26,428
Less: Accumulated amortization                      (29,196)          (11,731)
------------------------------------------------------------------------------
Goodwill and other intangible assets, net          $109,995           $14,697
==============================================================================

Goodwill represents the excess of amount paid towards purchase price and
non-refundable deposit over the fair value of assets acquired, and is primarily
related to the IndiaWorld and IndiaPlaza acquisitions by Infoway and the
acquisition of the minority interest in Satyam Enterprise Solutions Limited by
Satyam Computer Services. Satyam evaluates the recoverability of its intangible
assets including goodwill as current events or circumstances warrant to
determine whether adjustments are needed to their carrying values. In the year
ended March 31, 2002, Satyam recorded an impairment charge of US$81,115
thousands relating to goodwill acquired in the IndiaWorld, India Plaza and
Eduempire acquisitions by Infoway as a result of an ongoing impairment
assessment of goodwill recorded in connection with various acquisitions.

Since the operations of those entities have been completely integrated into the
operations of Infoway. Satyam assessed the recoverability of goodwill arising
out of the India World and India Plaza acquisitions at the enterprise level of
Infoway. The impairment charge was calculated as the difference between the
market value of Infoway and its net assets.

The assessment was performed due to significant decline in Infoway's stock price
for a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of US$73,110 thousand, India Plaza of US$7,955
thousands and Eduempire of US$50 thousands has been charged to the statement of
operations for the year ended March 31, 2002.

Amortization of goodwill and other intangible assets amounted to US$5,098
thousand, US$24,856 thousands and US$17,717 thousands for the years ended March
31, 2000, 2001 and 2002 respectively.

                                      F-20

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

9.  Investments

Investments of Satyam consist of available-for-sale securities ("AFS") and other
non-marketable securities.

                                                    (US$ in thousands)
--------------------------------------------------------------------------------
                                                             As of March 31
                                          --------------------------------------
                                                      2001             2002
--------------------------------------------------------------------------------
Available-for-sale securities
Cost                                                $  274           $  263
Gross unrealized holding gains                           5                3
Gross unrealized holding losses                        (69)             (72)
--------------------------------------------------------------------------------
AFS - Fair Value                                    $  210           $  194

Other investments, at cost                          $2,498           $3,229
--------------------------------------------------------------------------------
Investments - Non current                           $2,708           $3,423
================================================================================

Aggregate proceeds from the sale of available-for-sale securities amounted to
US$13 thousands, US$3 thousands and US$2,263 thousands (purchased during the
year ended March 31, 2002 for US$2,263 thousands) for the years ended March 31,
2000, 2001 and 2002 respectively.

10. Investment in associated companies

Satyam Computer Services holds 50.0% stake in three joint venture companies,
Satyam GE Software Services Private Limited, Satyam Venture Engineering Services
Private Limited and CA Satyam ASP Private Ltd.

On December 29, 2000, Satyam Computer Services entered an agreement with
Computer Associates International, Inc. ("CA") to form an equally held joint
venture company CA Satyam ASP Private Ltd. ("CA Satyam"). The joint venture was
formed in January 2001 at Mumbai, India. As per the agreement, both Satyam
Computer Services and CA are to invest US$1,500 thousands each in the joint
venture. During the year ended March 31, 2002 Satyam Computer Services invested
US$500 thousands in CA Satyam.

In January 2002, Satyam Computer Services has initiated the process of transfer
of its 50% shareholding in Satyam GE Software Services Private Limited ("Satyam
GE") to GE Pacific (Mauritius) Limited, Mauritius ("GEPL") in accordance with
the shareholders' agreement for a consideration of approximately US$4,000
thousands. The transfer is subject to fulfillment of terms and conditions
specified in the agreement and obtaining necessary approvals from appropriate
authorities. Satyam Computer Services continues to have the ability to exercise
significant influence over the operating and financial policies of Satyam GE and
hence has accounted for its 50% interest in Satyam GE using the equity method
for the year ended March 31, 2002. The resulting carrying amount of the
investment in Satyam GE of US$2,999 thousands as of March 31, 2002 after
recognition of income for the year then ended does not exceed the expected
selling price of US$4,000 thousands.

Infoway holds 40% interest in Refco-Sify Securities India Private Limited
("Refco-Sify"). Refco-Sify is engaged in Internet based trading and research
services. Infoway has accounted for its 40% interest in Refco-Sify by the equity
method. During the year ended March 31, 2002 Refco-Sify issued additional shares
to existing shareholders in proportion to their holdings. Infoway subscribed to
its share of the issue for a consideration of US$925 thousands.

Infoway holds a 27% interest in Placements.com Limited ("Placements.com").
Placements.com is engaged in establishing and developing a portal on the
internet for jobs and to carry on the business as a manpower recruitment agency.
Infoway has accounted for its 27% interest in Placements.com by the equity
method.

On July 29, 2000, Infoway acquired 25% of the outstanding stock of Cricinfo
Limited ("Cricinfo") a private Company incorporated in England and Wales, for
US$37.5 million by issue of 2,204,720 ADSs (represented by 551,180 equity shares
of Infoway). Cricinfo operates Cricinfo.com, a website dedicated to the cricket
sport. Infoway has accounted for its interest in Cricinfo by the equity method.
The difference between the cost of the investment and the amount of underlying
equity in net assets of Cricinfo resulted in goodwill of US$33,479 thousands,
which is being amortized over a period of 5 years.

Satyam evaluates the recoverability of goodwill relating to the investment in
associated companies as current events or circumstances warrant to determine
whether adjustments are needed to their carrying values. In the year ended

                                      F-21

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


March 2002, Satyam recorded a impairment charge of US$21,399 thousands relating
to goodwill on the Cricinfo acquisition by Infoway as a result of an ongoing
impairment assessment of goodwill recorded in connection with various
acquisitions.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth assumption
for Cricinfo at the time of acquisition. Due to the change in market realities,
management believes those revenue growth estimates would require significant
downward revision. The anticipated leadership and synergistic benefits have also
largely not realized. The current fair value of Cricinfo as an independent
entity is negligible due to its mounting cash losses coupled with the adverse
current market conditions. The impairment was based on discounted cash flow
method considering historical results adjusted to reflect management's best
estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-than temporary. Hence, out of the carrying value of goodwill as at
September 30, 2001 of US$24,458 thousands, US$21,399 thousands has been charged
to the statement of operations for the year ended March 31, 2002. The management
believes that balance goodwill of US$3,059 thousands is attributable to the
future discounted cash flows from Infoway's share in revenue.

On October 5, 2001, Infoway entered into an agreement to subscribe for unsecured
convertible notes to be issued by Cricinfo in an aggregate amount of up to
GBP1,000 thousands (US$1,479 thousands) to meet Cricinfo's short to medium term
working capital requirements. These notes are redeemable on October 5, 2004. The
subscription will be in tranches of such amounts and on such dates as agreed to
in writing from time to time by Infoway and Cricinfo. The terms of the note
instrument provide for the payment of interest on the principal amount at the
rate of 8% per annum. In addition, Infoway shall be entitled, at any time upon
5-business days notice to Cricinfo, to convert the notes into Cricinfo shares
based on a predetermined conversion formula. Infoway will not be obligated to
subscribe for notes if it is not satisfied that Cricinfo has met certain agreed
upon performance measures. On March 31, 2002 Infoway entered into an arrangement
to subscribe to a further issue of convertible notes in an aggregate amount of
upto GBP500 thousands (US$713 thousands) by Cricinfo that would be subject to
the same terms as discussed above.

As of March 31, 2002 Infoway had purchased convertible notes with an aggregate
principle amount of GBP1,088 thousands (US$1,527 thousands). The above agreement
does not give Infoway a majority voting interest or a controlling financial
interest in Cricinfo over the period of convertible notes. Further, the
management currently does not intend to convert the notes into equity.
Therefore, the investment of Infoway in Cricinfo continues to be accounted for
as an equity investment.

The carrying values of investments in various associated companies of Satyam are
as follows:

                                                         (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of  March 31
                                                  ------------------------------
                                                           2001             2002
--------------------------------------------------------------------------------

Satyam GE                                               $ 1,699          $ 2,999
Satyam Venture                                              140              957
CA Satyam                                                     -              486
Cricinfo                                                 29,759            3,824
Placements.com                                              196               13
Refco-Sify                                                2,195            2,456
--------------------------------------------------------------------------------
Total                                                   $33,989          $10,735
================================================================================

                                      F-22

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

11. Borrowings

Short-term debts

Short-term debts comprise of:


                                                         (US$ in thousands)
--------------------------------------------------------------------------------
                                                              As of March 31
                                             -----------------------------------
                                                           2001             2002
--------------------------------------------------------------------------------

    Cash credit facilities                               $5,224                -
    Other short-term debts                                2,134           $1,764
--------------------------------------------------------------------------------
    Short-term debts                                     $7,358           $1,764
================================================================================

Short-term debts as of March 31, 2001 is secured by a first charge on the
premises and equipment of Satyam Computer Services. The weighted-average
interest rate on these borrowings was 12.35% and 9.14% for the years ended March
31, 2001 and 2002 respectively.

Long-term debts

Long-term debts outstanding comprise of:

<TABLE>
<CAPTION>
                                                                                     (US$ in thousands)
------------------------------------------------------------------------------------------------------------
                                                                                    As of March 31
                                                                         -----------------------------------
                                                                                           2001        2002
------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>
    Secured debts, representing obligation principally to banks and financial
    institutions
    - Foreign currency term loans (dollar denominated),                                $  3,730           -
       with floating rate - LIBOR+ (175 to 350bps)
    - Rupee term loans, with floating rate -MLR + (150 to 200 bps)                       14,728           -
    - Rupee term loans, with fixed rate - 12.5% to 18.5%                                  9,605           -
    - Rupee loans of Satyam Associate Trust, maturing serially through fiscal 2004-      13,196     $ 4,155
       13.0% to 14.25%
    Others                                                                                1,583       1,344
    Total Debt                                                                           42,842       5,499
    Less: Current portion of long-term debts                                            (33,217)     (2,787)
------------------------------------------------------------------------------------------------------------
     Long-term debts, net of current portion                                           $  9,625     $ 2,712
============================================================================================================
</TABLE>

MLR= Minimum lending rate prevailing in India (as of March 31, 2001 - 12.50% and
 as of March 31, 2002 -12.50%) bps = Basis Points

Term loans are secured by a pari-passu charge on premises and equipment and
other loans classified as secured debts are secured by a pari-passu charge on
current assets. These are also generally guaranteed personally by Satyam
Computer Services Chairman and Managing Director.

Aggregate maturities of long-term debts subsequent to March 31, 2002, are
US$2,787 thousands in fiscal 2003, US$2,570 thousands in fiscal 2004, US$139
thousands in fiscal 2005 and US$3 thousands in fiscal 2006.

Unused lines of credit

Unused lines of credit comprise of:

                                                       (US$ in thousands)
--------------------------------------------------------------------------------
                                                               As of March 31
                                                          ----------------------
                                                             2001          2002
--------------------------------------------------------------------------------
    Cash credit and short term debts                      $12,920       $ 7,168
    Long term debts                                         1,067             -
    Non-fund facilities                                     6,201         4,820
--------------------------------------------------------------------------------
Total Unused lines of credits                             $20,188       $11,988
================================================================================

                                      F-23

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


12.      Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash and cash
equivalents, trade and other receivables, amounts due to or from related
parties, accounts payable and other liabilities approximate their respective
fair values due to their short maturity. The approximate fair value of long-term
debts, as determined by using current interest rates was US$42,779 thousands and
US$5,520 thousands as of March 31, 2001 and 2002 respectively as compared to the
carrying amounts of US$42,842 thousands and US$5,499 thousands as of March 31,
2001 and 2002 respectively.

13.  Employee Benefits

The Gratuity Plan

The following table sets forth the funded status of the Gratuity Plan of Satyam,
and the amounts recognized in Satyam's consolidated balance sheets.

<TABLE>
<CAPTION>
                                                                                                   (US$ in thousands)
----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year ended March 31
                                                                        ----------------------------------------------
                                                                                 2000           2001              2002
----------------------------------------------------------------------------------------------------------------------
  <S>                                                                          <C>          <C>               <C>
  Change in projected benefit obligation
  Projected benefit obligation at beginning of the year                        $ 349        $   572           $ 1,179
  Service cost                                                                   197            323               609
  Interest cost                                                                   61             60               124
  Actuarial loss (gain)                                                          (22)           279               (41)
  Benefits paid                                                                   (3)            (5)              (12)
  Effect of exchange rate changes                                                (10)           (50)              (63)
  Projected benefit obligation at end of the year                                572          1,179             1,796
----------------------------------------------------------------------------------------------------------------------
  Change in plan assets
  Fair value of plan assets at beginning of the year                              16             25                39
  Actual return on plan assets                                                     2              3                 6
  Employer contribution                                                           18             18                46
  Benefits paid from plan assets                                                 (11)            (7)              (19)
  Fair value of plan assets at end of the year                                    25             39                72
----------------------------------------------------------------------------------------------------------------------
  Funded status of the plans                                                    (547)        (1,140)           (1,724)
  Unrecognized transition obligation                                              50             35                22
  Unrecognized net actuarial loss (gain)                                         (27)           251               211
  Amount Recognized during the year                                                -              -               (11)
----------------------------------------------------------------------------------------------------------------------
  Accrued benefit cost                                                         $(524)       $  (854)          $(1,502)
=====================================================================================================================

  The components of net gratuity costs are reflected below:
  Service cost                                                                 $ 197        $   323           $   609
  Interest cost                                                                   61             60               124
  Expected returns on plan assets                                                 (2)            (3)                5
  Amortization                                                                    13             12                11
  Amount Recognized during the year                                                -              -                11
----------------------------------------------------------------------------------------------------------------------
  Net gratuity costs                                                           $ 269        $   392           $   760
=====================================================================================================================
  Principal actuarial assumptions:
  Discount rate                                                                 11.0%          11.0%             10.0%
  Long-term rate of compensation increase                                       10.0%          10.0%              9.0%
  Long-term rate of return on plan assets                                       11.0%          11.0%              9.0%
----------------------------------------------------------------------------------------------------------------------

</TABLE>

                                      F-24

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements


Provident Fund

Satyam's contribution towards the Provident Fund amounted to US$1,176 thousands,
US$1,839 thousands and US$2,201 thousands for the years ended March 31, 2000,
2001 and 2002 respectively.

Superannuation Plan

Satyam Computer Services contribution towards the Superannuation Plan maintained
by LIC amounted to US$15 thousands, US$26 thousands and US$35 thousands for the
years ended March 31, 2000, 2001 and 2002 respectively.

401(k) Plan

Satyam's matching contribution under 401(k) Plan amounted to US$176 thousands,
US$376 thousands and US$345 thousands for the years ended March 31, 2000, 2001
and 2002 respectively.

14.  Income Taxes

The provision for income taxes consists of:

<TABLE>
<CAPTION>
                                                                                                   (US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                                                         ----------------------------------------------
                                                                                    2000            2001           2002
-----------------------------------------------------------------------------------------------------------------------
  <S>                                                                           <C>           <C>              <C>
  Foreign taxes
  Current                                                                       $  1,119        $  3,437       $  4,596
  Deferred                                                                           145             530         (3,709)
  Domestic taxes
  Current                                                                            239          10,984          2,627
  Deferred                                                                           116         (10,814)        13,720
-----------------------------------------------------------------------------------------------------------------------
  Aggregate taxes                                                               $  1,619        $  4,137       $ 17,234
=======================================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                                   (US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                                                        -----------------------------------------------
                                                                                    2000            2001           2002
-----------------------------------------------------------------------------------------------------------------------
  <S>                                                                           <C>             <C>            <C>
  Net loss before taxes ........................                                $ (8,241)       $(44,080)      $ (4,879)
  Enacted tax rates in India ...................                                   38.50%          39.55%         35.70%
-----------------------------------------------------------------------------------------------------------------------
  Computed tax expense / (benefit) .............                                $ (3,173)       $(17,434)      $ (1,742)
  Tax effect due to non-taxable export income ..                                 (11,079)        (28,040)       (37,688)
  Difference arising from different tax rate in  other tax jurisdictions             679           1,241          1,119
  Difference arising from different tax rate on gain on sale of
  investments                                                                          -               -         (5,839)
  Stock compensation (non-deductible) ..........                                   6,518          18,235          3,854
  Goodwill (non-deductible) ....................                                   1,942           9,759         35,026
  Permanent Differences ........................                                  (1,284)          2,574         (5,859)
  Changes in valuation allowance, including losses of subsidiaries                 7,275          15,963         23,775
  Effect of tax rate change ....................                                      13               7           (246)
  Others                                                                             636           1,584          3,888
-----------------------------------------------------------------------------------------------------------------------
  Income taxes .................................                                   1,527           3,889         16,288
  Tax for earlier years ........................                                      92             248            946
=======================================================================================================================
  Income taxes recognized in the statement of operations                        $  1,619        $  4,137       $ 17,234
=======================================================================================================================
</TABLE>

                                      F-25

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

The current provisions for income taxes, net of payments, were US$6,707
thousands and US$6,770 thousands as of March 31, 2001 and 2002 respectively. The
provision for foreign taxes is due to income taxes payable in overseas tax
jurisdictions by its offsite and onsite centers, principally in the United
States. Satyam Computer Services benefits from certain significant tax
incentives provided to software entities under Indian tax laws. These incentives
presently include: (i) an exemption from payment of Indian corporate income
taxes for a period of ten consecutive years of operations of software
development facilities designated as "Software Technology Parks" ("STP units");
and (ii) a tax deduction for profits from exporting computer software. The
benefits of these tax incentives have historically resulted in an effective tax
rate for Satyam Computer Services well below statutory rates. Further, most of
Satyam Computer Services operations are from STP units which are entitled to a
tax holiday of ten years from the date of commencement of operations. STP units
registered after March 31, 2001 are not entitled to the above exemption. In case
of Satyam Computer Services for various registered STP units these exemptions
expire starting from fiscal 2006 through fiscal 2010. However, Satyam Computer
Services earns certain other income and domestic income, which are taxable
irrespective of the tax holiday as stated above. Satyam Computer Services
subsidiaries are subject to income taxes of the countries in which they operate.

Significant components of activities that gave rise to deferred tax assets and
liabilities included in the financial statements are as follows:

                                                             (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                           ---------------------
                                                               2001        2002
--------------------------------------------------------------------------------

Deferred tax assets:
Operating loss carryforwards                               $ 22,620    $ 35,139
Provision for accounts receivable and advances                  902      13,430
Premises and equipment                                           18       2,666
Gain on sale of shares of Infoway to GSIC                    10,438          --
Others                                                        3,553       3,071
--------------------------------------------------------------------------------
Gross deferred tax assets                                    37,531      54,306
Less: Valuation allowance                                   (24,756)    (49,515)
--------------------------------------------------------------------------------
Total deferred tax assets                                    12,775       4,791

Deferred tax liabilities:
Premises and equipment                                       (2,379)     (3,081)
Provision for accounts receivable and advances                   --      (1,165)
Investments in associated companies and gain on dilution
of interest in a subsidiary                                 (34,316)    (33,358)
Others                                                          (82)       (243)
--------------------------------------------------------------------------------
Total deferred tax liabilities                              (36,777)    (37,847)

--------------------------------------------------------------------------------
Net deferred tax liabilities                               $(24,002)   $(33,056)
================================================================================

No deferred income taxes have been provided on undistributed earnings of foreign
subsidiaries due to the losses incurred by them since their inception. These
losses aggregated to approximately US$30,064 thousands and US$ 36,552 thousands
as of March 31, 2001 and 2002 respectively.

No deferred taxation provision has been recognized for the taxes arising on
income of Satyam Computer Services due to the tax benefit available to it in the
form of a deduction from taxable income for 10 years, except to the extent of
timing differences which reverse after the tax holiday period or unless they
reverse under foreign taxes.

                                      F-26

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Operating loss carryforwards for tax purposes of Satyam Computer Services and
its consolidated subsidiaries amount to approximately US$22,620 thousands and
US$35,139 thousands as of March 31, 2001 and 2002 respectively and are available
as an offset against future taxable income of such entities. These carryforwards
expire at various dates primarily over 8 to 20 years. Realization is dependent
on such subsidiaries generating sufficient taxable income prior to expiration of
the loss carryforwards. A valuation allowance is established attributable to
deferred tax assets and loss carryforwards in subsidiaries where, based on
available evidence, it is more likely than not that they will not be realized.

Net deferred tax liabilities included in the consolidated balance sheets are as
follows:

                                                            (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of March 31
                                                       -------------------------
                                                               2001        2002
--------------------------------------------------------------------------------

Current assets - deferred income taxes                     $    966    $  3,151
Non-current assets - other assets*                            1,371       1,640
Current liabilities - accrued expenses and other
liabilities*                                                      -      (1,165)
Long-term liabilities - Deferred income taxes               (36,777)    (36,682)
Deferred taxes on gain of sale of shares in Infoway
to GSIC - Excess of cash received over carrying value
of investment in Infoway, net of taxes                       10,438           -
--------------------------------------------------------------------------------
Net deferred tax liabilities                               $(24,002)   $(33,056)
================================================================================

 * - Included in "other assets" and "accrued expenses and other liabilities"
respectively.

15.  Earnings Per Share

Basic earnings per share is computed on the basis of the weighted average number
of shares outstanding (weighted average number of shares issued less
unallocated, unvested or unexercised shares held by the Satyam Associate Trust).
Allocated but unvested or unexercised shares not included in the calculation of
weighted-average shares outstanding for basic earnings per share were 9,454,140
and 1,924,890 as at March 31, 2001 and 2002 respectively. Diluted earnings per
share is computed on the basis of the weighted average number of shares
outstanding plus the effect of outstanding stock options using the "treasury
stock" method. For the years ended March 31, 2000 and 2001, outstanding stock
options are excluded due to their antidilutive effect as a result operations
during these periods.

In addition to the above, the unallocated shares held by Satyam Associate Trust,
which are by definition unvested, have been excluded from all earnings per share
calculations. Such shares amounted to 1,715,930 and 1,558,930 as of March 31,
2001 and 2002 respectively.

The components of basic and diluted earnings per share were as follows:

                                            (US$ in thousands except share data)
--------------------------------------------------------------------------------
                                                            Year ended March 31
                                             -----------------------------------
                                                  2000         2001        2002
--------------------------------------------------------------------------------

Net income / (loss)                          $  (6,940)   $ (27,912)   $  25,892

Average outstanding shares (in thousands)*     264,720      269,943      305,751
Dilutive effect of:
 Associate Stock Options                             -            -        1,362
Share and share equivalents (in thousands)*    264,720      269,943      307,113

Earnings / (loss) per share
Basic and diluted                            $   (0.03)   $   (0.10)   $    0.08
--------------------------------------------------------------------------------
*  - on an adjusted basis

                                      F-27

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

16.  Stock-based Compensation Plans

Stock-based compensation plan of Satyam Computer Services

History of the plan

In May 1998, Satyam Computer Services established its Associate Stock Option
Plan (the "ASOP"). Satyam Computer Services subsequently established an
associate welfare trust called the Satyam Associate Trust (the "SC-Trust"), to
administer the ASOP and issued warrants to purchase 13,000,000 shares of Satyam
Computer Services. In turn, the SC-Trust periodically grants warrants to
eligible associates to purchase equity shares held by or reserved for the
issuance to the SC-Trust. The warrants may vest immediately or may vest over a
period ranging from two to three years, depending on the associate's length of
service and performance. Upon vesting, associates have 30 days in which to
exercise these warrants.

All the SC-Trust's trustees are nominated by Satyam Computer Services. The
SC-Trust issues warrants solely at the discretion of Satyam Computer Services
and cannot earn any other income. The shares purchased by the SC-Trust, as
described below, have been pledged against all SC-Trust liabilities. Hence, the
SC-Trust has been consolidated in the financial statements.

At the Annual General Meeting in May 1999, shareholders approved a two-for-one
stock split in the form of a dividend, available to all shareholders of record
as of August 31, 1999. All holders of SC-Trust warrants were given the choice of
converting their underlying Satyam Computer Services warrants to Satyam Computer
Services shares ahead of their scheduled vesting dates. Upon payment of the
balance of the exercise price, the underlying Satyam Computer Services warrants
would be converted into shares and remain in the custody of the SC-Trust until
the original vesting period expired. The `bonus' share, at the effective date of
the stock split, immediately vested to the associates who availed themselves of
this plan. Warrants for 62,500 shares were converted into Satyam Computer
Services shares in this manner, and Satyam Computer Services recognized US$137
thousands as compensation expense associated with this transaction.

In order to ensure all its associates received the benefits of the Satyam
Computer Services stock split in December 1999, the SC-Trust exercised all its
warrants to purchase Satyam Computer Services shares prior to the split using
the proceeds obtained from bank loans amounting to US$13,226 thousand. Prior to
August 31, 1999, the exercise price of the remaining SC-Trust warrants was
Rupees ("Rs.") 450 per warrant. Subsequent to August 31, 1999, each warrant
entitles the holder to purchase ten shares (adjusted for stock splits) of Satyam
Computer Services at a price of Rs.450 per warrant plus an interest component,
associated with the loan which the SC-Trust assumed, for conversion of the
warrants it held. The interest component is computed based on fixed vesting
period and a fixed interest rate. This stock bonus has been treated as an equity
restructuring pursuant to EITF 90-9. Correspondingly no additional compensation
cost has been recognized as a result of the conversion of warrants held by the
SC-Trust.

In April 2000, Satyam Computer Services established its Associate Stock Option
Plan B (the "ASOP B") and reserved warrants for 13,000,000 equity shares to be
issued to eligible associates with the intention to issue the warrants at the
market price of the underlying equity shares on the date of the grant. These
warrants vest over a period ranging from two to four years, starting with 20.0%
in second year, 30.0% in the third year and 50.0% in the fourth year. Upon
vesting, associates have 5 years to exercise these warrants. No equity shares
have been issued by Satyam Computer Services to the SC-Trust under the ASOP plan
B as was issued under the ASOP.

In May 2000, Satyam Computer Services established its Associate Stock Option
Plan (ADS) (the "ASOP (ADS)") to be administered by the Administrator of the
ASOP (ADS) which is a committee appointed by the Board of Directors of Satyam
Computer Services and reserved 2,574,665 ADSs (5,149,330 shares) to be issued to
eligible associates with the intention to issue the warrants at a price per
option which is not less than 90% of the value of one ADS as reported on the New
York Stock Exchange ("NYSE"), the fair market value on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the day of
grant as decided by the Administrator of the ASOP(ADS) . These warrants vest
over a period ranging from one to ten years from the date of the grant. The time
available to exercise the warrants upon vesting is as decided by the
Administrator of the ASOP (ADS). No equity shares underlying the ASOP (ADS) have
been issued by Satyam Computer Services to the SC-Trust similar to ASOP B plan.

                                      F-28

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Warrant grants

During the year ended March 31, 2000, the SC-Trust issued immediately vesting
warrants for 74,000 shares and warrants for 2,911,200 shares with longer vesting
periods to the associates. As of March 31, 2000, the Trust held warrants for
7,536,100 shares allocated to associates. At this date, warrants for 4,232,300
shares remained unallocated to associates. Unallocated warrants are not
considered outstanding for purposes of computing earnings per share.

During the year ended March 31, 2001, the SC-Trust issued immediately vesting
warrants for 716,020 (net of 4,600 forfeited) shares and warrants for 1,795,750
(net of 1,200,740 forfeited) shares with longer vesting periods to the
associates under the ASOP plan. Further, during the same period, under the ASOP
B plan, Satyam Computer Services issued warrants for 5,759,209 (net of 291,200
warrants forfeited) shares to the associates.

During the year ended March 31, 2002, the SC-Trust issued immediately vesting
warrants for 702,010 (net of 60,000 forfeited) shares and warrants for 80,050
(net of 49,620 forfeited) shares with longer vesting periods to the associates
under the ASOP plan. Further, during the same period, under the ASOP B plan,
Satyam Computer Services issued warrants for 4,438,119 (net of 598,563 warrants
forfeited) shares to the associates and warrants for 1,169,425 ADSs representing
2,338,850 equity shares to associates under the ASOP ADS plan.

Satyam Computer Services recognized deferred stock based compensation of
US$23,265 thousand, US$38,034 thousands and US$1,203 thousands for the years
ended March 31, 2000, 2001 and 2002 respectively. Satyam Computer Services
amortized and charged to income US$16,457 thousand, US$44,219 thousands and
US$10,479 thousands for the years ended March 31, 2000, 2001 and 2002
respectively.

Pursuant to APB 25, deferred stock compensation has been computed as of grant
date based on the difference between the exercise price of the warrants and the
fair value of underlying shares of Satyam Computer Services. Deferred stock
compensation is amortized on a straight-line basis over the vesting period of
the related warrants. The weighted-average grant-date fair value of options
granted during the years 2000, 2001 and 2002 was US$7.02, US$9.49 and US$4.21
respectively.

Changes in number of shares representing stock options outstanding for each of
the plans were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP - Plan                                Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>           <C>          <C>           <C>          <C>
Balance at the beginning of the year    5,910,200       $   1.24      7,536,100    $   1.26      9,454,140    $   1.24
Granted                                 2,985,200           1.36      3,717,110    $   1.27        891,680    $   1.29
Exercised                              (1,231,600)          1.22       (598,330)   $   1.05     (7,686,250)   $   1.17
Cancelled                                (126,500)          1.03       (521,500)   $   1.08       (109,620)   $   1.40
Lapsed                                     (1,200)          1.08       (679,240)   $   1.59       (625,060)   $   1.28
-------------------------------------------------------------------------------------------------------------------------
Balance at the end of the year          7,536,100       $   1.26      9,454,140    $   1.24      1,924,890    $   1.28
=========================================================================================================================
</TABLE>

                                      F-29

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP-B Plan                                Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
  <S>                                    <C>             <C>          <C>           <C>          <C>            <C>
  Balance at the beginning of the year           -             -               -            -     5,759,209      $ 7.17
  Granted                                        -             -       6,050,409    $    7.32     5,036,682        4.41
  Exercised                                      -             -               -            -             -           -
  Cancelled                                      -             -        (291,200)   $   10.38      (598,563)     $ 7.87
  Lapsed                                         -             -               -            -             -           -
-------------------------------------------------------------------------------------------------------------------------
  Balance at the end of the year                 -             -       5,759,209    $    7.17    10,197,328      $ 5.60
=========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP-ADS Plan                              Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
  <S>                                    <C>             <C>          <C>           <C>          <C>            <C>
  Balance at the beginning of the year           -             -               -            -             -           -
  Granted                                        -             -               -            -     2,338,850      $ 4.97
  Exercised                                      -             -               -            -             -           -
  Cancelled                                      -             -               -            -             -           -
  Lapsed                                         -             -               -            -             -           -
-------------------------------------------------------------------------------------------------------------------------
  Balance at the end of the year                 -             -               -            -     2,338,850      $ 4.97
=========================================================================================================================
</TABLE>

Information about number of shares representing stock options outstanding:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                         Outstanding                             Exercisable
                                        ---------------------------------------------------------------------------------
    Period        Range of Exercise        Weighted        Weighted       Number of        Weighted       Number of
                  Price (per share)        Average         Average          shares         Average          shares
                                           Exercise       remaining      arising out       Exercise      arising out
                                          Price (per     contractual      of options      Price (per      of options
                                            share)           Life                           share)
-------------------------------------------------------------------------------------------------------------------------
  <S>           <C>         <C>           <C>            <C>             <C>              <C>            <C>
  Fiscal        Rs. 45.0    US$ 0.9       Rs.134.54       1.88 years      15,213,349       Rs.49.69         720,620
  2001          Rs.655.6    US$13.6       US$   2.8                                        US$  1.0
-------------------------------------------------------------------------------------------------------------------------
  Fiscal        Rs. 45.0    US$ 0.9       Rs.239.86       1.63 year       14,461,067       Rs.57.23         762,010
  2002          Rs.278.8    US$ 5.6       US$  4.91                                        US$  1.2
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

The US$ numbers in the above tables have been translated using the closing
exchange rate as of March 31, 2002, 1US$= Rs48.83

                                      F-30

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Stock-based compensation plan of Infoway

In fiscal 1999, Infoway established the Employee Stock Offer Plan (`ESOP'),
which provides for the issuance of 825,000 warrants to eligible employees. The
warrants were issued to an employee welfare trust (the `Trust') at Re 1 each on
September 28, 1999. The Trust holds the warrants and transfers them to eligible
employees over a period of three years. The warrants, which are to be
transferred to eligible employees at Re 1 each, entitles the holder to purchase
one equity share at an exercise price determined by the Compensation Committee.
The warrants and the equity shares received upon the exercise of warrants are
subject to progressive vesting over a three-year period from the date of issue
of warrants to employees. Deferred compensation is recorded in the event that
the exercise price of the warrant is determined to be less than the fair market
value of the underlying shares on the date of the grant. Deferred compensation
is amortized over the vesting period of the warrants. The warrants allotted and
the underlying equity shares are not subject to any repurchase obligations by
Infoway.

Infoway recognized deferred stock based compensation of US$3,209 thousand,
US$2,225 thousands and US$1,485 thousands for the years ended March 31, 2000,
2001 and 2002 respectively. Infoway amortized and charged to income US$474
thousands, US$1,899 thousands and US$315 thousands for the years ended March 31,
2000, 2001 and 2002 respectively.

<TABLE>
<CAPTION>
Stock options outstanding are as follows:
------------------------------------------------------------------------------------------------------------------------
                                                                                                  Year  ended March 31

                                        --------------------------------------------------------------------------------
                                                 2000                      2001                         2002
------------------------------------------------------------------------------------------------------------------------
                                        Number      Weighted     Number of      Weighted     Number of      Weighted
                                        of shares    Average       shares       Average        shares       Average
                                                    Exercise                    Exercise                    Exercise
                                                      Price                      Price                       Price

------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>         <C>            <C>          <C>            <C>
   Balance at the beginning of the year        5,000    $  1.43       312,460       $ 47.88       565,020       $ 53.68
   Granted                                   313,160      47.88       342,800         57.77       276,360          3.56
   Exercised                                       -          -          (200)         7.17             -             -
   Cancelled                                  (5,700)      7.17       (90,040)        49.33      (257,540)        51.28
   Lapsed                                          -          -             -             -             -             -
------------------------------------------------------------------------------------------------------------------------
   Balance at the end of the year            312,460    $ 47.88       565,020       $ 53.68       583,840       $ 48.84
========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
Information about stock options outstanding:
--------------------------------------------------------------------------------------------------------------------------
                                                         Outstanding                              Exercisable
  Period    Range of Exercise Price --------------------------------------------------------------------------------------
                  (per share)             Weighted         Weighted         Number of       Weighted        Number of
                                          Average          Average           shares         Average          shares
                                       Exercise Price     remaining        arising out   Exercise Price    arising out
                                        (per share)    contractual Life    of options     (per share)      of options
-------------------------------------------------------------------------------------------------------------------------
<S>       <C>           <C>            <C>             <C>                 <C>           <C>               <C>
    2002    Rs.169.0-     US$3.46-        Rs205.0         2.22 years        322,380          Rs338.0         31,650
             Rs376.0      US$7.70         US$4.19                                            US$6.92

            Rs.724.0-    US$14.82-        Rs916.0         1.09 years         61,120          Rs946.0         21,620
             Rs973.0     US$19.92        US$18.75                                           US$19.37

          Rs.1,879.0     US$38.48-      Rs3,303.0         1.16 years        166,820        Rs3,312.0         32,603
          -Rs3,809.0     US$78.00        US$67.64                                           US$67.82

          Rs.5,892.0    US$120.66-      Rs6,304.0         0.85 years         33,520        Rs6,304.0         16,760
          -Rs8,603.0    US$176.18       US$129.10                                          US$129.10
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

The US$ numbers in the above table have been translated using the closing
exchange rate as at March 31, 2002, 1 US$ = Rs.48.83

                                      F-31

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Stock-based compensation plan of VisionCompass Inc.

In October 1999, VisionCompass Inc. ("VCI") Board of Directors adopted the 1999
Stock Option Plan (the "VCI-Plan"), which provides for the issuance of Incentive
Stock Options (ISOs) and nonqualified options to eligible individuals
responsible for the management, growth and financial success of VCI. As of March
31, 2000, there are 25,000,000 shares reserved for issuance under the VCI-Plan.
The option price is determined by the Board of Directors at the time the option
is granted, and, in the case of ISO's, in no event is less than the fair market
value of the VCI's shares at the date of grant, as determined by the Board. The
shares acquired through the exercise of options carries certain restrictions, as
specified in the VCI-Plan. Options generally vest over a four-year period and
expire ten years from the date of grant.

During the year ended March 31, 2000, 650,600 stock options with a weighted
average fair value of US$0.10 were granted with an exercise price of US$0.10 per
share. No options were exercised and 500 options were forfeited during this
period. As of March 31, 2000, no outstanding options are exercisable, and the
outstanding options have a weighted average remaining contractual life of 9.7
years.

During the year ended March 31, 2001, 652,600 stock options with a weighted
average fair value of US$0.10 were granted with an exercise price of US$0.10 per
share. No options were exercised and 383,300 options were forfeited during this
period. As of March 31, 2001, 130,025 outstanding options are exercisable, and
the outstanding options have a weighted average remaining contractual life of
9.27 years.

During the year ended March 31, 2002, no stock options were granted or exercised
and 849,400 options were forfeited. As of March 31, 2002, 17,500 outstanding
options are exercisable, and the outstanding options have a weighted-average
remaining contractual life of 8.53 years.

Additional Disclosure

Had compensation cost been recognized based on the fair value at the date of
grant in accordance with SFAS 123, the pro-forma amounts of Satyam's net
income/(loss) and earnings/(loss) per share would have been as follows for the
years ended March 31, 2000, 2001 and 2002 respectively.

                                      (US$ in thousands except per share data)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                       -----------------------------------------
                                            2000            2001            2002
--------------------------------------------------------------------------------

Net Income (loss)
        - As reported                    $(6,940)       $(27,912)       $25,892
        - Pro forma                         (351)        (29,933)          (276)
Earnings (loss) Per Share:
Basic and diluted
        - As reported                    $ (0.03)       $  (0.10)       $  0.08
        - Pro forma                            -           (0.11)         (0.01)
--------------------------------------------------------------------------------

Note: The pro forma disclosures shown above are not representative of the
effects on net income and earnings per share in future years.

The fair value of Satyam Computer Services' stock options used to compute pro
forma net income/(loss) and earnings/(loss) per share disclosures is the
estimated present value at grant date using the Black-Scholes option-pricing
model.

The following assumptions were used:
-----------------------------------------------------------------------------
                                                          Year ended March 31
                                    -----------------------------------------
                                          2000            2001           2002
-----------------------------------------------------------------------------

Dividend yield                            0.65%           0.51%          0.52%
Expected volatility                      90.00%          73.00%         75.00%
Risk-free interest rate                   9.87%          10.40%         10.32%
Expected term                             1.99            2.09           3.47
-----------------------------------------------------------------------------

                                      F-32

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

17.  Segmental Reporting

Satyam has adopted SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information" which requires disclosure of financial and descriptive
information about Satyam's reportable operating segments. The operating segments
reported below are the segments of Satyam for which separate financial
information is available and for which operating profit/loss amounts are
evaluated regularly by executive management in deciding how to allocate
resources and in assessing performance. Management evaluates performance based
on stand-alone revenues and net income for the companies in Satyam. Satyam's
reportable operating segments consist of the following three business groups:

..    IT services, providing a comprehensive range of services, including
     software development, packaged software integration, system maintenance and
     engineering design services. Satyam Computer Services provides its
     customers the ability to meet all of their information technology needs
     from one service provider. Satyam Computer Services' 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 Computer Services also assists its customers in making
     their existing computing systems accessible over the Internet.

..    Internet Services, providing consumer Internet access services, including
     dial-up Internet access, e-mail and web page hosting services. Infoway's
     corporate network and technology services include dial-up and dedicated
     Internet access, private network services, business-to-business electronic
     commerce and website development and hosting services. Infoway also
     operates an on-line portal, Sify.com (formerly satyamonline.com), and
     related content sites specifically tailored to Indian interests worldwide
     for news, personal finance, movies, music and automobiles.

..    Software Products, product development and creation of propriety software.

                                      F-33

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Satyam's operating segment information for the years ended March 31, 2000, 2001
and 2002 were as follows:

Business Segments

<TABLE>
<CAPTION>
                                                                                                 (US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                                             IT Services       Internet        Software      Elimination    Consolidated
                                                               Services        Products                        totals
------------------------------------------------------------------------------------------------------------------------
 <S>                                         <C>              <C>              <C>           <C>            <C>
 For the year ended March 31, 2000
 Revenue - External customers                $   149,257      $  15,198               -               -     $   164,455
 Revenue - Inter-segment                           5,768            208               -      $   (5,976)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   155,025      $  15,406               -      $   (5,976)       $164,455
========================================================================================================================
 Operating income / (loss)                   $    18,356      $ (10,630)       $(10,802)     $    2,447     $      (629)
 Net income / (loss)                               9,787         (5,713)        (11,014)              -          (6,940)
 Segment assets                                  183,283        243,551           1,758         (16,033)        412,559
 Depreciation and amortization                    19,616          5,600              52               -          25,268
 Capital expenditures for long-lived assets       22,389         20,003             517               -          42,909
------------------------------------------------------------------------------------------------------------------------

 For the year ended March 31, 2001
 Revenue - External customers                $   273,467      $  36,840               -               -     $   310,307
 Revenue - Inter-segment                           3,547          2,148             213          (5,908)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   277,014      $  38,988        $    213      $   (5,908)    $   310,307
========================================================================================================================
 Operating income / (loss)                   $    24,230      $ (56,994)       $(13,878)              -     $   (46,642)
 Net income / (loss)                              14,765        (28,804)        (13,873)              -         (27,912)
 Segment assets                                  257,143        246,766           2,243      $  (25,053)        481,099
 Depreciation and amortization                    24,374         29,695             424               -          54,493
 Capital expenditures for long-lived assets       42,296         41,934             926               -          85,156
------------------------------------------------------------------------------------------------------------------------

 For the year ended March 31, 2002
 Revenue - External customers                $   377,321      $  36,585        $    585               -     $   414,491
 Revenue - Inter-segment                             618          2,806             284          (3,708)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   377,939      $  39,391        $    869      $   (3,708)    $   414,491
========================================================================================================================
 Operating income / (loss)                   $    68,030      $(128,913)       $ (2,630)              -     $   (63,513)
 Net income / (loss)                             109,230        (80,708)         (2,630)              -          25,892
 Segment assets                                  463,934         83,047             754         (32,233)        515,502
 Depreciation, amortization and                   29,319        106,614             385               -         136,318
 impairment of goodwill
 Capital expenditures for long-lived assets       30,265            400          (1,001)              -          29,664
------------------------------------------------------------------------------------------------------------------------
</TABLE>
The capital expenditures for long-lived assets in the above table represent the
additions to premises and equipment (fixed assets) of each segment.

Geographic Information

The revenues that are attributable to countries based on location of customers
and long-lived assets are as follows:

<TABLE>
<CAPTION>
                                                                                                 (US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                         Year ended March 31, 2000      Year ended March 31, 2001       Year ended March 31, 2002
------------------------------------------------------------------------------------------------------------------------
                        Revenues from    Long-lived     Revenues from   Long-lived     Revenues from    Long-lived
                          external         assets         external        assets         external        assets
                          customers                       customers                      customers
------------------------------------------------------------------------------------------------------------------------
<S>                     <C>              <C>            <C>             <C>            <C>              <C>
 United States             $123,262       $  7,585        $224,315       $  3,715        $298,458        $  4,280
 Europe                       8,493             68          20,593            127          39,202             657
 India                       16,473        134,959          31,467        238,958          32,089         132,428
 Japan                       10,364            344           7,327            262           9,152             348
 Rest of the World            5,863            194          26,605            164          35,590             491
------------------------------------------------------------------------------------------------------------------------
 Total                     $164,455       $143,150        $310,307       $243,226        $414,491        $138,204
========================================================================================================================
</TABLE>

The long-lived assets in the above table represent premises and equipment and
intangible assets of each segment. Transfers between reportable business or
geographic segments are made either at cost or at arms-length prices.

                                      F-34

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

18.   Concentration of Credit Risk

Accounts receivable balances are typically unsecured and are derived from
revenues earned from customers primarily located in the United States. Satyam
monitors the creditworthiness of its customers to which it grants credit terms
in the normal course of business. During the year ended March 31, 2000, revenues
generated from the top two customers accounted for 14.2% and 11.9% of the total
revenues, respectively. During the year ended March 31, 2001, revenues generated
from the top two customers accounted for 15.76% and 8.11% of the total revenues,
respectively. During year ended March 31, 2002, revenues generated from the top
two customers accounted for 18.26% and 6.93% of the total revenues,
respectively. Total revenue from Satyam's top ten customers accounted for 51.9%,
46.34% and 48.95% of the total revenues during the years ended March 31, 2000,
2001 and 2002 respectively.

19.   Related Party Transactions

Related party transactions comprise of

<TABLE>
<CAPTION>
                                                                                                    (US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                                                                                                    Year ended March 31
                                                                                        2000         2001          2002
------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                    <C>         <C>           <C>
 Infrastructure and other services provided by Satyam during the year to
     Satyam GE                                                                          $539        $  461        $  142
     Satyam Venture                                                                        -         1,031           928
     Cricinfo                                                                              -             -            30
     Refco-SIFY                                                                            -           492           973
     Placements.com                                                                        -             -            75
------------------------------------------------------------------------------------------------------------------------
     Total                                                                              $539        $1,984        $2,148
========================================================================================================================

 Software services provided to Satyam during the year by
     Satyam GE                                                                          $182             -             -
     Satyam Venture                                                                        -        $  165             -
------------------------------------------------------------------------------------------------------------------------
     Total                                                                              $182        $  165             -
========================================================================================================================

 Interest received by Satyam during the year from
     Cricinfo                                                                              -             -        $   47
------------------------------------------------------------------------------------------------------------------------
     Total                                                                                               -        $   47
========================================================================================================================
</TABLE>

The balances receivable from and payable to related parties are as follows:

<TABLE>
<CAPTION>
                                                                                                   (US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                      As of  March 31
                                                                                                  2001           2002
-----------------------------------------------------------------------------------------------------------------------
 <S>                                                                                             <C>           <C>
 Advance towards investment in associated companies
     Refco-SIFY                                                                                       -        $  925
-----------------------------------------------------------------------------------------------------------------------
     Total                                                                                            -        $  925
=======================================================================================================================

 Amount due from/(to) associated companies
     Satyam GE                                                                                   $  631        $  189
     Satyam Venture                                                                                 896           267
     CA Satyam                                                                                        -          (287)
     Cricinfo                                                                                         -            31
     Refco-SIFY                                                                                       -            27
     Placements.com                                                                                   -            53
-----------------------------------------------------------------------------------------------------------------------
     Total                                                                                       $1,527        $  280
=======================================================================================================================
</TABLE>

                                      F-35

<PAGE>

Satyam Computer Services Limited
Notes to the Consoldiated Financial Statements

20.   Contingencies and Commitments

a)    Bank guarantees

The bank guarantees outstanding are US$1,012 thousands and US$1,638 thousands as
of March 31, 2001 and 2002 respectively. Bank guarantees are generally provided
to government agencies, primarily to the Telegraph Authorities as security for
compliance with and performance of terms and conditions contained in the
Internet Service Provider license granted to Satyam and Videsh Sanchar Nigam
Limited, towards the supply and installation of an electronic commerce platform
respectively. Satyam also provides guarantees to Excise and Customs authorities
for the purposes of maintaining a bonded warehouse. These guarantees may be
revoked by the governmental agencies if they suffer any losses or damage through
the breach of any of the covenants contained in the agreements.

b)    Capital commitments

Capital commitments comprise of:

<TABLE>
<CAPTION>
                                                                                         (US$ in thousands)
-------------------------------------------------------------------------------------------------------------
                                                                                             As of  March 31
                                                                                -----------------------------
                                                                                         2001           2002

-------------------------------------------------------------------------------------------------------------
 <S>                                                                                   <C>             <C>
 Contractual commitments for capital expenditure                                       $ 8,565         $3,601
 Commitment towards investment in equity capital under joint venture                     2,645          1,000
-------------------------------------------------------------------------------------------------------------
 Total                                                                                 $11,210         $4,601
=============================================================================================================
</TABLE>

Contractual commitments for capital expenditures are relating to acquisition of
premises, equipment and new network infrastructure.

c)    Operating lease

Satyam has certain operating leases for office premises and guesthouses. Most of
the operating leases provide for increased rent through increases in general
price levels. Rental expense for operating leases amounted to US$3,971 thousand,
US$7,626 thousands and US$9,243 thousands for the year ended March 31, 2000,
2001 and 2002 respectively.

Future minimum annual lease commitments, including those leases for which
renewal options may be exercised as of March 31, 2002 are US$201 thousands in
fiscal 2003, US$200 thousands in fiscal 2004, US$189 thousands in fiscal 2005,
US$188 thousands in fiscal 2006, US$123 thousands in fiscal 2007 and US$156
thousands thereafter.

                                      F-36

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

21.      Shareholders' Equity and Dividends

a)       Issuance of common stock

In May 2001, Satyam Computer Services listed its American Depository Shares
("ADS") for trading on the New York Stock Exchange ("NYSE" ticker symbol "SAY").
Satyam Computer Services issued 16,675,000 ADS (representing 33,350,000 equity
shares of Rs. 2 each fully paid up) at a price of US$9.71 per ADS, including ADS
issued on exercise of 15% Greenshoe option by the Underwriters. Each ADS
represents two equity shares of Rs 2 each, fully paid up.

b)       Dividends

Final dividends proposed by the Board of Directors are payable when formally
declared by the shareholders, who have the right to decrease but not increase
the amount of the dividend recommended by the Board of Directors. Interim
dividends are declared by the Board of Directors without the need for
shareholders' approval. With respect to equity shares issued by Satyam Computer
Services during a particular fiscal year, cash dividends declared and paid for
such fiscal year generally will be prorated from the date of issuance to the end
of such fiscal year. Satyam Computer Services accrues dividends payable and pays
them after obtaining shareholders' approval.

Dividends payable to equity shareholders are based on the net income available
for distribution as reported in Satyam Computer Services unconsolidated
financial statements prepared in accordance with Indian GAAP. As such, dividends
are declared and paid in Indian Rupees. The net income in accordance with U.S.
GAAP may, in certain years, either not be fully available or will be
additionally available for distribution to equity shareholders. Under Indian
GAAP the net income available for distribution to equity shareholders was
US$29,954 thousands, US$103,797 thousands and US$92,029 thousands for the years
ended March 31, 2000, 2001 and 2002 respectively.

On June 29, 2001, shareholders authorized payment of a cash dividend of US$0.009
per share amounting to US$2,918 thousands to shareholders of record on June 25,
2001. The dividend was paid on July 10, 2001. On October 24, 2001, the Board of
Directors of Satyam Computer Services authorized payment of a cash dividend of
US$0.01 per share amounting to US$3,514 thousands to shareholders of record on
November 9, 2001. The dividend was paid on October 29, 2001.

Under the Indian Companies Act, dividends may be paid out of the profits of a
company in the year in which the dividend is declared or out of the
undistributed profits of previous fiscal years. Before declaring a dividend
greater than 10.0% of the par value of its equity shares, a company is required
to transfer to its reserves a minimum percentage of its profits for that year,
ranging from 2.5% to 10.0%, depending on the dividend percentage to be declared
in such year. Dividends declared, distributed or paid by an Indian corporation
are subject to a dividend tax of 10.2%, including the presently applicable
surcharge, of the total amount of the dividend declared, distributed or paid.
This tax is not paid by shareholders nor is it a withholding requirement, but
rather it is a direct tax payable by the corporation.

22.      Balance sheet and income statement schedules

a)       Cash and Cash Equivalents

The cash and cash equivalents consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of March 31
                                                    ----------------------------
                                                           2001           2002
--------------------------------------------------------------------------------

  Cash and bank balances                                $37,130       $ 57,400
  Cash equivalents                                       28,938        186,054
--------------------------------------------------------------------------------
  Cash and cash equivalents                             $66,068       $243,454
================================================================================

Cash equivalents include deposits of US$261 thousands and US$448 thousands as of
March 31, 2001 and 2002, respectively, placed in "No-charge-no-lien" accounts as
security towards performance guarantees issued by Satyam's bankers on Satyam's
behalf. Cash and Cash equivalents also include a sum of US$ Nil and US$2,048
thousands as of March 31, 2001 and 2002 respectively, under lien with Satyam's
bankers against guarantees issued by the bank on behalf of Satyam. Satyam cannot
utilize these amounts until the guarantees are discharged or revoked.

                                      F-37

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

b)       Accounts Receivable

Accounts receivable consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                          2001           2002
--------------------------------------------------------------------------------

  Customers (trade)                                    $95,444        $97,564
  Related parties                                          650            140
  Less: allowance for doubtful debts                    (3,530)        (9,495)
--------------------------------------------------------------------------------
  Accounts receivable                                  $92,564        $88,209
================================================================================

The allowance for doubtful debts is established at amounts considered to be
appropriate based primarily upon Satyam's past credit loss experience and an
evaluation of potential losses on the outstanding receivable balances.

c)       Inventory

Inventory consists of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                         2001            2002
--------------------------------------------------------------------------------

  CD-ROMs                                              $   153        $    82
  Communication hardware                                 2,010            459
  Application software                                     126             96
  Others                                                    70             96
  Less: Valuation Allowance                                 (9)            (8)
--------------------------------------------------------------------------------
  Inventory                                            $ 2,350        $   725
================================================================================

d)       Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                         2001            2002
--------------------------------------------------------------------------------

  Prepaid expenses                                     $ 5,922        $ 4,208
  Advance for expenses                                  13,089          6,064
  Loans and advance to employees                         2,493          2,238
  Other advances and receivables                         1,052            929
--------------------------------------------------------------------------------
  Prepaid expenses and other receivables               $22,556        $13,439
================================================================================

Other advances and receivables includes the current portion of the restricted
cash in the form of deposits placed with banks to obtain bank guarantees
amounted to US$15 thousands and US$ Nil as of March 31, 2001 and 2002
respectively. Prepaid expenses principally include the unexpired portion of
annual rentals paid to the Department of Telecommunications, Ministry of
Communications, and the Government of India for use of leased telecommunication
lines, Satellite link charges, and insurance premiums.

                                      F-38

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

e)       Other Assets

Other assets consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                  As of March 31
                                            ------------------------------------
                                                             2001         2002
--------------------------------------------------------------------------------

    Rent and maintenance deposits                         $ 3,570      $ 3,899
    Telephone and other deposits                            2,190        1,335
    Loans and advances to employees due after one year      1,918          673
    Deferred taxes on income                                1,371        1,640
    Others                                                  3,906        4,151
    Less: Allowance for doubtful deposits                    (959)      (1,396)
--------------------------------------------------------------------------------
    Other Assets                                          $11,996      $10,302
================================================================================

Others include the non-current portion of the restricted cash in the form of
deposits placed with banks to obtain bank guarantees amounted to US$140
thousands and US$158 thousands as of March 31, 2001 and 2002 respectively.
Telephone and other deposits are primarily attributable to deposits with
government organizations principally to obtain leased telephone lines and
electricity supplies and advance payments to vendors for the supply of goods and
rendering of services.

f)       Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of:

                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                  As of March 31
                                             -----------------------------------
                                                            2001          2002
--------------------------------------------------------------------------------

    Accrued expenses                                     $20,142       $24,148
    Unclaimed dividend                                       335           424
    Provision for taxation                                 6,707         6,770
    Provision for gratuity                                   854         1,502
    Deferred taxes on income                                   -         1,165
    Others                                                 5,870         5,731
--------------------------------------------------------------------------------
    Accrued expenses and other current liabilities       $33,908       $39,740
================================================================================

g)       Other Income

Other income consists of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                         ---------------------------------------
                                              2000          2001           2002
--------------------------------------------------------------------------------

    Gain on foreign exchange transactions   $1,072        $5,816        $10,813
    Others                                     399           990          1,355
--------------------------------------------------------------------------------
    Other income                            $1,471        $6,806        $12,168
================================================================================

h)       Other expenses

Other expenses consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                     -------------------------------------------
                                              2000          2001           2002
--------------------------------------------------------------------------------

    (Profit)/loss on sale of equipment        $ 72          $ 43          $ (59)
    Miscellaneous expenses                     346           301            137
--------------------------------------------------------------------------------
    Other expenses                            $418          $344          $  78
================================================================================

                                      F-39

<PAGE>

Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

23.      Executive employment arrangements

Infoway has entered into Executive Employment Agreements (`the agreements') with
a few executive employees which provide for certain payment in connection with
termination of employment after a change of control or for other reasons (which
are defined in the agreements). The agreements were entered on February 20, 2002
and expire after three years. The aggregate terminal benefits payable to the
employees under such agreement amounts to US$333 thousand.

Further, the senior executives had been provided loans totaling to US$819
thousands in fiscal 2001 repayable with interest on December 31, 2002. In
consideration of the executives agreeing to continue in the employment of
Infoway, Infoway agreed to pay the executives additional compensation sufficient
to repay the loan and interest. The additional compensation is reduced by the
value, as on the date of such additional compensation, of specified market
liquid stock options granted to the executives before December 31,2000 and
vested until that date. Such additional cash compensation together with interest
is being accrued pro-rata and is amortized over the remaining service period of
approximately 10 months. In addition due to the modification in the terms of the
stock options these options are accounted in accordance with EITF 00-23 as a
variable plan. No compensation charge with respect to the variable plan is
recognized as the options are under water.

24. Legal proceedings

On November 5, 2001, a securities class action lawsuit was filed in the United
States District Court for the Southern District of New York on behalf of all
persons who acquired Infoway's ADSs between October 20, 1999 and December 6,
2000. Infoway, certain of the executive officers of Infoway, and certain
underwriters involved in Infoway's initial public offering of ADSs are named as
defendants in the complaint. This complaint alleges that certain of the
underwriters of the initial public offering violated the federal securities laws
by failing to disclose that they had solicited and received undisclosed
commissions from, and entered into undisclosed arrangements with, certain
investors who purchased ADSs in the initial public offering, and had entered
into undisclosed arrangements with certain investors whereby the underwriters
allocated shares in the initial public offering to those investors in exchange
for their agreement to purchase Infoway's ADSs in the after-market at
pre-determined prices. The complaint also alleges that the defendants violated
the federal securities laws by issuing a registration statement in connection
with the initial public offering that contained material misstatements and/or
omissions because it did not disclose that these allegedly undisclosed
arrangements had occurred. The complaint seeks damages on behalf of all those
who purchased or otherwise acquired Infoway's ADSs during the period covered by
the complaint. The deadline for defendants to respond to the complaint has not
yet expired. Infoway believes it has meritorious defenses and intend to defend
this action vigorously. However, Infoway could be forced to incur material
expenses in the litigation, and in the event there is an adverse outcome,
Infoway's business could be harmed.

Infoway's subsidiary IndiaWorld Communications is involved in a pending
litigation relating to the IndiaWorld trademark in Federal Court in San Diego,
California with a third party located in the United States. IndiaWorld
Communications commenced the lawsuit alleging, among other things, that the
third party fraudulently registered and used the IndiaWorld trademark, and
committed copyright infringement and misappropriation of content of IndiaWorld
Communications' website. The third party filed a counterclaim against Infoway
and IndiaWorld Communications alleging, among other things, that the activities
of IndiaWorld Communications infringe a United States trademark for the term
"Indiaworld" and associated logos and trade marks purportedly owned by this
third party, and that the third party has an ownership interest in the
underlying assets of IndiaWorld Communications. On August 9, 2001, the Court
granted Infoway's motion to dismiss Infoway from this case because the Court
found that it did not have personal jurisdiction over Infoway. IndiaWorld
Communications is still involved in the case. Infoway has been advised by the
prior owners of IndiaWorld Communications that no infringement or
misappropriation has taken place. Infoway's contract with the prior owners of
IndiaWorld Communications includes an indemnity for past infringement or
misappropriation. Infoway and IndiaWorld Communications have also been contacted
by a party that alleges, among other things, that he is entitled to an equity
ownership in IndiaWorld Communications. Infoway believes that this claim is also
covered by the contractual indemnity provided by the prior owners of IndiaWorld
Communications. Nonetheless, any dispute such as those described above creates
uncertainty as to the possible outcome, including whether or not the indemnity
will be effective in protecting Infoway, and also could divert management time
and attention away from business. An adverse outcome that is not indemnified
could be material.

The charges for international gateways and other services presently being
provided by VSNL are the subject of a dispute pending before the TRAI and the
Telecom Disputes Settlement and Appellate Tribunal between VSNL and private
Internet service providers, including our company. VSNL has priced these
services at levels, which Infoway believes are inconsistent with the terms and
conditions on which VSNL has secured the bandwidth for its international
gateways. The Telecom Disputes Settlement and Appellate Tribunal has remanded
the matter back to TRAI for denovo consideration. The matter is pending before
TRAI. This is a pending matter and no decision has been announced. Adverse
resolution of this dispute could have a material impact on Infoway's business.
Infoway is party to additional legal actions arising in the ordinary course of
business. Based on information available to Infoway as of March 31, 2002,
Infoway believes that it has adequate legal defenses or insurance coverage for
these actions and that the ultimate outcome of these actions will not have a
material adverse effect on Infoway. Based on opinion received from legal
counsel, management believes that an adverse outcome in respect of the above is
not anticipated.

                                      F-40
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UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 20-F
                                   (Mark One)

[_]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934 or

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934. For the fiscal year ended March 31, 2002.

                                       or

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934. For the transition period from _______ to _______

                        Commission File Number 001-15190

                        Satyam Computer Services Limited
             (Exact name of Registrant as specified in its charter)

                                 Not Applicable
                 (Translation at Registrant's name into English)

                                Republic of India
                 (Jurisdiction of incorporation or organization)

                            Satyam Technology Center
                              Bahadurpally Village
                    Qutbullapur Mandal, R.R.District - 500855
                            Hyderabad, Andhra Pradesh
                                      India
                                (91) 40-309-7505
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
American Depositary Shares, each represented by two Equity Shares, par value
Rs.2 per share.

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

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

311,391,210 equity shares, including 33,350,000 underlying equity shares for
16,675,000 ADS, were issued and outstanding as of March 31, 2002.

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

Yes  [X]             No  [_]
Indicate by check mark which financial statement item the registrant has elected
to follow.

Item 17        [_]             Item 18       [X]
Table of Contents
Item                                                                                                          Page
----                                                                                                          ----
Currency of Presentation and Certain Defined Terms .........................................................    1
Forward-Looking Statements May Prove Inaccurate ............................................................    1

PART I .....................................................................................................    2

Item 1.      Identity of Directors, Senior Management and Advisers .........................................    2
Item 2.      Offer Statistics and Expected Timetable .......................................................    2
Item 3.      Key Information ...............................................................................    2
Item 4.      Information on the Company ....................................................................   18
Item 5.      Operating and Financial Review and Prospects ..................................................   33
Item 6.      Directors and Officers of Registrant ..........................................................   57
Item 7.      Major Shareholders and Related Party Transactions .............................................   65
Item 8.      Financial Information .........................................................................   66
Item 9.      The Offer and Listing .........................................................................   66
Item 10.     Additional Information ........................................................................   68
Item 11.     Quantitative and Qualitative Disclosures About Market Risk ....................................   80
Item 12.     Description of Securities Other Than Equity Securities ........................................   81

PART II ....................................................................................................   82

Item 13.     Defaults, Dividend Arrearages and Delinquencies ...............................................   82
Item 14.     Material Modifications to the Rights of Security Holders and Use of Proceeds ..................   82
Item 15.     Reserved ......................................................................................   82
Item 16.     Reserved ......................................................................................   82

PART III  ..................................................................................................   83

Item 17.     Financial Statements ..........................................................................   83
Item 18.     Financial Statements ..........................................................................   83
Item 19.     Exhibits ......................................................................................   83
Currency of Presentation and Certain Defined Terms

Unless the context otherwise requires, references herein to "we," "us," the
"company," "SAY" or "Satyam" are to Satyam Computer Services Limited, a limited
liability company organized under the laws of the Republic of India. References
to "U.S." or the "United States" are to the United States of America, its
territories and its possessions. References to "India" are to the Republic of
India. We are a leading Indian information technology services company which is
traded on the New York Stock Exchange under the symbol "SAY" as well as the
major Indian stock exchanges. "Satyam" is a trademark owned by Satyam Computer
Services. "Sify.com," "SatyamOnline," "Satyam: Net" and "satyamonline.com" are
trademarks used by our majority-owned subsidiary, Satyam Infoway Limited
("Infoway") for which we have registration applications pending in India. All
other trademarks or tradenames used in this Annual Report on Form 20-F ("Annual
Report") are the property of their respective owners.

In this Annual Report, references to "$", "Dollars" or "U.S. dollars" are to the
legal currency of the United States, and references to "Rs.," "rupees" or
"Indian rupees" are to the legal currency of India. References to a particular
"fiscal" year are to our fiscal year ended March 31 of such year.

For your convenience, this Annual Report contains translations of some Indian
rupee amounts into U.S. dollars which should not be construed as a
representation that those Indian rupee or U.S. dollar amounts could have been,
or could be, converted into U.S. dollars or Indian rupees, as the case may be,
at any particular rate, the rate stated below, or at all. Except as otherwise
stated in this Annual Report, all translations from Indian rupees to U.S.
dollars contained in this Annual Report have been based on the noon buying rate
in the City of New York on March 31, 2002 for cable transfers in Indian rupees
as certified for customs purposes by the Federal Reserve Bank of New York. The
noon buying rate on March 31, 2002 was Rs.48.83 per $1.00.

The International Data Corporation market data presented in this Annual Report
shows International Data Corporation's estimates derived from a combination of
vendor, user and other market sources and therefore may differ from numbers
claimed by specific vendors using different market definitions or methods. There
can be no assurance that the projected amounts will be achieved.

Information contained in our websites, including our corporate website,
www.satyam.com, is not part of this Annual Report.

                 Forward-Looking Statements May Prove Inaccurate

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT TO RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH
A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTION
ENTITLED "ITEM 3. KEY INFORMATION--RISK FACTORS", "ITEM 5. OPERATING AND
FINANCIAL REVIEW AND PROSPECTS" AND ELSEWHERE IN THIS ANNUAL REPORT. YOU ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE OF THIS ANNUAL REPORT. IN
ADDITION, YOU SHOULD CAREFULLY REVIEW THE OTHER INFORMATION IN THIS ANNUAL
REPORT AND IN OUR QUARTERLY REPORTS AND OTHER DOCUMENTS FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") FROM TIME TO TIME. OUR
FILINGS WITH THE SEC ARE AVAILABLE ON ITS WEBSITE, WWW.SEC.GOV.

                                       1
PART I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

Item 3. KEY INFORMATION

Selected Financial Data

You should read the following selected consolidated historical financial data in
conjunction with our financial statements and the related notes and Item 5.
Operating and Financial Review and Prospects" included elsewhere in this Annual
Report. The statement of operations data for the fiscal years ended March 31,
1999, 2000, 2001 and 2002 and the balance sheet data as of March 31, 1999, 2000,
2001 and 2002 are derived from our consolidated audited financial statements
including the notes, included elsewhere in this report, prepared in accordance
with U.S. GAAP for the fiscal years ended March 31, 1999, 2000, 2001 and 2002.
Selected consolidated historical financial data for the fiscal year ended March
31, 1998 has been omitted as our financial statements were not prepared in
accordance with U.S. GAAP for this period and this data cannot be provided
without unreasonable effort and expense.
Year ended March 31,
                                                                                     --------------------

                                                                        1999          2000          2001            2002
                                                                  ------------------------------------------------------------
                                                                 (in thousands, except  per share data and as stated otherwise)
Statement of Operations Data:
Revenues:
       Information technology services ......................        $ 95,573       $149,257      $273,467       $377,321
       Internet services ....................................           2,222         15,198        36,840         36,585
       Software products ....................................              --             --            --            585
                                                                     --------       --------      -----------------------
       Total revenues .......................................          97,795        164,455       310,307        414,491
Cost of revenues(1) .........................................          49,559         90,449       208,121        238,996
                                                                     ----------------------------------------------------

Gross profit ................................................          48,236         74,006       102,186        175,495
Operating expenses:
       Selling, general and administrative expenses(2) ......          31,896         69,592       124,100        140,896
       Amortization  of goodwill ............................             130          5,043        24,728         16,997
                                                                     --------       --------      -----------------------
       Impairment of goodwill ...............................              --             --            --         81,115
                                                                     --------       --------      -----------------------

       Total operating expenses .............................          32,028         74,635       148,828        239,008
                                                                     --------       --------      -----------------------

Operating Income (loss) .....................................          16,208           (629)      (46,642)       (63,513)
Interest income .............................................              43          2,625         5,732          3,806
Interest expense ............................................          (6,905)       (11,290)       (9,632)        (2,856)
Gain of sale of shares in Infoway ...........................              --             --            --         45,594
Other income ................................................             990          1,471         6,806         12,168
Other expenses ..............................................             (28)          (418)         (344)           (78)
                                                                     --------       --------      -----------------------

Income (Loss) before income taxes, minority interest
   and equity in earnings (losses) of associated
   companies, net ...........................................          10,308         (8,241)      (44,080)        (4,879)
Income taxes ................................................          (1,105)        (1,619)       (4,137)       (17,234)
Minority interest ...........................................            (171)         2,785        25,772         73,406
Equity in earnings (losses) of associated
   companies, net of taxes ..................................             (18)           135        (5,467)       (25,401)
                                                                     --------       --------      -----------------------

Net income (loss) ...........................................        $  9,014       $ (6,940)     $(27,912)      $ 25,892

Earnings (loss) per equity share:
       Basic and diluted ....................................        $   0.03       $  (0.03)     $  (0.10)      $   0.08

Earnings (loss) per ADS:
       Basic and diluted ....................................        $   0.07       $  (0.05)     $  (0.21)      $   0.17

Weighted average equity shares used in computing
   earnings per equity share:
       Basic ................................................         260,190        264,720       269,943        305,751
2
Diluted ........................................................   260,260        264,720       269,943       307,113

Weighted average ADS used in computing earnings per ADS:
       Basic ..........................................................   130,095        132,360       134,972       152,875
       Diluted ........................................................   130,130        132,360       134,972       153,556

Cash dividend per equity share ........................................  $   0.01       $   0.01     $    0.02      $   0.02
Cash dividend per ADS .................................................  $   0.03       $   0.03     $    0.03      $   0.04

Other Data:
Net cash provided by:
       Operating activities ...........................................  $ 14,245       $ 14,115     $   5,935      $116,371
       Investing activities ...........................................   (36,089)       (83,619)     (137,775)      (40,360)
       Financing activities ...........................................    35,849        251,664        14,212       110,747
Capital expenditures ..................................................    39,071         42,909        85,156        29,664
Number of information technology services technical
   associates .........................................................     3,513          4,473         7,798         7,898
As at March 31,
                                                                                                     ---------------
                                                                            1999          2000             2001         2002
                                                                            ----          ----             ----         ----
                                                                                                      (in thousands)
Balance Sheet Data:
Cash and cash equivalents. ............................................  $ 13,215       $192,304     $   66,068      243,454
Total assets ..........................................................   116,319        412,559        481,099      515,502
Total long-term debt (excluding current portion) ......................    47,967         50,050          9,625        2,712
Total shareholders' equity ............................................    35,892        168,474        194,695      369,842
Capital stock (excluding long term debt and redeemable
preferred stock .......................................................        --        205,234        269,135      422,674
(1) Inclusive of deferred stock based compensation expense of $13,356 thousand
in fiscal 2000, $31,336 thousand in fiscal 2001 and $7,212 thousand in fiscal
2002.

(2) Inclusive of deferred stock based compensation expense of $3,575 thousand in
fiscal 2000, $14,782 thousand in fiscal 2001 and $3,582 thousand in fiscal 2002.

                SELECTED FINANCIAL INFORMATION UNDER INDIAN GAAP

The unaudited selected unconsolidated financial and other data for fiscal 1998,
1999, 2000, 2001 and 2002 presented below has been derived from Satyam Computer
Services' unconsolidated financial statements, prepared in accordance with
Indian GAAP. We report our financial information in this manner to shareholders
that hold our equity shares listed on the Indian stock exchanges. These
financial statements are not included in this document.
Year ended March 31
                                                                                        -------------------

                                                                            1998      1999        2000       2001       2002
                                                                            --------------        ----       ----       ----
                                                                      (in thousands, except  per share data and as stated otherwise)
Income:
Sales - export ......................................................    $ 47,882   $ 89,395    $152,749   $261,026    356,815
Sales - Domestic ....................................................          99        358       3,257      6,105      6,047
Other Income ........................................................       3,129         75         448      4,749     14,907
                                                                         -------------------    ------------------------------
Total ...............................................................      51,110     89,828     156,454    271,880    377,769

Expenditures:
Personnel expenses ..................................................      19,560     33,901      58,463    106,636    165,318
Operating and administration expenses ...............................       9,229     17,743      33,064     58,166     69,642
Marketing expenses ..................................................       1,207      3,366       6,688      4,885      6,142
Financial expenses ..................................................       3,221      6,274       9,418      7,558      2,010
Depreciation ........................................................       6,152     10,196      16,364     21,121     24,609
Preliminary and deferred revenue expenses written off ...............          --         --          --         --         --

Total ...............................................................      39,369     71,480     123,997    198,366    267,721
3
Profit before taxation .............................................   11,741       18,348        32,457     73,514      110,048
Provision for taxation .............................................    1,237        1,068         1,383      4,039        6,397
Profit after taxation ..............................................   10,504       17,280        31,074     69,475      103,651
Extraordinary items:
Merger related extraordinary items .................................       --           --         1,124         --           --
Income tax for earlier periods paid ................................      123           --            --        247          964
Miscellaneous expenses written off .................................      673           --            --         --
Profit on sale of shares in subsidiary company (net of tax) ........       --           --            --     37,251           --
Provision for losses in subsidiaries ...............................       --           --            --         --        8,538
Depreciation for earlier years .....................................    4,544           --            --         --           --
Gratuity for earlier years .........................................       --           --            --         --           --

Profit after tax and extraordinary items ........................... $  5,164     $ 17,280      $ 29,950   $106,479     $ 94,149
                                                                     ===========================================================

Earnings per equity share (adjusted)(2)(3) ......................... $   0.04     $   0.07      $   0.15   $   0.25     $   0.33
Earnings per equity share ..........................................     0.40         0.66          0.73       1.23         1.63

Equity shares used in computing earnings per
  equity share (adjusted)(3) .......................................  260,190      260,190       212,440    281,190      314,540
Equity shares used in computing earnings per equity share ..........   26,019       26,019        42,488     56,238       62,908

Cash dividend per equity share (adjusted)(3) ....................... $   0.01     $   0.01      $   0.01   $   0.02     $   0.02
Cash dividend per equity share .....................................     0.05         0.07          0.07       0.09         0.12

Other Data:
Net Cash provided by (used in):
Operating activities ............................................... $  5,552     $ 23,219      $ 37,282   $ 48,798     $117,280
Investing activities ...............................................  (23,275)     (39,341)      (33,914)      (594)     (33,347)
Financing activities ...............................................   20,630       22,079        10,850    (38,283)     107,140
As of March 31,                                                         1998         1999          2000       2001         2002
---------------                                                         -------------------------------------------------------
EBITDA(4) ..........................................................   21,051       34,516        58,033    101,810      132,941
Capital expenditures ...............................................   23,742       34,812        21,847     42,261       25,997
Balance Sheet Data:
Cash and cash equivalents .......................................... $  3,543     $  9,085      $ 24,523   $ 33,225     $230,115
Total Assets(5) ....................................................   66,068      107,928       166,060    251,046      453,876
Total long-term debt (excluding current portion) ...................   20,405       43,043        43,084     30,110          567
Total shareholders' equity(6) ......................................   27,607       39,619        80,659    177,995      404,440
(1) Figures for fiscal 2000, fiscal 2001 and fiscal 2002 are not comparable
     with those of previous fiscal years due to the merger of Satyam Enterprise
     Solutions Limited, Satyam Renaissance Consulting Limited, and Satyam Spark
     Solutions Limited with Satyam Computer Services which was completed in
     September 1999. The following yearly average exchange rates were used for
     conversion from rupees into U.S. dollars for each fiscal year indicated:
     1998 - Rs.37.20, 1999 - Rs.42.13, 2000 - Rs.43.40, 2001 Rs.45.67 and 2002 -
     Rs47.73.

     (2) Extraordinary items were not considered for computing earnings per
     share.

     (3) Indian GAAP does not require retrospective presentation of earnings per
     share data in the event of a stock split. However, for the purposes of
     presenting comparable data, the September 1, 1999 and August 7, 2000 stock
     splits have been retrospectively effected for computation of adjusted
     earnings per share and cash dividend per equity share.

     (4) EBITDA represents earnings (loss) before depreciation, amortization of
     intangible assets, interest income and expense, income tax expense
     (benefit) and extraordinary items. EBITDA is presented because we believe
     some investors find it to be a useful tool for measuring a company's
     ability to fund capital expenditures or to service future debts. EBITDA is
     not determined in accordance with generally accepted accounting principles
     and should not be considered in isolation or as an alternative to net
     income as an indicator of operating performance or as an alternative to
     cash flow as a measure of liquidity. Our EBITDA is not comparable to that
     of other companies which may determine EBITDA differently.

     (5) Total assets represent fixed assets (net of depreciation), investments
     and gross current assets.

     (6) Total shareholders' equity comprises share capital, reserves and
     surplus less miscellaneous expenditures.

     The following table shows the reconciliation from profit after taxation to
     EBITDA:

                                       4
Year ended March 31,
                                                                                         --------------------
                                                                1998      1999       2000          2001        2002
                                                                --------------       ------------------------------
Profit after taxation ...........................   $10,504   $17,280     $31,074     $ 69,228     $102,688
          Add:
          Provision for taxation ..........................     1,237     1,068       1,383        4,286        7,361
          Depreciation ....................................     6,152    10,196      16,364       21,121       24,609
          Interest expense ................................     3,215     6,008       9,341        7,392        1,239
          Less: Interest on deposits ......................        57        36         129          217        2,956
                                                              -----------------     ---------------------------------

          EBITDA ..........................................   $21,051   $34,516     $58,033     $101,810     $132,941
                                                              =======================================================
RISK FACTORS

Any investment in our ADSs involves a high degree of risk. You should consider
carefully the following information about these risks, together with the other
information contained in this Annual Report, before you decide to buy our ADSs.
If any of the following risks actually occur, our company could be seriously
harmed. In any such case, the market price of our ADSs could decline, and you
may lose all or part of the money you paid to buy our ADSs.

Risks Related to Our Overall Operations

Any inability to manage our rapid growth could disrupt our business and reduce
our profitability.

We have experienced significant growth in recent periods. Our total revenues
increased 33.6% in fiscal 2002 as compared to fiscal 2001. As of March 31, 2002,
we had 9,532 employees, whom we refer to as associates, worldwide as compared to
9,700 associates as of March 31, 2001. We expect our growth to place significant
demands on our management and other resources and will require us to continue to
develop and improve our operational, financial and other internal controls, both
in India and elsewhere. In particular, continued growth increases the challenges
involved in:

     .    recruiting and retaining sufficiently skilled technical, marketing and
          management personnel;

     .    providing adequate training and supervision to maintain our high
          quality standards; and

     .    preserving our culture and values and our entrepreneurial environment.

Our inability to manage our growth effectively could disrupt our business and
reduce our profitability.

Our subsidiaries may continue to experience losses and negative cash flows.

As of April 25, 2002, we owned 52.5% of the equity shares of Infoway and 100.0%
of the equity shares of VCI. Since their inception in December 1995 and January
1999, respectively, our subsidiaries Infoway and VCI have incurred significant
operating losses and negative cash flows. As of March 31, 2002, the cumulative
net losses incurred by Infoway were $224.7 million and by VCI were $27.5
million. We cannot assure you that the operating losses or negative cash flows
of Infoway and VCI will not continue or increase in the future or that Infoway
and VCI will become profitable.

Deferred stock based compensation expense may significantly reduce our net
income under U.S. GAAP.

Our reported income under U.S. GAAP has been and will continue to be affected by
the grant of warrants or options under our various employee benefit plans. Under
the terms of our existing plans, employees were typically granted warrants or
options to purchase equity shares at a substantial discount to the current
market value. These grants require us to record non-cash compensation expenses
under U.S. GAAP, amortized over the vesting period of the warrants or options.
We expect to recognize amortization of deferred stock based compensation expense
in respect of our Associate Stock Option Plan, or ASOP, in the approximate
amounts of $3.7 million in fiscal 2003 and $1.9 million in fiscal 2004 based on
the price of our equity shares on March 31, 2002 and in connection with both
granted and ungranted warrants and options on that date. In addition, we expect
to recognize amortization of deferred stock based compensation expense in
respect of our Associate Stock Option Plan B, or ASOP B, in the approximate
amounts of $59 thousand in fiscal 2003 and $35 thousand in fiscal 2004 in
connection with granted warrants and options. Infoway expects to recognize
amortization of deferred stock based compensation expense in respect of its
Infoway Associates Stock Option Plan, or IASOP, in the approximate amounts of
$11 thousand in fiscal 2003 and $5 thousand in fiscal 2004 based on the price of
Infoway's ADSs on March 31, 2002 and in connection with both granted and
ungranted

                                       5
warrants and options. Depending on the market value of our equity shares and
Infoway's ADSs on the dates future grants are made, amortization of deferred
stock based compensation expense with respect to ungranted warrants may cause
the expected amounts to change. The size of our stock compensation expenses has
contributed, and may continue to contribute to negative operating income and
negative net income for purposes of U.S. GAAP. For example, we recognized
deferred stock based compensation of $1.2 million under our ASOP and ASOP B
Plans during fiscal 2002 and $10.5 million was amortized and charged to
earnings.

Impairment of Goodwill on account of our Investments may impact our net income
under U.S. GAAP.

We make estimates in the preparation of financial statements including the
useful lives of goodwill. Changes in such estimates resulting from events many
of which are outside the control of the Company, may result in the impairment of
goodwill which would negatively impact our net income under U.S. GAAP. Such
impact on net income may result in a reduction of the market value of our
shares.

Our revenues are highly dependent upon a small number of customers.

We derive a significant portion of our revenues from a limited number of
corporate customers. In fiscal 2002, our largest customer, General Electric
Company and its affiliates, accounted for 20.1% our information technology, or
IT, services revenues (excluding inter-segment revenues) and 18.3% of our total
revenues. In fiscal 2002, our second largest customer, State Farm Mutual
Automotive Insurance Company accounted for 7.6% of our IT services revenues
(excluding inter-segment revenues) and 6.9% of our total revenues. During fiscal
2001 and fiscal 2002, our five largest customers accounted for 39.1% and 42.2%,
respectively, of our IT services revenues (excluding inter-segment revenues) and
34.2% and 38.4%, respectively, of our total revenues. The volume of work
performed for specific customers is likely to vary from year to year,
particularly since we are usually not the exclusive outside service provider for
our customers. As a result, if we were to lose one of our major customers or
have it significantly reduce its volume of business with us, our profitability
could be reduced.

We dedicate significant resources to develop international operations which may
be more difficult to manage and operate.

In addition to our offshore IT centers in India, we have established new IT
centers in the United States, United Kingdom, Japan and Singapore and plan to
open additional international facilities. Our lack of experience with facilities
outside of India subjects us to risk with regard to foreign regulation and
overseas facilities management. Increasing the number of IT centers and the
scope of operations outside of India subjects us to a number of risks, including
administrative difficulties, currency exchange rate fluctuations, restrictions
against the repatriation of earnings, overlapping taxes and cost overruns and
delays.

System failure could disrupt the lines of communication our business depends on.

To deliver our services to our customers, we must maintain active voice and data
communications 24 hours a day between our main offices in Hyderabad, our other
IT centers and the offices of our customers worldwide. Any significant loss of
our ability to transmit voice and data through satellite and telephone
communications could result in lost customers and curtailed operations which
would reduce our profitability.

We may be unable to attract skilled professionals in the competitive labor
market.

Our ability to execute projects and to obtain new customers depends, in large
part, on our ability to attract, train, motivate and retain highly skilled
technical associates, particularly project managers, project leaders and other
senior technical personnel. We believe that there is significant competition for
technical associates who possess the skills needed to perform the services we
offer. An inability to hire and retain additional qualified personnel will
impair our ability to bid for or obtain new projects and to continue to expand
our business. Also, we cannot assure you that we will be able to assimilate and
manage new technical associates effectively. In fiscal 2001 and fiscal 2002, we
experienced associate attrition at a rate of 15.1% and 13.2%, respectively. Any
increase in our attrition rates, particularly the rate of attrition of
experienced software engineers and project managers and leaders, would harm our
growth strategy. We cannot assure you that we will be successful in recruiting
and retaining a sufficient number of replacement technical associates with the
requisite skills to replace those technical associates who leave. Further, we
cannot assure you that we will be able to redeploy and re-train our technical
associates to keep pace with continuing changes in IT, evolving technologies and
changing customer preferences. Historically, wage costs in the Indian IT
services industry have been significantly lower than wage costs in the United
States for comparably skilled technical associates. However, in recent years,
wage costs in the Indian IT services industry have been increasing at a faster
rate

                                       6
than those in the United States, driven in part by demand for Indian technical
associates overseas. In the long-term, wage increases may make us less
competitive unless we are able to continue increasing the efficiency and
productivity of our professionals and the prices of our services.

U.S. immigration restrictions could limit our ability to expand our U.S.
operations.

Our professionals working onsite at a customer's premises in the United States
are typically required to obtain visas. As of March 31, 2002, substantially all
of our personnel in the United States were working pursuant to extended H-1B
visas (687 persons) or temporary L-1 visas (635 persons). Although there is no
limit to new L-1 petitions, there is a limit to the number of new H-1B petitions
that are approved in any government fiscal year. Changes in existing U.S.
immigration laws that make it more difficult for us to obtain visas could impair
our ability to compete for and provide services to 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.

As a core element of our business strategy, we continue to offer a significant
portion of our services on a fixed-price basis, rather than on a
time-and-materials basis. During fiscal 2001 and fiscal 2002, we derived 22.1%
and 22.0%, respectively, of our total IT services revenues from fixed-price
contracts. Although we use our software engineering processes and past project
experience to reduce the risks associated with estimating, planning and
performing fixed-price projects, we bear the risk of cost overruns, completion
delays and wage inflation in connection with these projects. Many of these risks
may be beyond our control. Our failure to estimate accurately the resources and
time required for a project, future rates of wage inflation and currency
exchange rates or our failure to complete our contractual obligations within the
time frame committed could reduce the profitability of our fixed-price
contracts.

We may be liable to our customers for damages resulting from a system failure.

Many of our contracts involve projects that are critical to the operations of
our customers' businesses and provide benefits that may be difficult to
quantify. Any failure in a customer's system could result in a claim for
substantial damages against us, regardless of our responsibility for such
failure. Although we attempt to limit our contractual liability for damages
arising from negligent acts, errors, mistakes or omissions in rendering our
services, we cannot assure you that the limitations of liability set forth in
our service contracts will be enforceable in all instances or will otherwise
protect us from liability for damages. We do not maintain liability insurance to
cover losses from such claims for damages. Assertions of one or more large
claims against us could result in lost customers, and could increase our costs
and reduce our profitability.

We face intense competition in the IT services market, which could reduce our
revenues and prevent us from maintaining our customers.

The market for IT services is rapidly evolving and highly competitive. We expect
that competition will continue to intensify. We face competition in India and
elsewhere from a number of companies, including:

     .    Indian IT services companies, such as Infosys Technologies Limited,
          Wipro Infotech Software & Services and Tata Consultancy Services;

     .    U.S. IT services companies, such as Computer Sciences Corporation,
          Electronic Data Systems, Accenture, Cambridge Technology Partners and
          Keane Inc; and

     .    Other international, national, regional and local firms from a variety
          of market segments, including major international accounting firms,
          systems consulting and implementation firms, applications software
          firms, service groups of computer equipment companies, general
          management consulting firms, programming companies and temporary
          staffing firms.

We expect that future competition will increasingly include firms with
operations in other countries, potentially including countries with lower
personnel costs than those prevailing in India. A significant part of our
competitive advantage has historically been the cost advantage relative to
service providers in the United States and Europe. Since wage costs in this
industry in India are presently increasing at a faster rate than those in the
United States and Europe, our ability to compete effectively will become
increasingly dependent on our reputation, the quality of our services and our
expertise in specific markets. Many of our competitors have significantly
greater financial, technical and marketing resources and generate greater
revenues than us, and we cannot assure you that we will be able to compete

                                       7
successfully with such competitors and will not lose existing customers to such
competitors. We believe that our ability to compete also depends in part on a
number of factors outside our control, including the ability of our competitors
to attract, train, motivate and retain highly skilled technical associates, the
price at which our competitors offer comparable services and the extent of our
competitors' responsiveness to customer needs.

We may be unable to recoup our investment costs to develop our software
products.

We may develop and market our own software products, which will require
significant capital expenditures. To date, we have developed only one software
product through our subsidiary VCI, in which we had invested $27.3 million
representing equity and other advances as of March 31, 2002. We expect that the
markets for any software products we develop will be highly competitive. We
cannot assure you that any products developed by us will be commercially
successful or that the costs of developing such new products will be recouped.
Additionally, software product revenues typically occur in periods after the
periods in which the costs are incurred for development of such products.
Delayed revenues may cause periodic fluctuations of our results of operations.

Our chairman and managing director may continue to control our board and may
have interests which conflict with those of our other shareholders or holders of
our ADSs.

Mr. B. Ramalinga Raju, our chairman, together with his brother and our managing
director, Mr. B. Rama Raju, and his brother-in-law and our director, Mr. C.
Srinivasa Raju, comprise one-half of our board of directors and as of April 25,
2002, beneficially own in the aggregate approximately 10.9% of our outstanding
equity shares. As a result, these persons, acting together while they are board
members, have the ability to exercise significant influence over most matters
requiring approval by our board of directors, including the appointment of
directors to fill vacancies until the next shareholders' meeting and significant
corporate transactions. This could delay, defer or prevent a change in control
of our company, impede a merger, consolidation, takeover or other business
combination involving us, or discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of our company.

We may be restricted from acquiring non-Indian companies which could adversely
affect our growth strategy.

We have developed a growth strategy based on, among other things, expanding our
presence in existing and new markets and selectively pursuing attractive joint
venture and acquisition opportunities. Under Indian law, an Indian company is
usually required to obtain the approval of the Reserve Bank of India, or RBI,
and/or the government of India to acquire a non-Indian company. If we are unable
to obtain such approvals or are delayed in obtaining them, we may not be able to
fully execute our growth strategy which could adversely affect our operations.

Our revenues are difficult to predict and can vary significantly from quarter to
quarter which could cause our share price to decline significantly.

Our quarterly operating results have historically fluctuated and may fluctuate
significantly in the future. This is primarily because we derive our revenue
from fees for services generated on a project-by-project basis. Our projects
vary in size, scope and duration. For example, we have some projects that employ
only several people for a few weeks and we have other projects that employ over
100 people for six months or more. A customer that accounts for a significant
portion of our revenue in a particular period may not account for a similar
portion of our revenue in future periods. In addition, customers may cancel
contracts or defer projects at any time for a number of different reasons. As a
result, our revenues and our operating results in a particular period are
difficult to predict, may decline in comparison to corresponding prior periods
regardless of the strength of our business, and may not meet the expectations of
securities analysts or investors. If this were to occur the share price of our
equity shares and our ADSs would likely to decline significantly.

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.

Any failure to meet a customer's expectations could result in a cancellation or
non-renewal of a contract. Our contracts with customers do not commit our
customers to provide us with a specific volume of business and can typically be
terminated by our customers with or without cause, with little or no advance
notice and without penalty, which could significantly reduce our revenues.
Additionally, our contracts with customers typically are limited to a specific
project and not any future work. There are also a number of factors other than
our performance and not within our control that could cause the loss of a
customer. Our customers may demand price reductions, change their outsourcing
strategy by moving more work in-house, or replace their existing software with
packaged software supported by licensors, any of which could reduce our
profitability.

                                       8
Risks Related to Our Internet Services Business

Because we owned as of April 25, 2002, 52.5% of the equity shares of Infoway,
which we believe is the largest integrated Internet and electronic commerce
services company in India based on number of customers as of March 31, 2002, we
face risks related to Infoway's business.

Infoway and its subsidiary IndiaWorld Communications are engaged in disputes
which, if resolved unfavorably, could impose costs on Infoway or have other
undesirable effects.

Infoway's subsidiary IndiaWorld Communications is involved in pending litigation
relating to the IndiaWorld trademark in Federal Court in San Diego, California
with a third party located in the United States. IndiaWorld Communications
commenced the lawsuit alleging, among other things, that the third party
fraudulently registered and used the IndiaWorld trademark, and committed
copyright infringement and misappropriation of content of IndiaWorld
Communications' website. The third party filed a counterclaim against Infoway
and IndiaWorld Communications alleging, among other things, that the activities
of IndiaWorld Communications infringe a United States trademark for the term
"IndiaWorld" and associated logos and trade dress purportedly owned by this
third party and that the third party has an ownership interest in the underlying
assets of IndiaWorld Communications. On August 9, 2001, the Court granted
Infoway's motion to dismiss Infoway from this case because the Court found that
it did not have personal jurisdiction over Infoway. IndiaWorld Communications is
till involved in the case. Infoway have been advised by the prior owners of
IndiaWorld Communications that no infringement or misappropriation has taken
place. Infoway's contract with the prior owners of IndiaWorld Communications
includes an indemnity for past infringement or misappropriation. Infoway and
IndiaWorld Communications have also been contacted by a party that alleges,
among other things, that he is entitled to an equity ownership in IndiaWorld
Communications. Infoway believes that this claim is also covered by the
contractual indemnity provided by the prior owners of IndiaWorld Communications.
Nonetheless, any dispute such as those described above creates uncertainty as to
the possible outcome, including whether or not Infoway's indemnity will be
effective in protecting Infoway, and also could divert management time and
attention away from Infoway's business. An adverse outcome that is not
indemnified could be material.

If there is an adverse outcome in the class action litigation that has been
filed against Infoway, its business may be harmed.

On November 5, 2001, a securities class action lawsuit was filed in the United
States District Court for the Southern District of New York on behalf of all
persons who acquired Infoway's ADSs between October 20, 1999 and December 6,
2000. Infoway, certain of the executive officers of Infoway, and certain
underwriters involved in Infoway's initial public offering are named as
defendants in the complaint. This complaint alleges that certain of the
underwriters of Infoway's initial public offering violated the federal
securities laws by failing to disclose that they had solicited and received
undisclosed commissions from, and entered into undisclosed arrangements with,
certain investors who purchased ADSs in Infoway's initial public offering, and
had entered into undisclosed arrangements with certain investors whereby the
underwriters allocated ADSs in the initial public offering to those investors in
exchange for their agreement to purchase ADSs in the after-market at pre-
determined prices. The complaint also alleges that the defendants violated the
federal securities laws by issuing a registration statement in connection with
the initial public offering that contained material misstatements and/or
omissions because it did not disclose that these allegedly undisclosed
arrangements had occurred. The complaint seeks damages on behalf of all those
who purchased or otherwise acquired Infoway's ADSs during the period covered by
the complaint. The deadline for defendants to respond to the complaint has not
yet expired. Infoway believes it has meritorious defenses and intends to defend
this action vigorously. However, Infoway could be forced to incur material
expenses in the litigation, and in the event there is an adverse outcome,
Infoway's business could be harmed.

The market price of our equity shares is strongly affected by Infoway's volatile
stock price.

As of April 25, 2002, we owned 12.2 million equity shares of Infoway, which
represented 52.5% of Infoway's outstanding equity shares. Since its initial
public offering of ADSs in October 1999, the trading price of Infoway's ADSs has
ranged from a low of $0.87 to a high of $113.0 per ADS. As a result, the public
stock price of Infoway's ADSs owned by our company has ranged from a low of
approximately $42.46 million to a high of approximately $5.5 billion.
Fluctuations in the price of Infoway's ADSs have had a significant impact on the
market price of our equity shares and will have a significant impact on the
market price of our ADSs. Furthermore, because Infoway is an Internet service
provider which owns points of access to international bandwidth, foreign
ownership in Infoway, which will include all of Infoway's ADSs, is limited to
74.0% under present Indian law. This limitation means that, unless

                                       9
Indian law changes, more than 74.0% of Infoway's equity shares will never be
available to trade in the United States market.

The success of Infoway's business depends on the acceptance of the Internet in
India which may be slowed or halted by high bandwidth costs and other technical
obstacles in India.

Bandwidth, the measurement of the volume of data capable of being transported in
a communications system in a given amount of time, remains very expensive in
India, especially when compared to bandwidth costs in the United States.
Bandwidth rates are commonly expressed in terms of Kbps (kilobits per second, or
thousands of bits of data per second) or Mbps (megabits per second, or millions
of bits of data per second). Although prices for bandwidth in India have
declined recently, they are high due to, among other things, capacity
constraints.

The limited installed personal computer base in India limits Infoway's pool of
potential customers and restricts the amount of revenues that Infoway's consumer
Internet access services division may generate.

The market penetration rates of personal computers and online access in India
are far lower than such rates in the United States. For example, according to
International Data Corporation, in 2000 the Indian market contained
approximately 4.4 million Internet users compared to a total population in India
of 1.0 billion, while the U.S. market contained approximately 135 million
Internet users compared to a total population in the U.S. of 275 million.
Alternate methods of obtaining access to the Internet, such as through set-top
boxes for televisions, are currently not popular in India. There can be no
assurance that the number or penetration rate of personal computers in India
will increase rapidly or at all or that alternate means of accessing the
Internet will develop and become widely available in India. While the personal
computer penetration level in India is relatively low, Infoway is addressing the
demand for public Internet access through the establishment of a retail chain of
public Internet access centers, which Infoway refers to as "cybercafes", under
the "iway" branch name. Although this service creates a larger market, it also
imposes on the operator of the cybercafe the considerable costs of providing the
consumer access to a personal computer and related hardware and software.

The high cost of accessing the Internet in India limits Infoway's pool of
potential customers and restricts the amount of revenues that Infoway's consumer
Internet access services division may generate.

Infoway's growth is limited by the cost to Indian consumers of obtaining the
hardware, software and communications links necessary to connect to the Internet
in India. If the costs required to access the Internet do not significantly
decrease, most of India's population will not be able to afford to use Infoway's
services. The failure of a significant number of additional Indian consumers to
obtain affordable access to the Internet would make it very difficult to execute
Infoway's business plan.

The success of Infoway's business depends on the acceptance and growth of
electronic commerce in India which is uncertain and, to a large extent, beyond
Infoway's control.

Many of Infoway's existing and proposed products and services are designed to
facilitate electronic commerce in India, although there is relatively little
electronic commerce currently being conducted in India. Demand and market
acceptance for these products and services by businesses and consumers,
therefore, are highly uncertain. Many Indian businesses have deferred purchasing
Internet access and deploying electronic commerce initiatives for a number of
reasons, including the existence or perception of, among other things:

     .    inconsistent quality of service;

     .    need to deal with multiple and frequently incompatible vendors;

     .    inadequate legal infrastructure relating to electronic commerce in
          India;

     .    lack of security of commercial data, such as credit card numbers; and

     .    low number of Indian companies accepting credit card numbers over the
          Internet.

If usage of the Internet in India does not increase substantially and the legal
infrastructure and network infrastructure in India are not developed further,
Infoway is not likely to realize any benefits from its investment in the
development of electronic commerce products and services.

Infoway is highly dependent on its relationships with strategic partners to
provide key products and services to its customers.

Infoway relies on its arrangements with strategic partners to provide key
network products and services to its business clients. Some of these
relationships can be terminated by its partners in some circumstances. Infoway
also relies on some of its strategic partners to provide it with access to their
customer base. Infoway is a strategic partner of UUNet Technologies in India and
provide dial-up access to UUNet Technologies roaming international clients in
India. UUNet Technologies is a unit of WorldCom, Inc., which in June 2002
announced its intention to restate its financial statements for 2001 and the
first quarter of 2002. If Infoway's relationships with its strategic partners do
not continue, the ability of Infoway's corporate network/data services division
to generate revenues will be decreased significantly. Infoway also provides
access to a co-branded version of the AOL Instant Messenger service to its
portal customers, and this proprietary service is an important feature of
Infoway's website.

                                       10
Infoway's ability to compete in the Internet service provider market is hindered
by the fact that its principal competitor was until recently a
government-controlled provider of international telecommunications services in
India which enjoys significant competitive advantages over Infoway.

Videsh Sanchar Nigam Limited (VSNL), is a provider of international
telecommunications services in India, that, until recently, was controlled by
the Government of India. In February 2002, the Government of India sold a 25%
stake in VSNL to the TATA group, reducing the Government of India's ownership of
VSNL to 26%. VSNL had approximately 587,000 subscribers as of March 31, 2002.
VSNL enjoys significant competitive advantages over Infoway , including the
following:

     .    Longer service history. VSNL started offering Internet service
          provider services from August 1995, whereas Infoway has offered
          Internet service provider services only since November 1998.

     .    Access to network infrastructure. Because VSNL was controlled by the
          Government of India, it had direct access to network infrastructure
          which was owned by the Indian government. Infoway believes that this
          access is continuing as a result of the Government of India's
          investment in VSNL.

     .    Greater financial resources. VSNL has significantly greater total
          assets and annual revenues than Infoway.

In the past, VSNL aggressively reduced consumer Internet access prices despite
the lack of offsetting reductions in prevailing bandwidth tariffs payable by
private competitors, such as Infoway. Infoway believes that these practices
constitute an improper cross-subsidy funded by VSNL's present monopoly in
international long distance telephone service. The charges for international
gateways and other services presently being provided by VSNL are the subject of
a dispute pending before the TRAI and the Telecom Disputes Settlement and
Appellate Tribunal between VSNL and private Internet service providers,
including Infoway. The Telecom Disputes Settlement and Appellate Tribunal has
remanded the matter back to the TRAI for denovo consideration. This matter is
pending before the TRAI. Unless there is a change in government policy or
favorable resolution of this dispute, or until Infoway is able to reduce our
bandwidth costs through other means, Infoway will continue to face difficult
market conditions in the consumer Internet access services business. These
competitive issues may prevent Infoway from attracting and retaining subscribers
and generating advertising revenue. This could result in loss of market share,
price reductions, reduced margins or negative cash flow for Infoway's
operations.

Infoway may be required to further modify the rates it charges for its products
and services in response to new pricing models introduced by new and existing
competition in the Internet services market which would significantly affect its
revenues.

Infoway's corporate network/data services business faces significant competition
from well-established companies, including Global E-Commerce Limited, Sprint-RPG
Limited and WIPRO-CSD. Reliance Infocom, a member of the Reliance Group, is
building a nationwide fiber optic network in India and has announced plans to
provide a range of value-added services, including corporate connectivity
services.

A significant number of competitors have entered India's liberalized Internet
service provider market, and Infoway expects additional competitors to emerge in
the near future. As of December 31, 2001, approximately 442 companies had
obtained Internet service provider licenses in India, including 79 companies
which have obtained licenses to offer Internet service provider services
throughout India. New entrants into the national Internet service provider
market in India may enjoy significant competitive advantages over Infoway ,
including greater financial resources, which could allow them to charge Internet
access fees that are lower than Infoway's in order to attract subscribers. Since
May 2000, Infoway has offered unlimited Internet access to consumers for a fixed
price. A number of Infoway's competitors, including VSNL, Dishnet and Mantra,
also offer unlimited Internet access for a fixed price. In addition, some
competitors offer free Internet service. These factors have resulted in
significant reduction in actual average selling prices for consumer ISP
services. Infoway expects the market for consumer Internet access to remain
extremely price competitive.

Infoway's online portal, www.sify.com, faces significant competition from
well-established Indian content providers, including rediff.com, which completed
its initial public offering in the United States in June 2000. Some of these
sites currently have greater traffic than Infoway's site and offer some features
that Infoway does not. Further, the dominant Internet portals continue to be the
online services and search engine companies based in the United States, such as
America Online, Yahoo!, Microsoft Network and Lycos. These companies have been
developing specially branded or co-branded products designed for audiences in
specific markets. Infoway expects that these companies will deploy

                                       11
services that are targeted at the Indian market. For example, Yahoo! launched an
Indian service in June 2000.

Increased competition may result in reduced operating margins or operating
losses, loss of market share and diminished value in Infoway's services, as well
as different pricing, service or marketing decisions. Infoway cannot assure you
that it will be able to successfully compete against current and future
competitors.

The Government of India may change its regulation of Infoway's business or the
terms of Infoway's license to provide Internet access services without its
consent, and any such change could decrease Infoway's revenues and/or increase
Infoway's costs which would adversely affect Infoway's operating results.

Infoway's business is subject to government regulation under Indian law and to
significant restrictions under Infoway's Internet service provider license
issued by the Government of India. These regulations and restrictions include
the following:

     .    Infoway's Internet service provider license has a term of 15 years,
          and was originally issued in 1998.  Infoway's Internet service
          provider license was reissued in 2002, enabling Infoway to offer
          telephony services over the Internet and increasing Infoway's maximum
          permitted level of foreign equity investment to 74%. Infoway has no
          assurance that the license will be renewed in the future. If Infoway
          is unable to renew its Internet service provider license for any
          reason, it will be unable to operate as an Internet service provider
          in India and will lose one of its primary sources of revenue.

     .    The Telecom Regulatory Authority of India, or TRAI, a statutory
          authority constituted under the Telecom Regulatory Authority of India
          Act, 1997, maintains the right to regulate the prices Infoway charges
          its subscribers. The success of Infoway's business model depends on
          its ability to price its services at levels it believes is
          appropriate. If the TRAI sets a price floor, Infoway may not be able
          to attract and retain subscribers. Likewise, if the TRAI sets a price
          ceiling, Infoway may not be able to generate sufficient revenues to
          fund its operations. Similarly, an action of the Indian Parliament may
          impact Infoway's ability to set the prices for its services.

     .    The Government of India maintains the right to take over Infoway's
          entire operations or revoke, terminate or suspend its license for
          national security and similar reasons without compensation to Infoway.
          If the Government of India were to take any of these actions, Infoway
          would be prevented from conducting all or part of its business.

Infoway may be liable to third parties for information retrieved from the
Internet.

Because users of Infoway's Internet service provider service and visitors to
Infoway's websites may distribute its content to others, third parties may sue
Infoway for defamation, negligence, copyright or trademark infringement,
personal injury or other matters. Infoway could also become liable if
confidential information is disclosed inappropriately. These types of claims
have been brought, sometimes successfully, against online services in the United
States and Europe. Others could also sue Infoway for the content and services
that are accessible from Infoway's websites through links to other websites or
through content and materials that may be posted by Infoway's users in chat
rooms or bulletin boards. Infoway does not carry insurance to protect it against
these types of claims, and there is no precedent on Internet service provider
liability under Indian law. Further, Infoway's business is based on establishing
its network as a trustworthy and dependable provider of information and
services. Allegations of impropriety, even if unfounded, could damage Infoway's
reputation, disrupt its ongoing business, distract its management and employees,
reduce its revenues and increase its expenses.

Infoway's business may not be compatible with delivery methods of Internet
access services developed in the future.

Infoway faces the risk that fundamental changes may occur in the delivery of
Internet access services. Currently, Internet services are accessed primarily by
computers and are delivered by modems using telephone lines. As the Internet
becomes accessible by cellular telephones, personal data assistants, television
set-top boxes and other consumer electronic devices, and becomes deliverable
through other means involving digital subscriber lines, coaxial cable or
wireless transmission mediums, Infoway will have to develop new technology or
modify its existing technology to accommodate these developments. Infoway's
pursuit of these technological advances, whether directly through internal
development or by third party license, may require substantial time and expense.
Infoway may be unable to adapt its Internet service business to alternate
delivery means and new technologies may not be available to Infoway at all.

Infoway may not be able to maintain its Nasdaq National Market listing.

In order to maintain the listing of its ADSs on the Nasdaq National Market,
Infoway is required to comply with the continuing listing requirements of
Nasdaq, including the $1.00 minimum bid price requirement. The price of
Infoway's ADSs on the Nasdaq National Market has recently closed below $1.00.
Infoway's equity share-to-ADS exchange ratio is currently 1-to-4, and Infoway
may be required to adjust its equity share-to-ADS ratio in order to maintain its
Nasdaq National Market listing. Even if Infoway adjusts its equity share-to-ADS
ratio, Infoway does not know whether it will be able to maintain its Nasdaq
National Market listing in the future.

                                       12
Risks Related to Investments in Indian Companies

We are incorporated in India, and a substantial portion of our assets and our
employees are located in India. Consequently, our financial performance and the
market price of our ADSs will be affected by changes in exchange rates and
controls, interest rates, government of India policies, including taxation
policies, as well as political, social and economic developments affecting
India.

Conflicts in South Asia could adversely affect the Indian economy and our
company.

South Asia has from time to time experienced instances of civil unrest and
hostilities among neighboring countries, including between India and Pakistan.
In recent years, military confrontations between India and Pakistan have
occurred in the region of Kashmir. The political and military situation between
India and Pakistan have become subject to increased tension in recent months.
Any such conflicts in South Asia are likely to adversely affect the Indian
economy and the market for securities of Indian companies, including our ADSs.

Terrorist attacks and other acts of violence or war involving the United States
could adversely affect the markets in which we operate.

Terrorist attacks, such as the attacks that occurred in New York and Washington,
D.C. on September 11, 2001, and other acts of violence or war may negatively
effect our operations. There can be no assurance that there will not be further
terrorist attacks against the United States or United States businesses, from
which the majority of our revenues are derived. These attacks or armed conflicts
may directly impact our customers. Furthermore, these attacks may make travel
and the delivery of our services more difficult and ultimately affect our sales.

Also as a result of terrorism, the United States may enter into an armed
conflict which could negatively impact our business. Since October 2001, the
U.S. and its allies have been conducting military operations against various
targets located in Afghanistan. The consequences of any of these armed conflicts
are unpredictable, and we may not be able to foresee events that could have an
adverse effect on our business or your investment.

More generally, any of these events could cause consumer confidence and spending
to decrease or result in increased volatility in the U.S. and worldwide
financial markets and economy. They also could result in economic recession in
the U.S. or abroad. Any of these occurrences could have a significant impact on
our operating results, revenues and costs and may result in the volatility of
the market price for our securities.

Political instability could seriously harm business and economic conditions in
India generally and our business in particular.

During the past decade and in particular since 1991, the government of India has
pursued policies of economic liberalization, including significantly relaxing
restrictions on the private sector. Nevertheless, the role of the Indian central
and state governments in the Indian economy as producers, consumers and
regulators has remained significant. Since 1996, the government of India has
changed five times. The current government of India, formed in October 1999, has
announced policies and taken initiatives that supported the continued economic
liberalization policies that have been pursued by the previous governments. We
cannot assure you that these liberalization policies will continue in the
future. The rate of economic liberalization could change, and specific laws and
policies affecting technology companies, foreign investment, currency exchange
rates and other matters affecting investment in our securities could change as
well. A significant change in India's economic liberalization and deregulation
policies could disrupt business and economic conditions in India generally and
our business in particular.

Economic sanctions imposed on India by the United States could restrict our
access to technology and limit our ability to operate our business.

In May 1998, the United States imposed economic sanctions against India in
response to India's testing of nuclear devices. Since then, the United States
has waived some of these sanctions after its discussions with the government of
India. These sanctions, or additional sanctions, could restrict our access to
technology that is available only in the United States and that is required to
operate our business. We cannot assure you that any of these sanctions will
continue to be waived, that additional economic sanctions of this nature will
not be imposed, or that these sanctions or any additional sanctions that are
imposed will not disrupt our business or increase our costs or adversely affect
the market for our ADSs in the United States.

                                       13
Foreign investment restrictions under Indian law may adversely impact the value
of our ADSs.

Our equity shares are traded on the Stock Exchange, Mumbai, formerly known as
the Bombay Stock Exchange, or the BSE, the National Stock Exchange and the
Hyderabad Stock Exchange and they may trade on these stock exchanges at a
discount or premium to the ADSs traded on the New York Stock Exchange in part
because of restrictions on foreign ownership of the underlying shares.

Under current Indian regulations and practice, RBI approval is required for the
sale of equity shares underlying ADSs by a non-resident of India to a resident
of India as well as for renunciation of rights to a resident of India, unless
the sale of equity shares underlying the ADSs is through a recognized stock
exchange or in connection with the offer made under the regulations regarding
takeovers.

Since exchange controls still exist in India, the RBI will approve the price at
which the equity shares are transferred based on a specified formula, and a
higher price per share may not be permitted. Holders who seek to convert the
rupee proceeds from a sale of equity shares in India into foreign currency and
repatriate that foreign currency from India will have to obtain RBI approval for
each transaction. We cannot assure you that any required approval from the RBI
or any other government agency can be obtained.

Indian law imposes restrictions that limit your ability to convert equity shares
into ADSs, which may cause our equity shares to trade at a discount or premium
to the market price of our ADSs.

Under recent amendments to Indian regulations, our depositary bank is able to
accept deposits of outstanding equity shares and issue ADRs evidencing ADSs
representing such equity shares, but only to the extent, and limited to the
number, of ADSs converted into underlying equity shares.

Currency exchange rate fluctuations may affect the value of our ADSs.

The exchange rate between the rupee and the U.S. dollar has changed
substantially in recent years and may fluctuate substantially in the future.
During the three-year period from April 1, 1999 through March 31, 2002, the
value of the rupee against the U.S. dollar declined by approximately 15.0%. In
fiscal 2001 and fiscal 2002, our U.S. dollar-denominated revenues represented
82.1% and 82.7%, respectively, of our total revenues. We expect that a majority
of our revenues will continue to be generated in U.S. dollars for the
foreseeable future and that a significant portion of our expenses, including
personnel costs as well as capital and operating expenditures, will continue to
be denominated in rupees. Consequently, our results of operations will be
adversely affected to the extent that the rupee appreciates against the U.S.
dollar. Depreciation of the rupee will result in foreign currency translation
losses in respect of foreign currency borrowings. In fiscal 2001 and fiscal
2002, our foreign currency translation losses were approximately $12.4 million
and $15.1 million, respectively. Fluctuations in the exchange rate between the
rupee and the U.S. dollar will also affect the U.S. dollar conversion by the
depositary of any cash dividends paid in rupees on the equity shares represented
by the ADSs. In addition, fluctuations in the exchange rate between the Indian
rupee and the U.S. dollar will affect the U.S. dollar equivalent of the Indian
rupee price of our equity shares on the the Stock Exchange, Mumbai, the National
Stock Exchange and the Hyderabad Stock Exchange, which we refer to collectively
as the Indian stock exchanges. As a result, these fluctuations are likely to
affect the prices of our ADSs. These fluctuations will also affect the dollar
value of the proceeds a holder would receive upon the sale in India of any
equity shares withdrawn from the depositary under the deposit agreement. We
cannot assure you that holders of ADSs will be able to convert rupee proceeds
into U.S. dollars or any other currency or with respect to the rate at which any
such conversion could occur. In addition, our market valuation could be
seriously harmed by the devaluation of the rupee if U.S. investors analyze our
value based on the U.S. dollar equivalent of our financial condition and results
of operations.

The government of India has recently taken actions to curtail or eliminate tax
benefits that we have historically benefited from.

We have historically benefited from significant tax incentives provided under
Indian tax laws. The principal applicable incentive is tax deduction for 90% of
profits derived from exporting computer software and services. As a result, the
majority of our income is not subject to Indian tax and, accordingly, our
effective tax rate is far below the Indian statutory income tax rate of 35.0%
plus an applicable surcharge.

                                       14
The Software Technology Park tax exemption scheme has been modified from April
1, 2000. All facilities registered in the program before March 31, 2000, which
include all of our existing facilities in India and registrations for 10 new
facilities which have not yet been constructed, will continue to benefit from
this program under present law. Over time, as we construct additional
facilities, however, the overall benefits of this tax program to our company
will decrease with a resulting increase in our effective tax rate. We cannot
assure you as to what action the present or future governments of India will
take regarding tax incentives for the IT industry.

It may be difficult for you to enforce any judgment obtained in the United
States against us or our affiliates.

We are incorporated under the laws of the Republic of India and many of our
directors and key managerial personnel, and some of the experts named in this
document, reside outside the United States. In addition, virtually all of our
assets and the assets of many of these persons are located outside the United
States. As a result, you may be unable to:

..    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.

We have been advised by our Indian counsel, Crawford Bayley & Co., that the
United States and India do not currently have a treaty providing for reciprocal
recognition and enforcement of judgments (other than arbitration awards) in
civil and commercial matters. Therefore, a final judgment for the payment of
money rendered by any federal or state court in the United States on civil
liability, whether or not predicated solely upon the federal securities laws of
the United States, would not be enforceable in India. However, the party in
whose favor such final judgment is rendered may bring a new suit in a competent
court in India based on a final judgment which has been obtained in the United
States. If and to the extent Indian courts were of the opinion that fairness and
good faith so required, it would, under current practice, give binding effect to
the final judgment which had been rendered in the United States unless such a
judgment contravened principles of public policy of India.

Conditions in the Indian securities market may affect the price or liquidity of
our equity shares and our ADSs.

The Indian securities markets are smaller and more volatile than securities
markets in more developed economies. The Indian stock exchanges have in the past
experienced substantial fluctuations in the prices of listed securities and the
price of our equity shares has been especially volatile. For example, in 1999,
our share price on the BSE ranged from a high of Rs.459.80 ($9.38) in December
1999 to a low of Rs.73.10 ($1.49) in January 1999. In 2000, our share price on
the BSE reached a peak of Rs.1,445.99 ($29.49) and a low of Rs.291.50 ($5.95).
In 2001, our share price on the BSE reached a peak of Rs. 429.70 ($8.76) and a
low of Rs.111.00 ($2.26). In 2002, until April 25, 2002, our share price on the
BSE reached a peak of Rs. 331.15 ($6.75) and a low of Rs. 250.45 ($5.11). On
April 25, 2002 the closing price of our shares on the BSE Rs.259.55 ($5.29). For
comparison purposes, these prices have been adjusted to give effect to our
September 1, 1999 two-for-one stock split and our August 25, 2000 five-for-one
stock split and an exchange rate of Rs. 49.03 per $1.00 as on April 24, 2002 has
been used.

The Indian stock exchanges have also experienced problems that have affected the
market price and liquidity of the securities of Indian companies. These problems
have included temporary exchange closures, the suspension of stock exchange
administration, broker defaults, settlement delays and strikes by brokers. In
addition, the governing bodies of the Indian stock exchanges have from time to
time restricted securities from trading, limited price movements and restricted
margin requirements. Further, from time to time, disputes have occurred between
listed companies and stock exchanges and other regulatory bodies, which in some
cases may have had a negative effect on market sentiment. Similar problems could
occur in the future and, if they do, they could harm the market price and
liquidity of our equity shares and our ADSs.

The laws of India may not adequately protect our intellectual property rights.

The laws of India do not protect intellectual property rights to the same extent
as laws in the United States, and the global nature of our IT services and the
Internet makes it difficult to control the ultimate destination of our products
and services. For example, Indian statutory law does not protect service marks.
The misappropriation or duplication of our intellectual property could curtail
our operations or reduce our profitability.

We rely upon a combination of non-disclosure and other contractual arrangements
and copyright, trade secret and trademark laws to protect our intellectual
property rights. Ownership of software and associated deliverables created
for customers is generally retained by or assigned to our customers, and we do
not retain an interest in such software

                                       15
and deliverables. We have applied for the registration of "Satyam" and
"VisionCompass" as trademarks in India. We currently require our technical
associates to enter into non-disclosure and assignment of rights agreements to
limit use of, access to and distribution of our proprietary information. We
cannot assure you that the steps taken by us in this regard will be adequate to
prevent misappropriation of proprietary information or that we will be able to
detect unauthorized use and take appropriate steps to enforce our intellectual
property rights.

Although we believe that our services and products do not infringe upon the
intellectual property rights of others, we cannot assure you that such a claim
will not be asserted against us in the future. Assertion of such claims against
us could result in litigation, and we cannot assure you that we would prevail in
such litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms. We
expect that the risk of infringement claims against us will increase if more of
our competitors are able to obtain patents for software products and processes.
Any such claims, regardless of their outcome, could result in substantial cost
to us and divert management's attention from our operations. In the future,
litigation may be necessary to enforce our intellectual property rights or to
determine the validity and scope of the proprietary rights of others. Any
infringement claim or litigation against us could therefore result in
substantial costs and diversion of resources.

You may be subject to Indian taxes arising out of capital gains on the sale of
the underlying equity shares.

Generally, capital gains, whether short-term or long-term, arising on the sale
of the underlying equity shares in India are subject to Indian capital gains
tax. For the purpose of computing the amount of capital gains subject to tax,
Indian law specifies that the cost of acquisition of the equity shares will be
deemed to be the share price prevailing on the BSE or the National Stock
Exchange on the date the depositary advises the custodian to redeem receipts in
exchange for underlying equity shares. The period of holding of such equity
shares, for determining whether the gain is long-term or short-term, commences
on the date of the giving of such notice by the depositary to the custodian.
Investors are advised to consult their own tax advisers and to consider
carefully the potential tax consequences of an investment in our ADSs.

There may be less company information available in Indian securities markets
than securities markets in developed countries.

There is a difference between the level of regulation and monitoring of the
Indian securities markets and the activities of investors, brokers and other
participants and that of markets in the United States and other developed
economies. The Securities and Exchange Board of India, or SEBI, is responsible
for improving disclosure and other regulatory standards for the Indian
securities markets. SEBI has issued regulations and guidelines on disclosure
requirements, insider trading and other matters. There may, however, be less
publicly available information about Indian companies than is regularly made
available by public companies in developed economies.

Risk Related to our ADSs and our Trading Market

You may be restricted in your ability to exercise preemptive rights under Indian
law and thereby may suffer future dilution of your ownership position.

Under the Companies Act, 1956 of India, or the Companies Act, a company
incorporated in India must offer its holders of equity shares preemptive rights
to subscribe and pay for a proportionate number of shares to maintain their
existing ownership percentages before the issuance of any new equity shares,
unless the preemptive rights have been waived by adopting a special resolution
by holders of three-fourths of the shares which are voted on the resolution. As
U.S. holders of ADSs represent 10.6% of our outstanding equity shares, you may
be unable to exercise preemptive rights for equity shares underlying ADSs unless
a registration statement under the Securities Act of 1933, as amended, or the
Securities Act, is effective with respect to the rights or an exemption from the
registration requirements of the Securities Act is available. Our decision to
file a registration statement will depend on the costs and potential liabilities
associated with any given registration statement as well as the perceived
benefits of enabling the holders of our ADSs to exercise their preemptive rights
and any other factors that we deem appropriate to consider at the time the
decision must be made. We may elect not to file a registration statement related
to preemptive rights otherwise available by law to you. In the case of future
issuances, the new securities may be issued to our depositary, which may sell
the securities for your benefit. The value, if any, our depositary would receive
upon the sale of such securities cannot be predicted. To the extent that you are
unable to exercise preemptive rights granted in respect of the equity shares
represented by your ADSs, your proportional interests in our company would be
reduced.

                                       16
Holders of ADSs may be restricted in their ability to exercise voting rights.

At our request, the depositary bank will mail to you any notice of shareholders'
meeting received from us together with information explaining how to instruct
the depositary bank to exercise the voting rights of the securities represented
by ADSs. If the depositary bank timely receives voting instructions from you, it
will endeavor to vote the securities represented by your ADSs in accordance with
such voting instructions. However, the ability of the depositary bank to carry
out voting instructions may be limited by practical and legal limitations and
the terms of the securities on deposit. We cannot assure you that you will
receive voting materials in time to enable you to return voting instructions to
the depositary bank in a timely manner. Securities for which no voting
instructions have been received will not be voted.

An active or liquid trading market for our ADSs is not assured.

We cannot predict the extent to which an active, liquid public trading market
for our ADSs will exist. Active, liquid trading markets generally result in
lower price volatility and more efficient execution of buy and sell orders for
investors. The lack of an active, liquid trading market could result in the loss
of market makers, media attention and analyst coverage. If there is no longer a
market for our equity shares, or if we fail to continue to meet eligibility
requirements, we may be required to delist from the New York Stock Exchange and
this may cause our stock prices to decrease significantly. In addition, if there
is a prolonged decline in the price of our equity shares, we may not be able to
issue equity securities to fund our growth, which would cause us to limit our
growth or to incur higher cost funding, such as short-term or long-term debt.
Further, if our ADS trading price falls below $5.00 per ADS, our ADSs will be
considered a penny stock and trading in our ADSs will be subject to a set of
rules adopted by the Securities and Exchange Commission that regulate
broker-dealer practices in connection with transactions in penny stocks. The
penny stock rules require broker-dealers who recommend penny stocks to persons
other than their established customers and accredited investors to make a
special written suitability determination for the purchaser, provide them with a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market, and receive
the purchaser's written agreement to the transaction before the sale. These
requirements limit the ability of broker-dealers to sell penny stocks. Also,
because of the extra requirements, many broker-dealers are unwilling to sell
penny stocks at all. As a result, if our ADSs were subject to the penny stock
rules, the market liquidity for our ADSs could be adversely affected.

Liquidity of a securities market is often a function of the volume of the
underlying shares that are publicly held by unrelated parties. Although you are
entitled to withdraw the equity shares underlying the ADSs from the depositary
at any time, there is no public market for our equity shares in the United
States.

The future sales of securities by our company or existing shareholders may harm
the price of our ADSs or our equity shares.

The market price of our ADSs or our equity shares could decline as a result of
sales of a large number of ADSs or equity shares or the perception that such
sales could occur. Such sales also might make it more difficult for us to sell
ADSs or equity securities in the future at a time and at a price that we deem
appropriate. As of April, 25, 2002, we have an aggregate of 311,391,210 equity
shares outstanding, which includes underlying equity shares of 33,350,000 for
16,675,000 ADSs. All ADSs are freely tradable, other than ADSs purchased by our
affiliates. The remaining equity shares outstanding may be sold in the United
States only pursuant to a registration statement under the Securities Act or an
exemption from the registration requirements of the Securities Act, including
Regulation S.

Forward-looking statements contained in this Annual Report may not be realized.

We have included statements in this document which contain words or phrases such
as "may," "will," "will likely result," "believe," "expect," "will continue,"
"anticipate," "estimate," "intend," "plan," "contemplate," "seek to," "future,"
"objective," "goal," "project," "should" and similar expressions or variations
of such expressions, that are "forward-looking statements." Actual results may
differ materially from those suggested by the forward-looking statements due to
risks or uncertainties associated with our expectations with respect to, but not
limited to, our ability to implement our strategy and our growth and expansion.

In addition, other factors that could cause results to differ materially from
those estimated by the forward-looking statements contained in this document
include, but are not limited to, general economic and political conditions in
India, Southeast Asia, and other countries which have an impact on our business
activities, changes in Indian and foreign laws, regulations and taxes, changes
in competition and other factors beyond our control, including the factors
described in this "Risk Factors" section. We do not intend to update any of the
forward-looking statements after the

                                       17
date of this Annual Report to conform such statements to actual results.

Item 4. INFORMATION ON THE COMPANY

History and Development

The full legal name of our company is Satyam Computer Services Limited. Satyam
was organized as a limited liability company under the laws of the Republic of
India pursuant to the provisions of the Indian Companies Act on June 24, 1987.
Our registered office is located at Mayfair Center, SP Road, Secunderabad 500
003, Andhra Pradesh, India. Our principal place of business is the Satyam
Technology Center located at Bahadurpally Village, Qutbullapur Mandal, R.R.
District 500 855, Hyderabad, Andhra Pradesh, India, telephone number (91)
40-309-7505. Our agent for service in the United States is CT Corporation
System, 111 8th Avenue, New York, New York 10011, telephone number 1 (212)
894-8940. Our operations are primarily conducted in India and majority of our
revenues are derived from the United States.

We effected a two-for-one stock split of our equity shares in September 1999 and
a five-for-one stock split of our equity shares in August 2000.

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) in the United States and elsewhere outside of India a
price of $9.71 per ADS. We received approximately $152.7 million, net of
underwriting discounts, commissions and other costs of this offering. On May 15,
2001, our ADSs were listed on the New York Stock Exchange.

Our principal capital expenditures for the fiscal years 2000, 2001 and 2002 were
comprised mainly of expansion of infrastructure facilities in India and abroad.
Our capital expenditures amounted to $22.4 million in fiscal 2000, $42.3 million
in fiscal 2001 and $30.0 million in fiscal 2002. In fiscal 2000, our capital
expenditures were incurred mainly for expansion of offshore facilities in
Hyderabad, Pune and Bangalore and for a major upgrade in the data and voice
communication network. In fiscal 2001, our capital expenditures were incurred
mainly for expansion of offshore facilities in Hyderabad, Chennai and
acquisition of land in Bangalore. In fiscal 2002, our capital expenditures were
incurred mainly for expansion of offshore facilities in acquisition/long lease
of land in Bangalore and expansion of facilities in Hyderabad and Chennai.

Business Overview

Background

We are the fourth largest provider of IT services in India, based on the amount
of export revenues generated during the fiscal year ended March 31, 2001. We
offer a comprehensive range of services, including software development, system
maintenance, packaged software integration, and engineering design services. We
use our global infrastructure to deliver value-added services to our customers
to address IT needs in specific industries and to facilitate eBusiness
initiatives. We began providing IT services to businesses in 1988 and as of
March 31, 2002 we had 7,898 technical associates servicing over 300 customers
worldwide. In addition to our core business of providing IT services, we have
also selectively invested in related businesses. We recognized the importance of
the Internet to India and, in December 1995, created Infoway, which we believe
is the largest integrated Internet and electronic commerce services company in
India, based on the number of customers as of March 31, 2002. Infoway's shares
are listed only in the United States and are quoted on the Nasdaq National
Market under the symbol "SIFY". Through our wholly owned subsidiary in the
United States, VCI, we have developed VisionCompass, a software product for use
as a management tool to assess and help improve business performance.

Our Core Business Segment--IT Services

Industry Overview

In 2000, the worldwide IT services industry grew to approximately $385.0
billion, an increase of approximately 10% over 1999, and is projected to grow at
a compound annual growth rate of 11% to reach $583.0 billion by the year 2004
according to International Data Corporation. We believe the growth of this
industry is driven by the following factors and trends:

Increased importance of IT to businesses. In today's increasingly competitive
business environment, companies have become dependent on technology not only to
conduct day-to-day operations, but also as a strategic tool to enable them

                                       18
to re-engineer business processes, restructure organizations and react quickly
to competitive, regulatory and technological changes. As systems continually
become more complex, companies increasingly turn to external IT service
providers to develop and implement new technologies and integrate them with
existing applications in which a company may have already made a considerable
investment.

Impact of the Internet and the emergence of eBusiness. Businesses are
increasingly using the Internet to interact with new and existing customers and
create new revenue opportunities. Business conducted electronically over the
Internet, or eBusiness, extends beyond Internet-based applications, such as
eCommerce websites and corporate intranets, to include packaged software tools
such as customer and supply chain management software. eBusiness initiatives are
often large and difficult to manage and must keep pace with constantly evolving
business processes and technological innovations. In addition, managing and
upgrading existing systems has also become more critical given the importance of
these systems to eBusiness initiatives. Internal IT departments often do not
have the appropriate resources or breadth of skills necessary to execute these
initiatives. As a result, companies increasingly turn to outside service
providers to design, integrate, implement and maintain their eBusiness
applications.

Emergence of a high-quality IT services industry in India. India has emerged as
a destination for companies seeking to engage IT service providers in a variety
of areas, including eBusiness and software design, development, integration and
system maintenance. India's National Association of Software and Service
Companies, or NASSCOM estimates that export revenue generated from the software
and service industry in India was approximately $ 6.2 billion in fiscal 2001 and
will reach $7.8 billion by fiscal 2002. The key factors contributing to this
rapid growth include the availability of a large pool of highly skilled,
English-speaking engineers and professionals, the ability to produce high
quality software applications, low personnel costs relative to the United States
and a time difference which permits work to be done during non-business hours in
the United States and Europe.

We believe that India ranks second only to the United States as the country with
the largest population of English-speaking technical personnel. According to
NASSCOM, engineering colleges and technical institutes in India produce
approximately 130,000 computer software professionals each year. Given the
shortage of technical labor in the United States and other developed economies,
the availability of people could be a competitive advantage for Indian IT
services companies. Also, the English speaking ability of Indian technical
engineers and professionals facilitates interaction with customers in the United
States and Europe and is a significant advantage compared to non-English
speaking countries which also offer IT services.

Indian companies have developed high-quality methodologies. A January 2002
NASSCOM survey of international quality standards of the top 300 Indian IT
services companies showed that 216 had acquired ISO 9000 or SEI or other
certifications and 58 more companies were in the process of acquiring the same.
According to NASSCOM, currently 36 Indian companies have received a level five
assessment under the Software Engineering Institute's Capability Maturity Model,
or SEI-CMM, developed by the Carnegie Mellon University. Level five is the
highest level attainable under the SEI-CMM standards, which assess an
organization's quality management system and systems engineering processes and
methodologies. The level five certification process involves periodically
subjecting our management system and systems engineering processes and
methodologies to stringent third party review and verification. Some of our
customers look to an SEI-CMM certification as a threshold indication of the
quality of our processes and methodologies.

Need for IT service providers who can provide a range of services worldwide.
Many companies today need a wide range of IT services, from high value-added
services such as the integration and implementation of eBusiness and packaged
software applications to lower-end services such as system maintenance and the
re-engineering of older applications. As a result, companies often seek a
service provider that can understand and integrate a wide spectrum of emerging
technologies with existing systems and which offers a comprehensive range of
services from software design and development to system maintenance. In
addition, as companies become global, they increasingly require IT support on a
worldwide basis. In the eBusiness environment, service providers need to have a
close relationship with customers given the complexity and time sensitive nature
of eBusiness.

We believe there is a need for full service IT service providers that have
expertise in both existing systems and new Internet-based technologies, access
to a large pool of highly-skilled technical personnel and the ability to
cost-effectively service customers on a worldwide basis.

Our Business

We believe the following aspects of our business help us to address the
challenges faced by our customers in the current IT environment:

                                       19
Comprehensive range of services. We provide our customers the ability to meet
all of their IT needs from one service provider. Our understanding of both
existing systems and new Internet technologies allows us to assist our customers
in the management and maintenance of established systems and the development and
integration of new technologies such as Internet-based customer or supply chain
management software applications. We also help them understand their IT needs
and work with them to develop an appropriate strategy to address these needs.

Global delivery model. We provide our services through our offshore centers
located in India, our seven offsite centers located in the United States, United
Kingdom, Japan and Singapore and onsite teams operating on our customers'
premises. Through this global network, we can provide a flexible delivery mix
that is tailored to meet our customers' specific needs. In addition, our global
network of centers allows us to service our customers on a 24-hour basis and
thereby shorten the time required to complete projects. Our onsite teams and
offsite centers allow us to respond quickly to customer requests, to interact
closely with the customer to develop IT services where the customers'
specifications are not clearly defined and to market services tailored to meet
the needs of specific geographic markets.

Focus on eBusiness. Our eBusiness services include designing, developing,
integrating and maintaining Internet-based applications, such as eCommerce
websites, and implementing and integrating packaged software applications, such
as customer or supply chain management software applications. We also assist our
customers in making their existing computing systems accessible over the
Internet.

In-depth industry knowledge. We have developed significant industry expertise in
insurance, financial services, manufacturing and telecommunications. This allows
us to better understand and address the IT needs of customers within a
particular industry. Our technical associates include experienced project
managers and software engineers with substantial experience in providing IT
services to a particular industry. We have also hired business specialists who
possess the industry knowledge our company needs to better understand the
requirements of our customers in these sectors and assist our software engineers
in proactively designing IT services. We believe our customers benefit from our
ability to design and develop applications and services tailored to address
industry-specific needs.

Adherence to high quality standards. We have a large pool of highly trained
technical associates that allows us to provide high quality services tailored to
meet our customers' needs. As of March 31, 2002, 61.0% of our technical
associates had bachelors degrees in engineering, and 39.0% had masters degrees
in engineering, technology or computer applications and bachelors degrees in
Science and others. Each new technical associate must participate in a three to
six-month software engineering training program and all technical associates are
expected to undertake between 40 and 80 hours per year of development training.
In addition, we have implemented strict quality control programs which form an
integral part of our project management methodology to ensure we provide high
quality services to our customers. We have a company-wide quality management
system which satisfies the ISO 9001 TickIT and received a level five assessment
under the SEI-CMM standards. According to NASSCOM, only 58 companies worldwide
have been assessed at level five. Among other things, our system involves a
rigorous review of software development processes, testing of all work,
measurement and analysis of key quality metrics and regular internal quality
audits. Our adherence to this system ensures that our customers receive timely
delivery of consistent and high-quality services.

Our Growth Strategy

Our main goal is to be a leading worldwide provider of comprehensive IT
services. We intend to accomplish our goal by:

Continuing to focus on eBusiness and high-value added services. To better
service our customers in all key industry segments, we intend to continue to
focus on and expand our eBusiness offerings and our other high-value added
services, such as packaged software integration and engineering design services.
To continue to differentiate our services and achieve recognition as a leading
worldwide provider of comprehensive IT services, we intend to broaden our range
of Internet-based applications as new technologies become available.

Leveraging our existing customer base. Our goal is to build long-term stable
business relationships with our customers to generate consistent revenues. With
our existing customers, we plan to continue to expand the scope and range of the
services we provide by extending our capabilities into new and emerging
technologies and by understanding our customers' businesses. For example, some
of our customers who initially engaged us for Year 2000 conversion projects
subsequently retained us to provide other IT services. In fiscal 2001 and fiscal
2002, we generated 80.7% and 82.7%, respectively, of our IT services revenues
(excluding inter-segment revenues) from customers who were

                                       20
customers in the prior year. To further strengthen our relationships and broaden
the scope and range of the services we provide to existing customers, our senior
corporate executives have specific relationship management responsibilities for
our largest customers.

Expanding our presence in existing markets and penetrating new geographic
markets. We plan to expand our presence in our existing markets and to establish
a presence in new geographic markets throughout Europe and the Asia-Pacific
region. We intend to accomplish this by leveraging our existing global customer
base to serve them in other geographic locations. We expect to open additional
sales and marketing offices in Europe and the Asia-Pacific region and to
establish new offsite centers in other major markets to help us gain better
access to new customers. We also plan to continue to hire local employees to
staff and manage our offsite centers. We believe that the use of locally hired
technical associates and managers working from offsite centers will enable us to
increase our share of the local market and compete more effectively with local
IT service providers.

Continuing to enhance our specific industry expertise. We aim to have an
in-depth understanding of targeted industries in order to identify customer
needs in those industries and be able to proactively design and offer tailored
IT services to address those needs. By focusing on targeted industries, we
believe we can develop services that are reusable within an industry and thereby
lower our cost of delivering those services. We intend to enhance our health
care, government and retail IT services capabilities by hiring additional
specialists with expertise in these industries. We have also organized our
company by line of business, with each operating unit serving customers in a
particular industry. We believe that our decentralized structure enhances our
focus on our targeted industries which should further increase our level of
expertise.

Attracting and retaining quality technical associates and augmenting their
training. To attract, retain and motivate our technical associates, we plan to
continue to provide an environment that rewards entrepreneurial initiative and
performance, including competitive salaries and benefits as well as incentives
in the form of cash bonuses and stock options. We also intend to continue to
devote significant resources to training our technical associates through our
Satyam Learning Center in a variety of software languages and computer
platforms. We have also established the Satyam Technology Entrepreneurship
Program, known as STEP, through which we provide an opportunity for technical
associates with ideas to act as real entrepreneurs by forming joint ventures
with our company to develop and market their ideas, with access to our company's
resources, people, infrastructure and systems. These joint ventures are run by
the participating associate as virtual companies, and the participating
associate receives a fixed percentage of the equity of the joint venture,
creating a sharing of the wealth between the individual associate and our
company.

Enhancing our capabilities through joint ventures, technology alliances and
acquisitions. We plan to continue to broaden our network of joint ventures and
technology alliances with technology providers, customers, and IT service
providers, particularly in markets in which we are not currently involved. We
enter into these joint ventures and alliances to acquire expertise in high-end
software products and emerging technologies, to add qualified personnel, to gain
access to additional customers to invest in companies which service niche
markets. We will also consider acquiring companies to gain ownership of specific
technologies and to exploit other synergies with our existing business. While we
currently have not identified any specific candidates, we regularly engage in
discussions and negotiations relating to potential investment, joint ventures,
technology alliances and acquisitions in the ordinary course of our business.

IT Service Offerings

We offer a comprehensive range of IT services based on existing and emerging
technologies that are tailored to meet the specific needs of our customers. Our
IT services include:

Software development. We design, develop and install software for a variety of
IT systems. Our applications range from single-platform, single-site systems to
multi-platform, multiple-site systems. A project may involve the development of
new applications or new functions for existing software applications. Each
development project typically involves all aspects of the software development
process, including definition, prototyping, design, pilots, programming,
testing, installation and maintenance.

System maintenance. We provide maintenance services for large software systems,
which may include modifications and enhancements to the system and product
support. We also assist customers in migrating to new technologies while
extending the useful life of existing systems. Projects may involve
re-engineering software to migrate applications from mainframe to client/server
architectures or to migrate from existing operating systems to UNIX or Windows
NT. For companies with extensive proprietary software applications, implementing
such technologies may require rewriting and testing millions of lines of
software code. We perform most of the maintenance work at our offshore
facilities using satellite links to our customer's system. In addition, we
maintain a small team on the customer's

                                       21
premises to coordinate support functions.

Packaged software integration. We work with providers of packaged software in
the areas of enterprise resource planning, customer relationship management and
supply chain management to install and integrate these packages with our
customers' existing computer systems and with various Internet applications as
required to address the eBusiness needs of our customers. These packaged
software applications help enable companies to strengthen relationships with
their customers and business partners, create new revenue opportunities, enhance
operating efficiencies and improve communications. We also customize this
software to meet the specific needs of our customers and provide ongoing
maintenance and support services. We have established alliances with providers
of enterprise resource planning systems, such as Oracle and SAP. We have also
established alliances with other companies who supply customer relationship or
supply chain management systems and eBusiness applications for building on-line
businesses. In addition, we offer our customers applications in the areas of
business and customer intelligence, data-mining and data-warehousing to enable
them to analyze trends.

Engineering design services. We provide engineering design services using
computer aided design, modeling and engineering tools. Our engineering design
services include component design, product and process analysis, and simulations
and range from basic drawing changes to complex designs. In addition, our
services may involve customizing the latest computer aided design, modeling and
engineering software to specific user requirements.

eBusiness. As part of our service offerings, we focus on solving the eBusiness
needs of our customers. Our eBusiness services include designing, developing and
maintaining Internet-based applications, such as eCommerce websites, and
integrating them with our customers' existing computer systems and packaged
software applications. For example, we have designed, developed and deployed
business-to-business applications for Intercontinental Steel Singapore to
facilitate on-line trading of steel and for Ford Motor Company to enable dealer
integration and on-line procurement. We have also created business-to-consumer
applications to facilitate remote banking kiosks that offer automatic teller
transactions over the Internet, on-line auctions and on-line retail sales. We
also help our customers assess their eBusiness needs, develop strategies and
formulate implementation plans. Revenues derived from eBusiness services
comprised 20.6%, 27.4% and 14.2% of our IT services revenues (excluding
inter-segment revenues) in fiscal 2000, fiscal 2001 and fiscal 2002.

Delivery of IT Services

We offer our customers flexible delivery alternatives through our offshore
centers located in India, through offsite centers which we have established in
our major markets and through onsite teams operating at the customers' premises.

Offshore centers. We typically assign a team of technical associates to visit a
customer's premises and determine the scope and requirements of a particular
project. Some members of the initial team remain onsite to facilitate direct
liaison with the customer, while others return to India to establish and
supervise a larger project team of suitably qualified technical associates to
implement the project. Typically 20% of a project team will be on site depending
on the nature and complexity of the project. Projects completed in our offshore
centers in India contributed 60.9% and 47.8% to our IT services revenues in
fiscal 2001 and fiscal 2002, respectively.

We have also entered into arrangements with several customers where an entire
project team is assigned to a single customer. Such teams, called dedicated
offshore centers, work from our facilities in India and are staffed and managed
by us. Once the project priorities are established by the customer, we, in
conjunction with the customer's IT department, manage the execution of the
project. When needed, our dedicated offshore centers will have equipment
specific to the customer, or will have a separate work area with its own
security protocols. The customer agrees to a regular periodic billing amount
regardless of the work performed. We have an established dedicated offshore
centers for, among others, General Electric Appliances Products LLP, and Ford
Motor Company.

Offsite centers. We believe that a key success factor in meeting our customers'
needs is our physical presence near the customer. Accordingly, we have expanded
and improved the offshore development model by establishing offsite centers in
our major markets. In the United States, we currently operate four offsite
centers located in Atlanta, Georgia; Chicago, Illinois; Parsippany, New Jersey;
and Santa Clara, California. Outside of the United States, we have five offsite
centers located in Tokyo, Japan; Basingstoke, U.K.; Singapore; Sydney,
Australia; and Dubai, Middle East. We believe our offsite centers allow us to
respond quickly to customer requests, to interact closely with the customer to
develop IT services where the customer's specifications are not clearly defined
and to market services tailored to meet the needs of specific geographic
markets. In addition, we staff our offsite centers with locally-hired managers,
marketers and technical associates which we believe enables us to compete more
effectively with local IT service providers. Projects completed at our offsite
centers contributed 4.8% of our IT services revenues in fiscal 2001

                                       22
and 5.8% in fiscal 2002.

Onsite teams. Some customers require the presence of our project teams at their
premises, particularly for mission critical or high-end projects. The customer's
team and our project team collaborate to develop IT services that meet the
customer's specifications. Projects completed by our onsite teams contributed
34.4% of our IT services revenues in fiscal 2001- and 46.4%% in fiscal 2002.

As of March 31, 2002, 1,894 of our technical associates worked in our customers'
premises and offsite centers compared to 1,374 as of March 31, 2001.

Quality and project management. Our well established quality management system
which is critical to the success of our delivery model, now reaches out to all
our associates, onsite / offsite/offshore, through WEB Qualify (Quality
Information For You), the online Quality management system.

With the launch of the revised ISO 9000 standards early last year, we lost no
time in adhering to the ISO 9001:2000 standards and were one of the first few
companies to be certified. Our quality management system has further evolved
with focused initiatives like Business Unit Quality Goals and Project Risk
Reporting, which have helped benchmark our goals in product / service quality
and manage project risks.

Process automation tools to enhance productivity were launched this year :
QUANTIFY and WEBAuditor have been effectively deployed. QUANTIFY automates the
project data management & software development process. WEBAuditor automates the
Internal Quality Audits process. We now conduct all project audits using
WEBAuditor.

After September 11th, maintaining a high level of customer confidence has
required in-depth information security measures and comprehensive business
continuity planning. Our proactive efforts in this direction through the
Information Security Management System (ISMS) initiative has led to the
successful certification of Hyderabad units to BS 7799 standards. BS 7799
certification has given us an internationally recognized structured methodology
to evaluate, implement, maintain and manage information security.

With the business continuity initiative, we are fully committed and equipped to
provide a strong and stable environment for servicing client requirements. The
initiative is intended to minimize delays and speed up resumption of critical
services to customers in the event of any disaster.

We have won the prestigious "IMC Bajaj National Quality Trophy" for the year
2001. This award, which was instituted in 1997 by the Indian Merchants Chamber,
is similar to the renowned "Malcolm Baldrige National Quality Award" for US
Companies. The award recognizes Indian companies for business excellence and
achievement. We were assessed on our strengths in understanding and deploying
the requirements for business excellence as well as performance results.

Customers

We market our services primarily to companies in the United States, Europe, the
Middle East and the Asia-Pacific region. Our strategy is to seek new customers
and at the same time secure additional engagements from existing customers by
providing high quality services and by being responsive to customer needs. The
strength of our relationships has resulted in significant recurring revenue from
existing customers. We generated $120.4 million, $224.1 million and $312.5
million in IT services revenues in fiscal 2000, fiscal 2001 and fiscal 2002,
respectively, from customers who were customers in the prior fiscal year. We
also derive a significant proportion of our IT services revenues from a limited
number of customers. In fiscal 2000, fiscal 2001 and fiscal 2002, our largest
customer, General Electric Company and its affiliates, accounted for 15.7%,
18.0% and 20.1%, respectively, of our IT services revenues (excluding
inter-segment revenues) and 14.2%, 15.8% and 18.3%, respectively, of our total
revenues. During the same periods, our second largest customer, State Farm
Mutual Automotive Insurance Company, accounted for 13.1%, 9.3% and 7.6%,
respectively, of our IT services revenues (excluding inter-segment revenues) and
11.9%, 8.1% and 6.9%, respectively, of our total revenues. In fiscal 2000,
fiscal 2001 and fiscal 2002, our five largest customers accounted for 42.4%,
39.1% and 42.2%, respectively, of our IT services revenues (excluding
inter-segment revenues) and 38.4%, 34.2% and 38.4%, respectively, of our total
revenues.

Sales and Marketing

We sell and market our services through 14 main sales and marketing offices
spread across the globe. In the United States, we have 5 sales and marketing
offices located in Atlanta, Chicago, Parsippany, Santa Clara, and Vienna. We

                                       23
also have sales and marketing offices in Basingstoke, Sydney, Singapore, Dubai,
Tokyo and Shanghai and a network of business representatives, who work with
Satyam in several countries. Our Global Sales and Marketing Group, based in the
United States, coordinates all of our marketing and sales operations. We focus
on establishing and maintaining long-term relationships with our customers.

Our sales and marketing operations are divided into three sub-groups. One group
consists of sales associates who work solely on acquiring new customers. Another
group consists of account managers who market further services to existing
customers. The third group manages our many marketing alliances. As of March 31,
2002, we employed 90 sales and 13 marketing associates globally.

Joint Ventures and Alliances

We have in the past entered into, and plan to continue to enter into, joint
ventures and alliances with technology providers, customers, and IT service
providers, particularly in markets in which we are not currently involved. We
enter into these joint ventures and alliances to gain access to additional
customers, to acquire expertise in high-end software products and emerging
technologies, to add qualified personnel and to make investments in companies
engaged in providing services to niche markets. We believe our two most
significant joint ventures are:

GE Affiliate: In December 1998, we entered into a joint venture with an
affiliate of GE Industrial Systems. The joint venture company provides the GE
affiliate with engineering design services, software development and system
maintenance services. We believe this joint venture is significant because it
has helped us to strengthen our relationship with one of our largest customers,
General Electric Company and its affiliates.

TRW Inc.: In September 2000, we entered into an agreement with TRW Inc. to form
a non-exclusive joint venture to provide TRW and other global companies with
software development, system maintenance and engineering design services.
Through a company incorporated in Delaware to operate the joint venture, Satyam
Manufacturing Technology, Inc., we own a 76.0% equity interest in the joint
venture and TRW owns a 24.0% interest. We manage this joint venture, which is
largely focused on the automotive sector worldwide. TRW has targeted to
outsource to the joint venture at least $200 million of revenues from
information systems and engineering work through December 31, 2005. As part of
the joint venture arrangement with TRW, in August 2000 we issued to ESL Inc., an
affiliate of TRW, warrants to purchase 319,480 of our equity shares in exchange
for a payment of Rs.22.9 million (approximately $0.5 million). These warrants
were expired unexercised on February 21, 2002.

For additional information regarding the joint venture with TRW Inc. and the
warrants issued to ESL Inc., please see

"Item 5. Operating and Financial Review and Prospects--Overview--Joint Venture
with TRW Inc.".

Competition

The IT services industry is highly competitive and served by numerous national,
regional and local firms, all of which are either existing or potential
competitors of our company. Our primary India-based competitors include Infosys
Technologies Limited, Wipro Infotech Software & Services and Tata Consultancy
Services. Our primary U.S.-based competitors include Computer Sciences
Corporation, Electronic Data Systems, Accenture, Cambridge Technology Partners
and Keane Inc. Generally, our competitors include participants from a variety of
market segments, including major international accounting firms, systems
consulting and implementation firms, applications software firms, service groups
of computer equipment companies, general management consulting firms,
programming companies and temporary staffing firms. Many of these competitors
have substantially greater financial, technical and marketing resources and
greater name recognition than us. We believe that the principal competitive
factors in the IT services industry include the range of services offered,
technical expertise, responsiveness to customer needs, speed in delivering IT
services, quality of service and perceived value. We believe that we compete
favorably with respect to these factors. There are relatively few barriers to
entry into our markets such that we may face additional competition from new
entrants into our markets. In addition, there is a risk our customers may elect
to increase their internal IT resources to satisfy their IT services needs.

Communications Infrastructure

A key component of our IT services delivery model is the linking of a customer's
onsite system with our offsite and offshore centers through a privately owned
Frame Relay Network consisting of satellite and fiber communications links. Our
data and voice network, SatyamNet, connects our facilities worldwide through a
high speed network with a backbone of satellite, fiber optic and land lines.
Video Conferencing is used on the same network to improve customer

                                       24
interaction. SatyamNet allows projects to progress and software applications to
be installed without the need for extensive attendance at the customer's
premises. Similarly, day-to-day maintenance of a customer's system can be
carried out largely from one or more offsite or offshore centers with only a few
maintenance professionals required to be stationed at the customer's premises.
We lease dedicated telecommunication lines from VSNL and Software Technology
Park of India which permit data communication between our facilities in India
and between such facilities and our customers' facilities abroad. All of our
Indian satellite and fiber links terminate at our communication hubs in Vienna,
Virginia and Parsippany, New Jersey. From the Vienna and Parsippany
communication hubs, we connect our offshore centers in India to our offsite
centers in the United States through high speed networks and to customers'
systems through leased lines, the Internet, the customer's own network or a
network operated by third parties. These two locations act as back-up
telecommunications centers for each other to help ensure that the connectivity
to our customer premises is always available.

In December 2001, we completed a major upgrade of SatyamNet to enhance and
optimize network efficiency across all operating locations. This upgrade has
enhanced our aggregate links capacity by more than 100.0% in different
bandwidths, which cater to the networking requirements of approximately 7,000
workstations across various geographic locations. We currently lease two 2Mbps
Fiber Optic links from Hyderabad and Chennai and three 512Kbps international
links ( one fiber and the other two satellite ) and one 64 kbps international
satellite link. The aggregate BW is 5.6Mbps and consists of both fiber and
satellite links to take care of media redundancy. In addition, we have 512kbps
committed information rate high speed links connecting various cities in India
and plan to upgrade this to 1Mbps in a few months. Our intra-city links are
connected by 2048 kbps lines expandable up to 8192 kbps. We can add or reduce
the number of such links based on capacity needs. We are now connected with UK
by a 256K dedicated leased circuit and also connected to Australia and Singapore
by a 128K link framed leased circuit from our US office hubs. We have also added
redundant Internet Mail and Name Resolution servers in our US offices as a part
of building Disaster Recovery infrastructure.

During business hours, the average loading of SatyamNet is currently
approximately 40% of total capacity, with sudden bursts in usage reaching
approximately 50%. Our network has extra capacity available to service new
customers in the immediate future and to permit sudden bursts of data transfer
and other contingent uses. The Network utilization is monitored using a
centralized management software, and the utilization reports are shared with
senior associates on a weekly basis. When the utilization reaches 60%, the
process for enhanced BW is activated.

We have not experienced any significant downtime in our communications network
during the last 12 months. To help minimize the likelihood of downtime in our
voice and data communications network, we have built redundancy and alternative
pathways into our network. For example, most of our communications take place
over international links. Each office that has its own international link also
has a inter-city link to another nearby office, which provides an alternative
pathway for international communications if the office's own international link
breaks down. We have also provided ISDN links as a back-up for the intra-city
links. We also stock spare parts for our network equipment so we can quickly
repair equipment breakdowns.

The terms of our customer contracts often impose particular confidentiality and
security standards. We have independently established a system of security
measures to protect our computer systems from security breaches and computer
viruses that may attempt to gain access to our communications network. We
maintain a firewall at the entry point of the network which checks incoming data
for viruses and unauthorized access before they are transmitted on SatyamNet.
All traffic received at our facilities in India is again checked for viruses,
with contaminated files quarantined. We have arrangements with two virus
protection vendors for the automatic identification of viruses and the dispatch
or development of appropriate software countermeasures. We backup our data on a
regular basis to protect against losses. We have also created a secondary site
in New Jersey for contingency and disaster recovery purposes. We have been
recommended for BS7799 / ISO 17799 certification by Ministry of Information
Technology, Government of India, which is accredited by RVA, Netherland - in
recognition of Satyam's high standards of network security and business
continuity practices.

Facilities

Our corporate headquarters, the Satyam Technology Center, is located in
Hyderabad, India. We own this facility, which provides a modern workspace for
approximately 1400 software engineers in two buildings covering an aggregate
area of approximately 209,300 square foot, which are linked to our other
facilities through our SatyamNet. The Satyam Technology Center also has
recreational facilities and housing for up to 400 associates and covers an
approximately 153,000 square foot area.

We also have additional software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad and

                                       25
Pune, with facilities aggregating approximately 720,000 square foot. We own the
facilities in Bhubaneshwar and lease our other facilities with terms ranging
from six years to nine years. Each facility is equipped with computers, servers,
telecommunications lines and back-up electricity generation facilities
sufficient to ensure an uninterrupted power supply.

In addition to the offshore centers in India, we operate offsite centers in
major markets to establish a local presence closer to our customers. Our four
offsite centers currently operating in the United States are located in Atlanta,
Georgia; Chicago, Illinois; Parsippany, New Jersey and Santa Clara, California.
Outside the United States, we operate three offsite centers in Tokyo, Japan,
Basingstoke, United Kingdom and Singapore. We lease all of our offsite centers
with terms ranging from two years to seven years.

We have plans to construct new facilities on our own land in Bangalore, Pune and
Hyderabad and in other locations in India with overall plans to increase
associate capacity in fiscal 2003. We also have plans to construct our
facilities in existing as well as in new offsite centers. The expansion of
facilities will improve our ability to meet growing business demand. These
proposed expansion of facilities primarily include construction of new
facilities and addition of equipment in our own land in Bangalore, Pune and
Hyderabad; and expansion of facilities in premises in Chennai. The investment in
these expansions is estimated to be around $40 million and would be financed
through proceeds of our ADS offering in May 2001 and cash generated from
operations.

Other Business Segments-Internet Services

Business Overview

As of April 25, 2002, we owned 52.5% of the equity shares of Infoway. We believe
Infoway is the largest integrated Internet, network and electronic commerce
services company in India, offering end-to-end solutions with a comprehensive
range of products delivered over a common Internet backbone infrastructure.
Infoway's primary businesses include the following:

     . corporate network/data services;

     . consumer Internet access services; and

     . online portal and content offerings.

Infoway's comprehensive range of products and services enables its business and
consumer customers to communicate, transmit and share information, access online
content and conduct business remotely using Infoway's private data network or
the Internet.

Infoway began providing corporate network/data services to businesses in April
1998, and as of March 31, 2002 Infoway had more than 650 corporate customers.
Infoway launched its Internet service provider business in November 1998,
becoming the first private Internet service provider to begin service after the
Indian government, opened the market to private competition. Infoway currently
has more than 600,000 subscribers for its SatyamOnline services. Infoway also
operates an online portal, www.sify.com, and related content sites specifically
tailored for Indian interests worldwide. Sify.com is one of India's leading
portals with services in areas such as news, travel, finance, health and
shopping in addition to e-mail, chat and search.

Infoway currently operates a large national private data network in India. Our
network utilizes Internet protocol, which is an Internet industry standard for
tracking Internet addresses, routing outgoing messages and recognizing incoming
messages. As of March 31, 2002, Infoway owned and operated 53 points of presence
serving more than 250 cities across India, representing an estimated 90% of the
installed personal computer base in India. Points of presence are
telecommunications facilities located in a particular market which allow
Infoway's customers to connect to the Internet through a local telephone call.
Infoway operate international Internet gateways in Ahmedabad, Bangalore, Bhopal,
Kolkata (Calcutta), Chennai (Madras), Cochin, Chandigarh, Delhi, Hyderabad,
Lucknow, Mumbai (Bombay) and Pune.

Infoway is seeking to become the premier integrated Internet, network and
electronic commerce solutions provider to businesses and consumers in India. We
believe that demand for Infoway's services is significant in India and growing
rapidly as businesses and consumers seek alternatives to the communications
services offered by India's government-controlled telecom providers.

                                       26
Industry Overview

Development of the Internet. According to an International Data Corporation, the
total number of Internet users worldwide is expected to grow at a compound
annual growth rate of more than 27% from approximately 196 million in 1999 to
502 million in 2003. We believe that the large and increasing number of home and
office computers linked to the Internet, advances in network design, increased
availability of Internet-based software and applications, the emergence of
useful content and electronic commerce technologies, and convenient, fast and
inexpensive Internet access will continue to drive Internet growth and usage in
the near future.

Special Communications Needs of Businesses. As the Internet becomes more
developed and reliable, businesses are increasingly utilizing the Internet for
functions critical to their core business strategies such as sales and
marketing, customer service and project coordination. The Internet presents a
compelling profit opportunity for businesses by enabling them to reduce
operating costs, access valuable information and reach new markets. To maintain
a significant presence on the Internet, businesses typically purchase Internet
access services and establish a website. Internet access provides a company with
its basic gateway to the Internet, allowing it to transfer e-mail, access
information and connect with employees, customers and suppliers. A website
provides a company with a tangible identity and an interactive presence on the
Internet. Many corporations are also converting their information systems and
databases to web-enabled systems. According to International Data Corporation,
worldwide e-commerce spending grew 68% between 2000 and 2001 reaching more than
$600 billion. International Data Corporation has forecast that the e-commerce
spending will pass the $ 1.0 trillion mark in 2002.

The Opportunity in India. As with many developing nations, the
telecommunications infrastructure in India had until recently, been controlled
by government-controlled telecom providers. The resulting service has been and
remains inferior to service in developed countries. At the same time, however,
the Indian economy continues to modernize and expand, particularly in sectors
such as software development that are dependent on a reliable communications
network. The growth of these industries is leading to an increasing base of
personal computers and wired homes and businesses in India with a resulting
increased demand for Internet services. We believe these trends, which mirror
trends in more mature economies, will continue to develop in India.

The ability to exploit the Internet service provider and other data service
markets in India is currently inhibited by bandwidth limitations imposed by cost
and technical obstacles. Bandwidth refers to the measurement of the volume of
data capable of being transported in a communications system in a given amount
of time. Bandwidth rates are commonly expressed in terms of Kbps (kilobits per
second, or thousands of bits of data per second) or Mbps (megabits, or millions
of bits of data per second). Generally, bandwidth remains very expensive in
India. Prices for bandwidth are set by two agencies in India, the Department of
Telecommunications, or DOT, and the TRAI and have remained high due to, among
other things, capacity constraints.

To date, a significant amount of the usage of Indian content sites on the World
Wide Web has been driven by Internet users outside of India. We expect the
growth in personal computers and Internet users to increase the demand for
Internet content directed towards domestic Indian consumers as well as the
amount of electronic commerce in India. Set forth below is a table summarizing
International Data Corporation's projections for Internet use and electronic
commerce revenue in India:
Annualized
                                                                   2000             2005           Growth
                                                             -----------------  -------------   ------------
(in millions, except annualized growth)
Indian Internet users ....................................         4.4              37.6            53%
Indian installed personal and network computer base ......         4.2              33.0            51%
Indian Internet commerce revenues ........................        $393           $27,000           134%
Private market participants historically have not been able to exploit the
market opportunities in India because the regulatory environment in India
largely prevented any competition with the national government-controlled
telecom providers. Until November 1998, the only Internet service provider
permitted in India was VSNL, till recently, a government sponsored and
majority-owned entity, which at that time had approximately 150,000 subscribers.
VSNL began providing Internet access on August 15, 1995. As of March 31, 2002
VSNL had approximately 587,000 subscribers. On November 6, 1998, the government
opened the Indian Internet service provider market to private competition and
granted Internet service provider licenses. The licensees include cable
television operators and joint ventures between local companies and large
international telecom providers. Internet service provider licenses are

                                       27
granted for 15 years, with only nominal license fees. Currently, pricing of
Internet service provider services is not regulated by the Government of India,
although it has the power to elect to do so through policy directives. The
prices Internet service providers charge their subscribers and the
interconnection charges between service providers are regulated by the TRAI. The
charges for international gateways and other services presently being provided
by VSNL are the subject of a dispute pending before the TRAI and the Telecom
Disputes Settlement and Appellate Tribunal between VSNL and private Internet
service providers, including Infoway. VSNL has priced these services at levels
which we believe are inconsistent with the terms and conditions on which VSNL
has secured the bandwidth for its international gateways. This is a pending
matter and, as of the date of this annual report, no decision has been
announced. The Telecom Disputes Settlement and Appellate Tribunal has remanded
this matter back to the TRAI for denovo consideration. This matter is pending
before the TRAI. The resolution of this dispute could have a material impact on
Infoway's business.

Growth Strategy

Infoway's goal is to become the premier integrated Internet, network and
electronic commerce solutions provider to businesses and consumers in India.
Infoway's principal business strategies to accomplish this objective are:

     . Invest in the continued enhancement and expansion of its network
       infrastructure to support customer growth, enter new markets and
       accommodate increased customer usage;

     . Increase penetration in its existing markets by expanding awareness of
       the "SatyamOnline" brand name to capitalize on its first mover advantage
       in India;

     . Expand its products and services with new technologies to enable its
       customers to use the Internet more effectively;

     . Strengthen its Internet portal and other Internet content websites with
       more content tailored to Indian interests worldwide;

     . Expand its customer distribution channels through strategic alliances to
       take advantage of the sales and marketing capabilities of its strategic
       partners; and

     . Pursue selective strategic investments, alliances and acquisitions to
       expand its customer base, increase utilization of its network and add new
       technologies to its product mix.

Internet Service Offerings

Corporate Network/Data Services. Infoway offers a comprehensive suite of
technology products and network-based services that provide its corporate
customers with comprehensive Internet and private network access. Infoway's
products and services enable its corporate customers to offer a full range of
business-to-business and electronic commerce-related services. Infoway's
corporate network/data and e-consulting services consist of the following:

     . Premium Internet access. Infoway offers continuous high-speed Internet
       access, as well as dial-up Internet access, to businesses in India.

     . Private network services. Infoway offers a wide variety of private
       network services for both small and large corporate customers.

     . Web-based services. Infoway provides comprehensive website design,
       development, implementation and hosting services.

     . Data Center. Infoway's 20,000 square foot data center in Mumbai .
       (Bombay) has been designed to act as a reliable, secure and scalable
       facility to host mission-critical applications with the capacity to host
       4,000 servers.

 Initiatives in our corporate network and technology services business include:

..    International Gateways. Infoway has private international gateways to the
     Internet in strategic partnership with Singapore Telecommunications Ltd.,
     Cyberstar and New Skies in twelve strategic cities in India. These private

                                       28
international gateways enable Internet users to access globally available
     data faster and provide enhanced service to customers.

..    SafeScrypt Limited. In partnership with Verisign, a leading provider of
     Internet trust services, Infoway has formed a wholly-owned subsidiary,
     SafeScrypt Limited, to provide managed digital certificate-based
     authentication services in India.

Infoway's corporate network/data services division accounted for approximately
36.1%, 48.4% and 49.6% of Infoway's revenues in fiscal 2000, 2001 and 2002,
respectively. The increase in corporate network/data services division revenues
as a percentage of total revenues from fiscal 2000 to fiscal 2001 and from
fiscal 2001 to fiscal 2002 was primarily due to the growth of Infoway's
corporate customer base combined with increased competition and pricing
pressures in the consumer Internet access services division. Recent trends cause
us to believe that corporate services will continue to be the largest part of
Infoway's business for the immediate future.

Consumer Internet access services. Infoway offers dial-up Internet access,
e-mail and web page hosting to consumers in India through convenient online
registration and user-friendly software. In November 1998 after deregulation of
the Internet service provider market in India, Infoway launched its Internet
service provider business and became the first private Internet service provider
in India. As of March 31, 2002, Infoway had 600,000 consumer Internet
subscribers.

In addition, Infoway offers public Internet access to consumers through
cybercafes, which Infoway refers to as "iways." Because the personal computer
penetration rate in India is relatively low, iways are designed to provide
public Internet access to the significant portion of the Indian population that
does not own a personal computer. Infoway believes that iways will expand access
to our portal and websites to consumers who do not own a personal computer or
have Internet access at home. Iways offer a full range of Internet connectivity
services. As of March 31, 2002, we operated 680 iways in 10 cities.

Infoway is the largest national provider, of Internet access and Internet
services to consumers and businesses in India, based on the number of
subscribers as of March 31, 2002. Until recently, the largest national Internet
service provider in India was VSNL, which had been majority-owned by the Indian
government. In February 2002, the Government of India sold a 25% stake in VSNL
to the TATA group. The Government of India retained a 26% interest in VSNL.

Infoway's consumer Internet access services division accounted for approximately
57.7%, 38.3% and 32.7% of our revenues in fiscal 2000, 2001 and 2002
respectively. The decrease in consumer Internet access services division
revenues as a percentage of total revenues from fiscal 2000 to fiscal 2001 and
from fiscal 2001 to fiscal 2002 was due to the growth of our corporate customer
base combined with increased competition and pricing pressures in the consumer
Internet access services division.

Online portal and content offerings. Infoway operates an online portal,
www.sify.com, that functions as a principal entry point and gateway for
accessing the Internet by providing useful web-related services and links.
Infoway also offers related content sites specifically tailored to Indian
interests worldwide in four local Indian languages.

..    IndiaWorld Communications. Infoway completed the acquisition of IndiaWorld
     in June 2000. Prior to its acquisition by Infoway, IndiaWorld
     Communications was a leading provider of Internet content and services in
     India.

..    Online Trading in Securities. Infoway formed a joint venture with Refco
     Group Ltd. to meet the growing demand among Internet subscribers for online
     investing services in India. The joint venture will offer online equity and
     futures trading for retail customers once online trading is implemented by
     the stock exchanges in India, as well as execution and clearing services
     for financial institutions. Infoway has a 40% ownership interest in the
     joint venture.

..    Online Travel Services. Infoway entered into a tie-up with AFL Indtravels,
     the Indian affiliate of Carlson Wagonlit Inc., to offer online air travel,
     hotel and car hire services on sify.com.

..    America Online - AOL Instant Messenger. Infoway has a multi-year agreement
     with America Online to distribute a co-branded version of the AOL Instant
     Messenger service to Infoway's customers.

..    CricInfo Limited Investment. In July 2000, Infoway acquired a 25% stake in
     CricInfo Limited. CricInfo Limited operates www.cricinfo.com, which is one
     of the most popular cricket sites in the world. Infoway receives a

                                       29
portion of the revenues generated from advertising and electronic commerce
     business generated by www.cricinfo.com's India site.

..    Indiaplaza.com Acquisition. In July 2000, Infoway entered into an agreement
     to acquire all of the outstanding capital stock of IndiaPlaza.com, Inc., a
     private company incorporated in California. Infoway completed this
     acquisition in December 2000. Indiaplaza.com operates an online shopping
     mall catering to Indian interests.

In fiscal 2000, 2001 and 2002, Infoway's online portal and content offerings
division accounted for approximately 6.3%, 11.8% and 13.1% respectively, of
Infoway's total revenues.

Strategic Alliances

Infoway maintains a number of strategic relationships with key vendors of
Internet-related hardware, software and services. Some of these relationships
are exclusive to Infoway in India, subject in some cases to minimum sales
thresholds. These relationships result in two significant benefits. First, they
provide Infoway with the ability to offer valuable products and services to
Infoway's customers in India. In addition, these relationships help Infoway
market its services by providing it with access to its partners' customer bases.
Infoway's network and related services are focused on meeting the needs of
corporate customers, particularly in manufacturing and service organizations,
which have a need to coordinate their activities with satellite operations such
as dealers, distributors, agents and suppliers.

Technology and Network Infrastructure

Infoway currently operates India's largest national Internet protocol private
data network with 53 points of presence serving more than 250 cities across
India, representing an estimated 90% of the installed personal computer base in
India. A point of presence is commonly defined as the ability to access online
services in a market through a local telephone call or local leased lines.
Infoway operates its network facilities and customer service operations which
gives it greater control over the utilization and quality of its network.
Infoway has designed and built its network using advanced technologies and
equipment which allows it to continue to expand the geographic range of its
network, integrate improved data processing technologies and enhance speed and
capacity with little or no disruption to its customers.

Competition

Infoway faces competition in each of its markets and we expect that this
competition will intensify as the market in India for corporate network services
and technology products, Internet service provider services and online content
develops and expands. Infoway competes on the basis of service, reliability and
customer support. Price and ease of use are also competitive factors.

Corporate network/data services. Infoway's competitors for many private network
services include government services, companies that have built and operate
their own private data networks, satellite communications agencies, such as
Bharti BT, Comsat, HCL Comnet and Hughes, and terrestrial network providers,
such as Global Electronic Commerce Services, HCL Infinity and WiproNet Ltd.

Consumer Internet Access Services. Infoway's principal competitor is VSNL, a
telecom provider that was controlled by the Government of India until recently.
As of December 31, 2001, approximately 442 companies had obtained Internet
service provider licenses in India. Infoway expects other competitors to emerge
in the future. Infoway also expect prices to continue to fall as more
competitors enter the market. Further, Infoway believes that it is inevitable
that the large, foreign providers of Internet service provider services will
eventually attempt to enter the Indian market through local joint ventures or
other means.

Since May 2000, Infoway has offered unlimited Internet access to consumers for a
fixed price. A number of Infoway's competitors, including VSNL, Dishnet and
Mantra, also offer unlimited Internet access for a fixed price. In addition, at
least one of Infoway's competitors offers free Internet service. Infoway expects
the market for consumer Internet access to remain extremely price competitive as
late market entrants attempt to acquire customers.

In the past, VSNL aggressively reduced consumer Internet access prices despite
the lack of offsetting reductions in prevailing bandwidth tariffs payable by
private competitors, such as Infoway. Infoway believes that these practices
constitute an improper cross-subsidy funded by VSNL's present monopoly in long
distance telephone service. The charges for international gateways and other
services presently being provided by VSNL are the subject of a dispute pending
before the TRAI and the Telecom Disputes Settlement and Appellate Tribunal
between VSNL and private

                                       30
Internet service providers, including Infoway. The Telecom Disputes Settlement
and Appellate Tribunal has remanded this matter back to the TRAI for denovo
consideration. This matter is pending before the TRAI. Unless there is a change
in government policy or favorable resolution of this dispute, or until we are
able to reduce our bandwidth costs through other means, we will continue to face
difficult market conditions in the consumer access business.

In addition, Infoway could face competition from companies that develop new and
innovative techniques to access the Internet. Although growing rapidly,
International Data Corporation estimates that India had an installed base of
only approximately 4.2 million personal computers in 2000. Technology permitting
a connection to the Internet through alternative, less capital intensive means
is likely to be attractive to Indian consumers. A number of companies are
planning alternative Internet access devices, such as set-top boxes for
televisions, to create demand for Internet services in excess of that which
could be supported by the installed base of personal computers. The provider who
develops this technology is likely to have a significant advantage in the
marketplace.

Online Portal. There are several other companies in India that have developed
websites, including rediff.com which completed its initial public offering in
the United States in June 2000 and others, that are designed to act as Internet
portals. These sites currently have greater traffic than Infoway's site and
offer some features that Infoway does not. Further, the dominant Internet
portals continue to be the online services and search engine companies based in
the United States, such as America Online, Yahoo, Microsoft Network and Lycos.
These companies have been developing specially branded or co-branded products
designed for audiences in specific markets. Infoway expects that these companies
will deploy services that are targeted at the Indian market. For example, Yahoo!
launched an Indian service in June 2000.

To be competitive, Infoway must respond promptly and effectively to the
challenges of technological change, evolving standards and Infoway's
competitors' innovations by continuing to enhance its products and services, as
well as its sales and marketing channels. Increased competition could result in
loss of market share, reduced prices or reduced margins, any of which could
adversely affect Infoway's business. Competition is likely to increase
significantly as new companies enter the market and current competitors expand
their services.

Government Regulation

Infoway is subject to comprehensive regulation by the Ministry of Communications
through the Telecom Commission and the Department of Telecommunications, or DOT,
pursuant to the provisions of the Indian Telegraph Act of 1885, or Telegraph
Act, the India Wireless Telegraphy Act, 1933, or Wireless Act, and the terms of
the Internet service provider license agreement Infoway entered into with the
DOT under which Infoway operates. Pursuant to the Telegraph Act, the provision
of any telecommunications services in India requires a license from the
Government of India, obtained through the DOT. While the Telegraph Act sets the
legal framework for regulation of the telecommunications sector and the Wireless
Act regulates the possession of wireless telegraphy equipment, much of the
supervision and regulation of Infoway is implemented more informally through the
general administrative powers of the DOT, including those reserved to the DOT
and other governmental agencies under Infoway's license.

In March 1997, the Government of India established the TRAI, an independent
regulatory authority, under the provisions of the Telecom Regulatory Authority
of India Act. The TRAI also has the authority to, from time to time, set the
rates at which domestic and international telecommunications services are
provided in India. The TRAI does not have authority to grant licenses to service
providers or renew licenses, functions which remain with the DOT. Failure to
follow TRAI directives may lead to the imposition of fines. Decisions of the
TRAI may be appealed to the Telecom Disputes Settlement and Appellate Tribunal.

Infoway entered into a license agreement with the Department of
Telecommunications, or DOT, under which it was granted a license to provide
national Internet services on a non-exclusive basis. The term of its license is
15 years, and it can be revoked by the DOT if Infoway breaches the terms and
conditions of the license. The DOT retains the right to take over Infoway's
network and to modify, revoke, terminate or suspend the terms and conditions of
the license at any time if, in its opinion, it is necessary or expedient to do
so in the interest of general public, or for the proper operation of the
telecommunications sector or for security considerations. The DOT also retains
the right to review the terms of Infoway's license based on changes in national
telecommunications policy. Infoway is not allowed to assign or transfer
its rights under the license without the prior written consent of the DOT.

The Government of India has recently revised foreign investment policies
permitting up to 74% foreign equity in an Internet service provider. Infoway's
license was reissued in April, 2002, permitting it to have foreign investment up
to 74% of its total equity and also to offer Internet telephony, subject to the
terms of operation as detailed in Infoway's license.

                                       31
Infoway may be required to import into India computer hardware and Internet
related software purchased from foreign manufacturers for business purposes.
These imports will be subject to the Export and Import Policy as declared by the
Ministry of Commerce. At the time of import, Infoway will be required to pay a
customs duty pursuant to the Customs Tariff Act, 1975.

Facilities

Infoway owns approximately 100,000 square foot corporate headquarters located in
Chennai (Madras), India. Infoway maintains a network operations center located
in Chennai and 20,000 square foot data center in Mumbai (Bombay). Infoway's
Chennai facility houses its central network servers as well as its network staff
which monitors network traffic, service quality and equipment at all its points
of presence to ensure a reliable Internet service. Most of Infoway's points of
presence are staffed 24-hours-a-day, seven-days-a-week. Infoway has backup power
generators and software and hardware systems designed to prevent network
downtime in the event of system failures. In the future, Infoway may add
additional facilities to supplement or add redundancy to its current network
monitoring capability.

Our Other Business Segments--Software Products

Through our wholly owned subsidiary in the United States, VCI, we have developed
VisionCompass, a software product for use as a management tool to assess and
help improve business performance. VCI's sales and marketing strategy will
target Fortune 1000 companies in the manufacturing, professional services and
telecommunications markets, utilizing both a direct sales force and select
channel partners.

Research and Development

Our research and development efforts are focused on development services
required by our existing customers or as needed to attract new customers. As of
March 31, 2002, we employed 49 associates dedicated to our research and
development activities. In addition, our management and other operational
personnel are also involved in research and development activities. We have
applied for one patent in the United States related to VisionCompass. We expect
to continue to invest some of our resources in research and development. We
estimate that we have spent approximately $5.7 million in fiscal 2000, $3.1
million in fiscal 2001 and $2.2 million in fiscal 2002 on company-sponsored
research and development activities.

Intellectual Property

Ownership of software and associated deliverables created for customers is
generally retained by or assigned to the customer, and we do not usually retain
an interest in such software or deliverables. We also develop software products
and software tools which are licensed to customers and remain our property. We
rely upon a combination of non-disclosure and other contractual arrangements and
copyright, trade secret, patent and trademark laws to protect our proprietary
rights in technology. We currently require our technical associates to enter
into non-disclosure and assignment of rights agreements to limit use of, access
to and distribution of our proprietary information. The source code for our
proprietary software is generally protected as trade secrets and as unpublished
copyright works. We have applied for the registration of "Satyam" and
"VisionCompass" as trademarks in India and United States. We generally apply for
trademarks and service marks to identify our various service and product
offerings.

Although we believe that our services and products do not infringe the
intellectual property rights of others, we cannot assure you that such a claim
will not be asserted against us in the future. Assertion of such claims against
us could result in litigation, and there is no assurance that we would prevail
in such litigation or be able to obtain a license for the use of any infringed
intellectual property from a third party on commercially reasonable terms. We
cannot assure you that we will be able to protect such licenses from
infringement or misuse, or prevent infringement claims against us in connection
with our licensing efforts. We expect that the risk of infringement claims
against us will increase if more of our competitors are able to obtain patents
for software products and processes. Any such claims, regardless of
their outcome, could result in substantial cost to us and divert management's
attention from our operations. Any infringement claim or litigation against us
could, therefore, result in substantial costs and diversion of resources.

                                       32
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of the financial condition and results of operations of
our company should be read in conjunction with the financial statements and the
related notes included elsewhere in this document. This discussion contains
forward-looking statements that involve risks and uncertainties. For additional
information regarding these risks and uncertainties, please see "Item 3.-Risk
Factors."

Overview

We are the fourth largest provider of IT services in India, based on the amount
of export revenues generated during our fiscal year ended March 31, 2002. We
offer a comprehensive range of services, including software development, system
maintenance, packaged software integration, and engineering design services. We
use our global infrastructure to deliver value-added services to our customers
to address IT needs in specific industries and to facilitate eBusiness
initiatives. We also have two main subsidiaries, Infoway, which provides
Internet services in India, and VCI, which has developed and markets our
software product, VisionCompass. Our total revenues increased by 88.7% to $310.3
million in fiscal 2001 from $164.5 million in fiscal 2000 and by 33.6% to $414.5
million in fiscal 2002 from $310.3 million in fiscal 2001.

Our reportable operating segments consist of the following three businesses:

     IT services. In our IT services business, we provide our customers the
ability to meet all of their IT needs from one service provider. Our
understanding of both existing computer systems and new Internet technologies
allows us to assist our customers in the management and maintenance of existing
systems and the development and integration of new technologies. Our 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. We also assist our customers in making their existing
computing systems accessible over the Internet. We offer our customers flexible
delivery alternatives through our offshore centers located in India, through
offsite centers which we have established in our major markets and through
onsite teams operating on the customers' premises.

     - Internet services. Through our subsidiary, Infoway, we offer our
corporate network/data services; consumer Internet access services; and online
portal and content offerings. Our corporate network/data services division
derives its revenues from dial-up and dedicated Internet access, electronic
commerce, electronic data interchange, e-mail and other messaging services,
virtual private networks, web hosting and web-based solutions. An important
asset in this business is the quality and reach of our large IP network in
India. Our consumer Internet access services division derives its revenues
primarily from the "SatyamOnline" dial-up business and the "iway" public
Internet access business. Infoway's ADSs trade on the Nasdaq National Market
under the symbol "SIFY".

In October 2001, we announced our intention to explore alternatives in order to
divest our interest in Infoway. As also announced in October, 2001, we have
acquired Infoway's software services division with effect from January 1, 2002.
The transaction was approved by stockholders of Infoway at an extraordinary
general meeting held on February 28, 2002. This acquisition includes the
purchase of specified tangible and intangible fixed assets, current assets and
current liabilities of the division as well as the assignment of its continuing
business in favour of the company. The objective of the acquisition is to permit
us to concentrate on our core business of software services and to permit
Infoway to concentrate on Internet services. The acquisition price of US$6.9
million has been paid to SIFY.

Software products. Through our wholly owned subsidiary in the United States,
VCI, we have developed VisionCompass, a software product for use as a management
tool to assess and help improve business performance. VCI's sales and marketing
strategy will target Fortune 1000 companies in the manufacturing, professional
services and telecommunications markets, utilizing both a direct sales force and
select channel partners.

Revenues

Our IT services revenues (excluding inter-segment revenues, which are revenues
generated from services provided by Satyam Computer Services to its subsidiaries
and vice-versa) represented 88.1% and 91.0% of our total revenues in fiscal
2001and fiscal 2002, respectively. These revenues increased by 83.2% to $273.5
million in fiscal 2001 from $149.3 million in fiscal 2000 and by 38.0% to $377.3
million in fiscal 2002 from $273.5 million in fiscal 2001. The fall in growth
rate can be primarily attributed to the general industry recession in the United
States and other parts of the world and the business slow down consequent to
terrorist attacks in the United States. Our revenues are generated

                                       33
principally from IT services provided on either a time-and-materials or a
fixed-price basis. Revenues from IT services provided on a time-and-materials
basis are recognized in the month that services are performed. Revenues from IT
services provided on a fixed-price basis are recognized under the percentage of
completion method of accounting when the work executed can be reasonably
estimated and under the completed contract method of accounting when the work to
complete cannot be reasonably estimated. The percentage of completion estimates
are subject to periodic revisions and the cumulative impact of any revision in
the estimates of the percentage of completion is reflected in the period in
which the changes become known. Although from time to time we have revised our
project completion estimates, to date such revisions have not materially
affected our reported revenues. Revenues from IT services (excluding
inter-segment revenues) provided on a time-and-materials basis represented 77.7%
and 78.1% of our IT services revenues in fiscal 2001 and fiscal 2002,
respectively. Revenues from IT services (excluding inter-segment revenues)
provided on a fixed-price basis represented 22.3% and 21.9% of our IT services
revenues in fiscal 2001 and fiscal 2002, respectively.

The following table represents our IT services revenues (excluding inter-segment
revenues) by type of IT service offering for the periods indicated:
Type of IT service offering                    Fiscal 2000             Fiscal 2001                  Fiscal 2002
         ---------------------------                    -----------             -----------                  -----------
                                                                       (in millions, except percentages)
Software development ..............................   $ 79.7     53.4%       $175.9        64.3%          195.5   51.8%
System maintenance ................................     41.4     27.7          55.3        20.2           110.2   29.2
Packaged software integration .....................     14.8      9.9          22.5         8.2            53.0   14.1
Engineering design services .......................     13.4      9.0          19.8         7.3            18.6    4.9
                                                      ------   ------        ------      ------          -------------

      Total .......................................   $149.3    100.0%       $273.5       100.0%          377.3  100.0%
                                                      ======   ======        ======      ======          =============
We provide our IT services through our offshore centers located in India,
through offsite centers which we have established in our major markets and
through onsite teams operating on our customers' premises. Offshore IT services
revenues consist of revenues from IT services work conducted in our offshore
centers and onsite work conducted at customers' premises which is related to
offshore work. Offshore IT services revenues do not include revenues from
offsite centers or onsite work which is not related to any offshore work. We
charge higher rates and incur higher compensation expenses for work performed by
our onsite teams on a customer's premises or at our offsite centers as compared
to work performed at our offshore centers in India. Services performed at our
onsite teams or at our offsite centers typically generate higher revenues per
capita but at a lower gross margin than the same amount of services performed at
our offshore centers in India. Offshore IT services revenues (excluding
inter-segment revenues) represented 60.7% and 47.7% of our IT services revenues
in fiscal 2001 and fiscal 2002, respectively. Offsite and onsite IT services
revenues (excluding inter-segment revenues) represented 39.3% and 53.3% of our
IT services revenues in fiscal 2001 and fiscal 2002, respectively.

IT services revenues and gross profits are affected by the rate at which
associates are utilized. We calculate utilization rates monthly, based on the
ratio of the actual number of hours billed by technical associates in such month
to the total number of billable hours. For purposes of such calculation, we
assume that an associate is 100.0% utilized if he works 157 hours per month.
Utilization rates for IT services were 73.0% and 77.5% in fiscal 2001 and fiscal
2002, respectively. These utilization rates do not include training time for our
associates.

Revenues from Internet services are generated principally from corporate network
and technology services, web-site design and development, sale of Internet
access and banner advertisements and sponsorship contracts. Our Internet
services revenues (excluding inter-segment revenues) represented 11.9% and 8.8%
of our total revenues in fiscal 2001 and fiscal 2002, respectively. These
revenues increased by 142.4% to $36.8 million in fiscal 2001 from $15.2 million
in fiscal 2000 and decreased by 0.7% to $36.6 million in fiscal 2002 from $36.8
million in fiscal 2001.

Revenues from software products to date have been immaterial.

Expenses

Cost of revenues for IT services consists primarily of salary and other
compensation and benefits, deferred stock based compensation expense,
depreciation, data communications expenses, Rents, computer maintenance, cost of
software for internal use, and foreign travel expenses. Cost of revenues for
Internet services consists primarily of recurring telecommunication costs
necessary to provide Internet access to consumer and corporate network
subscribers, personnel and operating expenses associated with customer support
and network operations, travel expenses and third

                                       34
party software and hardware purchased for resale to corporate customers.

Selling, general and administrative expenses consist of salary and other
compensation and benefits, deferred stock based compensation expense,
depreciation, sales and marketing expenses, telecommunications expenses, rent,
repairs and maintenance, travelling expenses, power and fuel, professional
charges, training and development and administrative expenses. Costs associated
with the development of software products are classified under selling, general
and administrative expenses and primarily consist of research and development
expenditures and compensation and benefit expenses. We expect sales and
marketing expenses to increase on a relative basis as we introduce our products
commercially.

Amortization of goodwill expense primarily relate to goodwill arising from the
acquisitions of IndiaWorld and IndiaPlaza.com by Infoway and our acquisition of
the minority interest in Satyam Enterprise Solutions Limited, or SES.

Impairment of goodwill during the year ended March 31, 2002 primarily relates to
the impairment of goodwill arising from the acquisitions of IndiaWorld and
IndiaPlaza.com by Infoway.

Consolidation of Subsidiaries

As of March 31, 2002, we had invested $7.3 million representing equity and other
advances in Infoway, $27.3 million in VCI and $9.7 million in six of our other
subsidiaries. Since their inception in December 1995 and January 1999,
respectively, our subsidiaries Infoway and VCI have incurred significant
operating losses and negative cash flows. As of March 31, 2002, the cumulative
net losses incurred were $224.7 million by Infoway, $27.5 million by VCI and
$9.0 million by our other subsidiaries.

The results of Infoway and VCI are reflected in our financial statements under
U.S. GAAP whereas the unconsolidated audited financial statements prepared under
Indian GAAP for Satyam Computer Services do not reflect the results of our
subsidiaries. Infoway's and VCI's combined losses reduced our consolidated net
income (loss) U.S. GAAP by $83.3 million in fiscal 2002, $42.6 million in fiscal
2001 and $16.7 million in fiscal 2000.

In November 1999, Infoway purchased 24.5% of the outstanding shares of
IndiaWorld for a cash purchase price of $28.3 million, and made an $11.8 million
non-refundable deposit towards an option to purchase the remaining 75.5% of the
outstanding shares in IndiaWorld for a purchase price of $85.0 million. Infoway
exercised the option to acquire the remaining outstanding shares of IndiaWorld
in June 2000 by paying $48.7 million in cash and the balance in 268,500 equity
shares of Infoway valued at $24.6 million. For U.S. GAAP reporting purposes, the
financial statements of IndiaWorld have been consolidated with Infoway's
financial statements from and after December 1, 1999. The acquisition has been
accounted for as a purchase, and Infoway is amortizing the goodwill on a
straight-line basis over a period of five years. Most of the purchase price
represented goodwill. The total goodwill from this acquisition amounted to
$106.8 million, of which $19.4 million and $11.5 million has been amortized and
impaired, and charged to earnings in fiscal 2001 and fiscal 2002, respectively.
During fiscal 2002, goodwill amounting to $73.1 million was impaired and charged
to earnings.

Equity in Earnings (Losses) of Associated Companies

Associated companies are accounted for using the equity method. In July 2000,
Infoway acquired a 25% stake in CricInfo Limited for a consideration of $37.5
million worth of Infoway's ADSs. The total goodwill from this acquisition
amounted to $37.4 million, of which $4.3 million and $3.7 million has been
amortized and charged to equity in earnings (losses) of associated companies net
of taxes in fiscal 2001 and fiscal 2002, respectively. During the fiscal 2002
goodwill amounting to $21.4 million was impaired and charged to earnings.

On October 5, 2001, Infoway entered into an agreement to subscribe for unsecured
convertible notes to be issued by Cricinfo in an aggregate amount of up to GBP
1.0 million ($1.5 million) to meet Cricinfo's short to medium term working
capital requirements. These notes are redeemable on October 5, 2004. The
subscription will be in tranches of such amounts and on such dates as agreed to
in writing from time to time by Infoway and Cricinfo. The terms of the note
instrument provide for the payment of interest on the principal amount at the
rate of 8% per annum. In addition, Infoway shall be entitled, at any time upon
5-business days notice to Cricinfo, to convert the notes into Cricinfo shares
based on a predetermined conversion formula. Infoway will not be obligated to
subscribe for notes if it is not satisfied that Cricinfo has met certain agreed
upon performance measures. On March 31, 2002 Infoway entered into an arrangement
to subscribe to a further issue of Cricinfo convertible notes in an aggregate
amount of upto GBP0.5

                                       35
million ($0.7 million) by Cricinfo that would be subject to the same terms as
discussed above.

Investment in Satyam GE Software Services Private Limited

In January 2002, Satyam Computer Services has initiated the process of transfer
of its 50% shareholding in Satyam GE Software Services Private Limited ("Satyam
GE") to GE Pacific (Mauritius) Limited, Mauritius ("GEPL") in accordance with
the shareholders' agreement for a consideration of approximately $4.0 million.
The transfer is subject to fulfillment of terms and conditions specified in the
agreement and obtaining necessary approvals from appropriate authorities. Satyam
Computer Services continues to have the ability to exercise significant
influence over the operating and financial policies of Satyam GE and hence has
accounted for its 50% interest in Satyam GE using the equity method for the year
ended March 31, 2002. The resulting carrying amount of the investment in Satyam
GE of $3.0 million as of March 31, 2002 after recognition of income for the year
then ended does not exceed the expected selling price of $4.0 million.

On December 29, 2000, Satyam Computer Services entered an agreement with
Computer Associates International, Inc. ("CA") to form an equally held joint
venture company CA Satyam ASP Private Ltd. ("CA Satyam"). The joint venture was
formed in January 2001 at Mumbai, India. As per the agreement, both Satyam
Computer Services and CA are to invest $1.5 million each in the joint venture.
During the year ended March 31, 2002 Satyam Computer Services invested $0.5
million in CA Satyam.

Deferred Stock based Compensation

In May 1998, Satyam Computer Services established its ASOP. Aspects of the ASOP
differ significantly from typical U.S. stock option plans. We subsequently
established the Trust to administer the ASOP, and issued to the Trust warrants
to purchase 13,000,000 equity shares. To give our associates the benefit of our
stock split in September 1999, the Trust exercised its warrants to acquire our
shares before the split using the proceeds from bank loans. The Trust
periodically grants eligible associates warrants to purchase equity shares held
by or reserved for issuance by the Trust. The warrants may vest immediately or
may vest over a period ranging from two to three years, depending on the
associate's length of service and performance. Upon vesting, employees have 30
days in which to exercise their warrants.

Each warrant issued by the Trust currently entitles the associate holding the
warrant to purchase 10 equity shares of our company at a price of Rs.450
($10.31), plus an interest component associated with the loan the Trust assumed,
for the conversion of the warrants it held. The interest component is computed
based on a fixed vesting period and a fixed interest rate. This exercise price
has been substantially below the market price of our shares at the time the
warrants have been granted by the Trust. Neither we nor the Trust may increase
the exercise price of the warrants. We account for the ASOP as a fixed plan in
accordance with Accounting Principles Board Opinion No. 25.

Under U.S. GAAP, the difference between the exercise price and the market price
on the date the warrants are granted to associates is required to be treated as
a non-cash compensation charge and amortized over the vesting period of the
equity shares underlying the warrants. Under U.S. GAAP, in fiscal 2000, 2001 and
2002, we recognized deferred stock based compensation of $23.3 million, $38.0
million and $1.2 million, and $16.5 million, $44.2 million and $10.4 million was
amortized and charged to earnings, respectively. As of March 31, 2002, warrants
(net of forfeited and cancelled) to purchase 11,441,070 equity shares have been
granted to associates pursuant to ASOP, and warrants to purchase 9,516,180
equity shares have been exercised. As of March 31, 2002, the Trust held warrants
to purchase 1,558,930 equity shares which had not yet been granted to associates
pursuant to the ASOP but are expected to be granted in the future. We expect to
recognize amortization of deferred stock based compensation expense in respect
of our ASOP in the approximate amounts of $3.7 million in fiscal 2003 and $1.9
million in fiscal 2004 based on the price of our equity shares on March 31, 2002
and in connection with both granted and ungranted warrants on such date.
Depending on the market value of our equity shares on the dates future grants
are made, amortization of deferred stock based compensation expense with respect
to ungranted warrants may cause the expected amounts to change.

In May 1999, the shareholders at our annual general meeting approved the
Associate Stock Option Plan B, or ASOP B for the grant of 13.0 million Equity
shares. In June, 2001 the Shareholders at our Annual General Meeting approved
the grant of further 15.7 million equity shares to this plan. The ASOP B is
substantially similar to the ASOP and will be administered by a committee of our
board of directors. Under U.S. GAAP, in fiscal 2002, we recognized deferred
stock based compensation of $6 thousand and $58 thousand was amortized and
charged to earnings, respectively. As of March 31, 2002, options (net of
forfeited and cancelled) to purchase 10,197,328 equity shares have been granted
to associates under this plan. We expect to recognize amortization of deferred
stock based compensation expense in respect of these granted options in the
approximate amounts of $59 thousand in fiscal 2003 and $35 thousand in fiscal
2004. We expect that the exercise prices of options granted in the future under
the ASOP B will generally not be less

                                       36
than the fair market value of the underlying shares and therefore we do not
expect to incur compensation expense with respect to those future grants. We
also account for the ASOP B as a fixed option plan.

In May 1999, the shareholders at our annual general meeting approved the
Associate Stock Option Plan ADR, or ASOP - ADR, pursuant to which we expect to
periodically issue grants to eligible associates to purchase ADRs. As of March
31, 2002, warrants for 1,169,425 ADSs representing 2,338,850 equity shares have
been granted to associates under the ASOP ADR. The warrants issued under
ASOP-ADR could be at a price per option which is not less than 90% of the value
of one ADS as reported on NYSE (fair market value) on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the day of
grant as decided by the Board or any of its Committees of the ASOP (ADS). We
account for the ASOP ADR as a fixed option plan. We expect that the exercise
prices of options granted in the future under the plan will not be less than the
fair market value of the underlying ADRs and therefore we do not expect to incur
compensation expense with respect to those future grants.

In fiscal 1999, Infoway established the IASOP. The IASOP is substantially
similar to the ASOP and is administered by an employee welfare trust called the
Infoway Trust. Infoway issued to the Infoway Trust warrants to purchase 825,000
equity shares of Rs.1 each in Infoway. In turn, the Infoway Trust from time to
time grants to eligible associates warrants to purchase equity shares held by or
reserved for issuance by the Infoway Trust. An associate must pay consideration
of Rs.1 per warrant to the Infoway Trust and each warrant entitles the
associate-holder to purchase one equity share of Infoway at an exercise price
decided by the board of directors. The board of directors has determined that in
no event will the exercise price for warrants granted in the future be less than
90.0% of the market price of the shares on the Nasdaq National Market as of the
grant date. The warrants and the shares received upon the exercise of warrants
are subject to progressive vesting over a three year period from the date the
warrants were issued to the associate. The exercise period for these warrants is
30 days from the vesting period. The warrants allotted and the underlying shares
are not subject to any repurchase obligations by Infoway. We account for the
IASOP as a fixed option plan.

Under U.S. GAAP, in fiscal 2001 and fiscal 2002, Infoway recognized deferred
stock based compensation of $2.2 million and $1.5 million, of which $1.9 million
and $0.3 million was amortized and charged to earnings, respectively. In fiscal
2002, Infoway recognized insignificant amounts of deferred stock based
compensation expense. As of March 31, 2002, warrants (net of forfeited and
cancelled) to purchase 584,040 equity shares of Infoway have been granted to
associates pursuant to its IASOP, and 200 warrants have been exercised. As of
March 31, 2002, the Infoway Trust held warrants to purchase 240,960 equity
shares of Infoway which had not yet been granted by the Infoway Trust to
associates pursuant to its IASOP but are expected to be granted in the future.
We expect that the exercise price of warrants granted in the future will not be
less than 90.0% of the fair market value of the underlying shares and therefore
we do not expect to incur significant compensation expense with respect to those
future grants. We expect to recognize amortization of deferred stock based
compensation expense in connection with Infoway's IASOP in the approximate
amounts of $0.1 million in fiscal 2003 and $0.05 million in fiscal 2004 based on
the price of Infoway's ADSs on March 31, 2002 and in connection with both
granted and ungranted warrants. Depending on the market value of Infoway's ADSs
on the dates future grants are made, amortization of deferred stock based
compensation expense with respect to ungranted warrants may cause the expected
amounts to change.

In April 2000, VCI established the VCI 2000 Stock Option Plan or VCI Plan. As of
March 31, 2002, options (net of forfeited and cancelled) to purchase 70,000
shares in VCI have been granted to associates pursuant to the VCI Plan, and no
options have been exercised. As of March 31, 2002, 24,930,000 shares in VCI are
reserved for issuance upon the exercise of options which had not been granted
pursuant to the VCI Plan but are expected to be granted in the future. We
account for the VCI Plan as a fixed option plan. The exercise prices of the
prior options grants have been at fair value of the underlying shares. We expect
that the exercise prices of options granted in the future under the plan will be
equal to the fair value of the underlying shares and therefore we do not expect
to incur compensation expense with respect to those future grants.

The Trust recognized interest expense of $1.8 million in fiscal 2001 and $0.7
million in fiscal 2002. The figure is reflected in our U.S. GAAP consolidated
financial statements whereas the audited financial statements of Satyam Computer
Services prepared under Indian GAAP do not reflect this figure.

Joint Venture with TRW Inc.

     In September 2000, we entered into an agreement with TRW Inc. to form a
non-exclusive joint venture to provide TRW and other global companies with
software development, system maintenance and engineering design services. We own
a 76.0% interest in the joint venture and TRW owns a 24.0% interest. We manage
this joint venture,

                                       37
which is largely focused on the automotive sector worldwide. TRW generated
revenues for the joint venture of $29.0 million during the fiscal ended March
31, 2002.

     After December 31, 2003, TRW has the option to require us to purchase its
24.0% interest. Under the joint venture agreement, TRW is not legally obligated
to provide any business to the joint venture. However, the buyout price of TRW's
interest in the joint venture depends on the aggregate amount of revenue which
TRW will provide to the joint venture through December 31, 2005. TRW has
initially targeted to outsource to the joint venture at least $200 million of
revenues from information systems and engineering work by December 31, 2005. TRW
may adjust this initial target revenue amount before May 31, 2001, but the
adjusted target revenue amount cannot be less than $100 million. [NTD: Satyam to
confirm initial target unchanged.] If the amount of revenues outsourced by TRW
to the joint venture by December 31, 2003 does not meet specified minimum
levels, we have the right to buy out TRW's 24.0% interest in the joint venture
for no or nominal consideration. If TRW exercises its option to sell the shares
to us after December 31, 2003, the purchase price of TRW's 24.0% stake will be
determined by the higher of an independent valuation of the 24.0% interest and a
formula based on the amount of revenues provided to the joint venture by TRW but
in any event no more than 2.0% of our total market capitalization on December
31, 2003. We may, at our discretion, use either cash or our equity securities
valued at the then prevailing market price as consideration for TRW's stake. If
TRW divests its stake after December 31, 2003, the terms of the joint venture's
supply agreement with TRW will continue until December 31, 2007 if the joint
venture remains able to perform the supply agreement. Under these circumstances,
TRW is required to use its best attempts to provide the same levels of business
to the joint venture from January 1, 2006 through December 31, 2007 as it had
provided to the joint venture during the preceding two years. If we undergo a
change in control or bankruptcy, TRW may terminate the joint venture agreement
on or before December 31, 2003 and require us to purchase its shares in the
joint venture and all of our securities issued to TRW or its affiliates in
connection with the joint venture agreement at a price equal to $1.0 million
plus the total consideration TRW has invested in the shares of the joint venture
(but excluding the initial amount paid for its 24.0% interest) and our
securities, net of any amount received by TRW for any sale of such shares or
securities.

     As part of the joint venture arrangement with TRW, on August 22, 2000, we
issued to ESL Inc., an affiliate of TRW, 63,896 warrants (each warrant
exercisable to purchase five equity shares) for an upfront payment of Rs.22.9
million (approximately $0.5 million). These warrants are convertible into
319,480 of our equity shares for Rs.644.40 ($14.1) per share, totaling
approximately $4.5 million, during an exercise period from January 22, 2002 to
February 21, 2002. The upfront payment made by ESL Inc. for these warrants, plus
the aggregate exercise price for the 319,480 equity shares underlying these
warrants, will equal approximately $5.0 million. The excess of the fair value of
the warrants, as determined at the date of grant, over the consideration of
warrants paid by ESL Inc., amounts to approximately $1.2 million. This amount
will be amortized ratably over the period of five years and three months,
starting from the date of signing of the joint venture agreement, which was
September 26, 2000, until December 31, 2005. The amortization will be classified
as a reduction of the revenue recognized under the agreement. However, if the
amortization exceeds the amount of revenue recognized in any period, the excess
amortization will be recorded as an expense. These warrants for 319,480 equity
shares expired unexcercised on February 21, 2002.

The exercise price and the fair market value of the warrants issued to ESL Inc.
were not determined based on the revenue TRW has targeted to provide to the
joint venture. The exercise price of the warrants was determined based on the
average closing prices of the underlying shares on the Indian stock exchanges in
accordance with the Securities and Exchange Board of India guidelines. The fair
value of the warrants at the date of grant was determined by reference to the
prevailing market price of our equity shares on the Indian exchanges, using the
Black Scholes model with an assumed volatility of 90% and a risk free interest
rate of 10.672%.

Principles of Currency Translation

In fiscal 2001 and fiscal 2002, 82.1% and 82.7%, respectively, of our total
revenues were generated in U.S. dollars. A majority of our expenses were
incurred in Indian rupees and the balance was incurred in U.S. dollars, European
currencies and Japanese yen. Our functional currency and the functional currency
for our subsidiaries located in India is the Indian rupee; however, the Japanese
yen, U.S. dollars, Sterling pounds and Singapore dollars are the functional
currencies of our foreign subsidiaries located in Japan, the U.S., the U.K. and
Singapore, respectively. The translation of such foreign currencies into U.S.
dollars (our reporting currency) is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue and
expense accounts using monthly simple average exchange rates prevailing during
the reporting periods. Adjustments resulting from the translation of functional
currency financial statements to reporting currency are accumulated and reported
as other comprehensive income, a separate component of shareholders' equity.

                                       38
We expect that a majority of our revenues will continue to be generated in U.S.
dollars for the foreseeable future and that a significant portion of our
expenses, including personnel costs as well as capital and operating
expenditures, will continue to be denominated in Indian rupees. Consequently,
our results of operations will be affected to the extent the rupee appreciates
against the U.S. dollar.

Results of Operations

The following table sets forth selected operating data as value and as a
percentage of revenues by segment (including inter-segment revenues) for the
periods indicated:
Fiscal 2002
                                                                                                  -----------

                                                                      IT           Internet    Software
                                                                   services        services    products   Elimination    Total
                                                                   --------        ----------------------------------    -----
                                                                                      (in thousands)
Statement of Operations Data:
Revenues - external customers ...................................  $377,321       $  36,585         585          --      414,491
Inter-segment revenue ...........................................       618           2,806     $   284     $(3,708)          --
                                                                                  ---------------------     -------     --------

      Total revenues ............................................   377,939          39,391         869      (3,708)     414,491
Cost of revenues(1) .............................................   213,528          28,689         177      (3,398)     238,996
                                                                   --------       ---------------------     -------     --------

Gross profit ....................................................   164,411          10,702         692        (310)     175,495
Operating expenses:
   Selling, general and administrative expenses(2) ..............    92,070          45,814       3,322        (310)     140,896
   Amortization  of goodwill ....................................     4,311          12,686          --          --       16,997
                                                                   --------                     -------     --------------------
      Impairment of goodwill ....................................        --          81,115          --          --       81,115
                                                                   -------------------------------------------------------------

      Total operating expenses ..................................    96,381         139,615       3,332        (310)     239,008
                                                                   ------------------------     -------     -------     --------

Operating income (loss) .........................................    68,030        (128,913)     (2,630)         --      (63,513)
Interest income .................................................     2,984             822          --          --        3,806
Interest expense ................................................    (2,811)            (45)         --          --       (2,856)
Gain on sale of shares of infoway ...............................    45,594              --          --          --       45,594
Other income ....................................................    11,182             986          --          --       12,168
Other expenses ..................................................        58            (136)         --          --          (78)
                                                                                                            -------     --------
Income (loss) before income taxes, minority interest
 and equity in earnings (losses) of associated companies,
 net of taxes ...................................................   125,037        (127,286)     (2,630)         --       (4,879)
Income taxes ....................................................   (17,234)             --          --          --      (17,234)
Minority interest ...............................................        64          73,342          --          --       73,406
Equity in earnings (losses) of associated companies .............     1,363         (26,764)         --          --      (25,401)
                                                                                                -------     -------     --------

Net income (loss) ...............................................  $109,230       $ (80,708)    $(2,630)         --     $ 25,892
                                                                   ========       =================================     ========

Depreciation ....................................................  $ 25,008       $  12,093     $   384          --     $ 37,485
Deferred stock based compensation. ..............................    10,479             316          --          --       10,795
Year ended March 31,
                                                                       --------------------
                                                                     2000
                                                                     ----
                                           IT       Internet       Software                                     IT
                                        services    services       products     Elimination      Total       services
                                        --------    --------       ------------------------      -----       --------
                                                        (in thousands)
Statement of Operations
 Data:
Revenues-- external
 customers ...........................  $149,257     $15,198           --              --       $164,455     $273,467
Inter-segment revenue ................     5,768         208           --        $ (5,976)            --        3,547
                                        --------     -------      -------        --------       ---------------------

 Total revenues ......................   155,025      15,406           --          (5,976)       164,455      277,014
Cost of revenues(/1/) ................    89,387       6,935           --          (5,873)        90,449      181,326
                                        --------     -------      -------        --------       ---------------------

Gross profit .........................    65,638       8,471           --            (103)        74,006       95,688
Operating expenses:
 Selling, general and
  administrative expenses(/2/) .......    44,912      16,428       10,802          (2,550)        69,592       66,958
 Amortization of goodwill ............     2,370       2,673           --              --          5,043        4,500
                                        --------     -------      -------        --------       ---------------------
2001
                                                         ----

                                          Internet    Software      Elimina-
                                          services    products       tion     Total
                                          -----------------------------------------
                                                (in thousands)
Statement of Operations
 Data:
Revenues-- external
 customers ............................  $  36,840        --            --   $310,307
Inter-segment revenue .................      2,148    $  213     $  (5,908)        --
                                         --------------------------------------------

 Total revenues .......................     38,988       213        (5,908)   310,307
Cost of revenues(/1/) .................     27,892       142        (1,239)   208,121
                                         --------------------------------------------

Gross profit ..........................     11,096        71        (4,669)   102,186
Operating expenses:
 Selling, general and
  administrative expenses(/2/) ........     47,862    13,949        (4,669)   124,100
 Amortization of goodwill .............     20,228        --            --     24,728
                                         --------------------------------------------
39
Total operating
  expenses .............   47,282    19,101     10,802     (2,550)     74,635     71,458     68,090      13,949    (4,669)  148,828
                          -------   -------   --------   --------    --------------------------------------------------------------

Operating income
 (loss) ................   18,356   (10,630)   (10,802)     2,447        (629)    24,230    (56,994)    (13,878)       --   (46,642)
Interest income ........      182     2,443         --         --       2,625        263      5,469          --        --     5,732
Interest expense .......  (10,548)     (742)        --         --     (11,290)    (9,366)      (266)         --        --    (9,632)
Other income ...........    3,838        80         --     (2,447)      1,471      3,115      3,686           5        --     6,806
Other expenses .........     (206)       --       (212)        --        (418)      (330)       (14)         --        --      (344)
                          -------   -------   --------   --------    --------------------------------------------------------------

Income (loss) before
 income taxes, minority
 interest and equity in
 earnings (losses) of
 associated companies,
 net of taxes. .........   11,622    (8,849)   (11,014)        --      (8,241)    17,912    (48,119)    (13,873)       --   (44,080)
Income taxes ...........   (1,653)       34         --         --      (1,619)    (4,102)       (35)         --        --    (4,137)
Minority interest ......     (317)    3,102         --         --       2,785         65     25,707          --        --    25,772
Equity in earnings
 (losses) of associated
 companies .............      135        --         --         --         135        890     (6,357)         --        --    (5,467)
                          -------   -------   --------   --------    --------------------------------------------------------------

Net income (loss) ......  $ 9,787   $(5,713)  $(11,014)        --    $ (6,940)  $ 14,765  $ (28,804)  $ (13,873)       --  $(27,912)
                          =======   =======   ========   ========    ==============================================================

Depreciation ...........  $17,246   $ 2,872   $     52         --    $ 20,170     19,874      9,340         424        --  $ 29,638
Deferred stock
 compensation ..........   16,457       474         --         --      16,931     44,219      1,899          --        --    46,118
(1) Inclusive of deferred stock based compensation expenses $13,190
     thousand for IT services and $166 thousand for Internet services, in fiscal
     2000, $30,862 thousand for IT services and $474 thousand for Internet
     services, in fiscal 2001 and $7,140 thousand for IT services and $72
     thousand for Internet services, in fiscal 2002.

     (2) Inclusive of deferred stock based compensation expense of $3,267
     thousand for IT services and $308 thousand for Internet services in fiscal
     2000, $13,357 thousand for IT services and $1,425 thousand for Internet
     services in fiscal 2001 and $3,339 thousand for IT services and $243
     thousand for Internet services in fiscal 2002.
Fiscal 2002
    -----------
                                                                      IT         Internet        Software
                                                                   services      services        products        Total
                                                                   --------      --------        --------        -----
Statement of Operations Data:
Revenues - external customers ..............................           99.8%         92.9%           67.3%       100.0%
Inter-segment revenue ......................................            0.2           7.1            32.7           --
                                                                                                                 -----

      Total revenues .......................................          100.0         100.0           100.0        100.0
Cost of revenues(1) ........................................           56.5          72.8            20.4         57.7
                                                                                     ----

Gross profit ...............................................           43.5          27.2            79.6         42.3
Operating expenses:
   Selling, general and administrative expenses(2) .........           24.4         116.3           382.3         34.0
   Amortization  of  goodwill ..............................            1.1          32.2              --          4.1
                                                                     --------------------          -------------------
     Impairment of goodwill ................................             --         205.9              --         19.6
                                                                     -------------------------------------------------

      Total operating expenses .............................           25.5         354.4           382.3         57.7
                                                                     ------        ------          ------        -----

Operating income (loss) ....................................           18.0        (327.3)         (302.6)       (15.3)
Interest income ............................................            0.8           2.1              --          0.9
Interest expense ...........................................           (0.7)         (0.1)             --         (0.7)
40
Gain on sale of share in Infoway ......................................        12.1         --          --       11.0
Other income ..........................................................         3.0        2.5          --        2.9
Other expenses ........................................................          --       (0.3)         --         --
                                                                             ------                 ------     ------

Income (loss) before income taxes, minority interest and
equity in earnings (losses) of associated companies,
net of taxes ..........................................................        33.1     (323.1)     (302.6)      (1.2)
Income taxes ..........................................................        (4.6)        --          --       (4.2)
Minority interest. ....................................................          --      186.2          --       17.7
                                                                             -----------------      -----------------

Equity in earnings (losses) of associated companies ...................         0.4      (67.9)         --       (6.1)
                                                                             ------     ------      ------     ------

Net income (loss) .....................................................        28.9%    (204.9)%    (302.6)       6.2%
                                                                             ======     ======      ======     ======

Depreciation ..........................................................         6.6%      30.7%       44.2%       9.0%
Deferred stock based compensation .....................................         2.8%       0.8%         --        2.6%
Year ended March 31,                                      2000                                         2001
       ---------------------                                     ----                                         ----
                                                IT       Internet    Software               IT         Internet   Software
                                             services    services    products      Total    services   services   products    Total
                                             --------------------    -------------------    ---------------------------------------
Statement of Operations
  Data:
Revenues -- external
  customers ..............................     96.3%        98.6%         --      100.0%      98.7%     94.5%       ---     100.0%
Inter-segment revenue ....................      3.7          1.4          --         --        1.3       5.5      100.0%       --
                                              -----        -----       -----    -------------------------------------------------

  Total revenues .........................    100.0        100.0          --      100.0      100.0     100.0      100.0     100.0
Cost of revenues(1) ......................     57.7         45.0          --       55.0       65.5      71.5       66.7      67.1
                                              -----        -----       -----    -------------------------------------------------

Gross profit .............................     42.3         55.0          --       45.0       34.5      28.5       33.3      32.9
Operating expenses:
  Selling, general and
   administrative
   expenses(2) ...........................     29.0        106.6          --       42.3       24.2     122.8     6548.8      40.0
  Amortization of
   goodwill ..............................      1.5         17.4          --        3.1        1.6      51.9         --       8.0
                                              -----        -----       -----    -------------------------------------------------

  Total operating
   expenses ..............................     30.5        124.0          --       45.4       25.8     174.6     6548.8      48.0
Operating income
  (loss) .................................     11.8        (69.0)         --       (0.4)       8.7    (146.2)   (6515.5)    (15.0)
Interest income ..........................      0.1         15.9          --        1.6        0.1      14.0         --       1.8
Interest expense .........................     (6.8)        (4.8)                  (6.9)      (3.4)     (0.7)        --      (3.1)
Other income .............................      2.5          0.5          --        0.9        1.1       9.5        2.3       2.2
Other expense ............................     (0.1)          --          --       (0.3)      (0.1)       --                 (0.1)
                                              -----        -----       -----    -------------------------------------------------

Income (loss) before income taxes, minority
  interest and equity in earnings
  (losses) of associated companies,
  net of taxes ...........................      7.5        (57.4)         --       (5.0)       6.5    (123.4)   (6513.1)    (14.2)
Income taxes .............................     (1.1)         0.2          --       (1.0)      (1.5)     (0.1)        --      (1.3)
Minority interest ........................     (0.2)        20.1          --        1.7         --      65.9         --       8.3
Equity in earnings
  (losses) of associated
  companies ..............................      0.1           --          --        0.1        0.3     (16.3)        --      (1.8)
                                              -----        -----          --    -------------------------------------------------

Net income (loss) ........................      6.3%       (37.1)%        --       (4.2)%      5.3%    (73.9)%  (6513.1)%    (9.0)%
                                              =====        =====       =====    =================================================
41
Depreciation ...................     11.1%        18.6%      --       12.3%         7.2%      24.0%      199.1%     9.6%
Deferred stock
  compensation .................     10.6          3.1       --       10.3         16.0%       4.9%         --     14.9%
(1) Inclusive of deferred stock based compensation expenses $13,190
       thousand for IT services and $166 thousand for Internet services, in
       fiscal 2000, $30,862 thousand for IT services and $474 thousand for
       Internet services, in fiscal 2001 and $7,140 thousand for IT services and
       $72 thousand for Internet services, in fiscal 2002.

       (2) Inclusive of deferred stock based compensation expense of $3,267
       thousand for IT services and $308 thousand for Internet services in
       fiscal 2000, $13,357 thousand for IT services and $1,425 thousand for
       Internet services in fiscal 2001 and $3,339 thousand for IT services and
       $243 thousand for Internet services in fiscal 2002.

Comparison of fiscal 2002 and 2001

Revenues. Revenues increased by 33.6% to $414.5 million in fiscal 2002 from
$310.3 million in fiscal 2001. The revenue growth was primarily a result of
increases in revenues from IT services, which represented $377.3 million of
revenues in fiscal 2002 as compared to $273.5 million in fiscal 2001. In fiscal
2002, we derived approximately 91.0% of our total revenues from IT services,
approximately 8.8% of our total revenues from Internet services and 0.2% of our
total revenues from software products.

During fiscal 2002, we derived 72.0% of our revenues from the United States,
7.7% from India, 2.2% from Japan, 9.5% from Europe, and the remaining 8.6% from
other countries. During fiscal 2001, we derived 72.3% of our revenues from the
United States, 10.1% from India, 2.4% from Japan, 6.6% from Europe and the
remaining 8.6% from other countries.

Cost of revenues. Cost of revenues increased 14.8% to $239.0 million in fiscal
2002 from $208.1million in fiscal 2001. This increase was attributable primarily
to increases in associate compensation and benefits expenses, depreciation
expense and an increase in other expenses. Associate compensation and benefits
expenses increased 40.8% to $145.5 million, or 35.1% of revenues, in fiscal 2002
from $103.3 million, or 33.3% of revenues, in fiscal 2001. Depreciation expense
increased 40.2% to $21.6 million, or 5.2% of revenues, in fiscal 2002 from $15.4
million, or 5.0% of revenues, in fiscal 2001. Other expenses were primarily
comprised of cost of direct supplies. Other expenses increased 52.1% to $28.6
million, or 6.9% of revenues, in fiscal 2002 from $18.8 million, or 6.1% of
revenues, in fiscal 2001. These increases were partly compensated by a decrease
in deferred stock based compensation, communication expenses and travel
expenses. Deferred stock based compensation expense decreased 77.0% to $7.2
million, or 1.7% of revenues, in fiscal 2002 from $31.3 million, or 10.1% of
revenues, in fiscal 2001. Communication expenses decreased 4.1% to $18.5
million, or 4.5% of revenues, in fiscal 2002 from $19.3 million, or 6.2% of
revenues, in fiscal 2001. Travel expenses decreased 12.0% to $17.5 million, or
4.2% of revenues, in fiscal 2002 from $19.9 million, or 6.4% of revenues, in
fiscal 2001. Inter-segments cost of revenues were $3.4 million in fiscal 2002 as
compared to $1.2 million in fiscal 2001 and have not been allocated to the
individual components that make up cost of revenues. Cost of revenues
represented 57.7% of revenues in fiscal 2002 and 67.1% in fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 13.5% to $140.9 million in fiscal 2002 from
$124.1 million in fiscal 2001. This increase was a result primarily of increases
in associate compensation and benefits, profressional charges, travel expenses,
depreciation expense and other expenses. Compensation and benefits expenses
increased 69.1% to $44.4 million, or 10.7% of revenues, in fiscal 2002 from
$26.3 million, or 8.5% of revenues, in fiscal 2001. Professional charges
increased 57.2% to $11.9 million, or 2.9% of revenues, in fiscal 2002 from $7.6
million, or 2.5% of revenues, in fiscal 2001. Travel expenses increased 43.2% to
$10.3 million, or 2.5% of revenues, in fiscal 2002 from $7.2 million, or 2.3% of
revenues, in fiscal 2001. Depreciation expense increased 11.5% to $15.8 million,
or 3.8% of revenues, in fiscal 2002 from $14.2 million, or 4.6% of revenues, in
fiscal 2001. Other expenses increased 18.7% to $27.1 million, or 6.5% of
revenues, in fiscal 2002 from $22.8 million, or 7.4% of revenues, in fiscal
2001. These increase were partly compensated by a decrease in deferred stock
based compensation and marketing expenses. Deferred stock based compensation
expense decreased 75.8% to $3.6 million, or 0.9% of revenues, in fiscal 2002
from $14.8 million, or 4.8% of revenues, in fiscal 2001. Marketing expenses
decreased 33.9% to $9.9 million, or 2.4% of revenues, in fiscal 2002 from $15.0
million, or 4.8% of revenues, in fiscal 2001. Inter-segment selling, general and
administrative expenses were $0.3 million in fiscal 2002 as compared to $4.7
million in fiscal 2001 and have not been allocated to the individual components
that make up selling, general and administrative expenses. Selling, general and
administrative expenses represented 34.0% of

                                       42
revenues in fiscal 2002 as compared to 40.0% of revenues in fiscal 2001.

Amortization of goodwill. Amortization of goodwill expense was $16.9 million in
fiscal 2002 as compared to $24.7 million in fiscal 2001.

Impairment of goodwill: In the year ended March 31, 2002, Satyam recorded an
impairment charge of $81.1 million relating to goodwill acquired in the
IndiaWorld, India Plaza and Eduempire acquisitions by Infoway as a result of an
ongoing impairment assessment of goodwill recorded in connection with various
acquisitions. Since the operations of those entities have been completely
integrated into the operations of Infoway. Satyam assessed the recoverability of
goodwill arising out of the India World and India Plaza acquisitions at the
enterprise level of Infoway. The impairment charge was calculated as the
difference between the market value of Infoway and its net assets. The
assessment was performed due to significant decline in Infoway's stock price for
a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other-than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of $73.1 million, India Plaza of $8.0 million and
Eduempire of $50 thousand has been charged to the statement of operations for
the year ended March 31, 2002.

Operating income (loss). As a result of the foregoing, we incurred an operating
loss of $63.5 million in fiscal 2002 as compared to $46.6 million in fiscal
2001. Excluding primary non-cash items of amortization and impairment of
goodwill expense and deferred stock based compensation expense, operating income
would have been $45.4 million in fiscal 2002 and $24.2 million in fiscal 2001
and operating margin would have been 11.0% and 7.8% of total revenues in fiscal
2002 and 2001, respectively.

Interest income. Interest income was $3.8 million in fiscal 2002 and $5.7
million in fiscal 2001.

Interest expense. Interest expense decreased to $2.9 million in fiscal 2002 from
$9.6 million in fiscal 2001 primarily on account of repayment debt.

Gain of sale of shares in Infoway. Gain on sale of shares in Infoway was $45.6
million which was recognized in fiscal 2002. In June 2000, we completed a sale
of 347,200 equity shares to GSIC at a price of US$144 per share, subject to a
put option to sell the shares back to us. If Infoway had not completed an
initial public offering on a recognized stock exchange in India by September
2001. The put option held by GSIC expired unexercised on October 15, 2001.

Other income. Other income increased to $12.2 million in fiscal 2002 from $6.8
million in fiscal 2001 which was primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $78 thousand in fiscal 2002 and $0.3 million
in fiscal 2001.

Income taxes. Income taxes were $17.2 million in fiscal 2002 as compared to $4.1
million in fiscal 2001. The increase in income taxes is mainly on account of tax
paid on the capital gain on sale of shares of Infoway and the provision for
foreign taxes payable overseas by offsite and onsite centers, principally in the
United States.

Minority Interest. Minority interest increased to $73.4 million in fiscal 2002
from $25.8 million in fiscal 2001.

Equity in earnings (losses) of associated companies. Equity losses of associated
companies were $25.4 million in fiscal 2002 as compared to $5.5 million in
fiscal 2001 which was primarily due to impairment of goodwill associated with
our investment in CricInfo Limited. Satyam evaluates the recoverability of
goodwill relating to the investment in associated companies as current events or
circumstances warrant to determine whether adjustments are needed to their
carrying values. In the year ended March 2002, Satyam recorded a impairment
charge of $21.0 million relating to goodwill on the Cricinfo acquisition by
Infoway as a result of an impairment assessment.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth
assumption for Cricinfo at the time of acquisition. Due to the change in market
realities, management believes those revenue growth estimates would require
significant downward revision. The anticipated leadership and synergistic
benefits have also largely not realized. The current fair value of Cricinfo as
an independent entity is negligible due to its mounting cash losses coupled with
the adverse current market conditions. The impairment was based on

                                       43
discounted cash flow method considering historical results adjusted to reflect
management's best estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-than temporary. Hence, out of the carrying value of goodwill as at
September 30, 2001 of $24.5 million, $21.4 million has been charged to the
statement of operations for the year ended March 31, 2002. The management
believes that balance goodwill of $3.1 million is attributable to the future
discounted cash flows from Infoway's share in revenue.

Net income (loss). As a result of the foregoing, net income was $25.9 million in
fiscal 2002 as compared to a net loss of $27.9 million in fiscal 2001. Excluding
primary non-cash items of amortization and impairment of goodwill expense and
deferred stock based compensation expense, net income would have been $134.8
million in fiscal 2002 and $42.9 million in fiscal 2001 and net margin would
have been 32.5% and 13.8% in fiscal 2002 and 2001, respectively.

IT Services

Revenues. IT services revenues (including inter-segment revenues) increased
36.4% to $377.9 million in fiscal 2002 from $277.0 million in fiscal 2001, of
which $0.6 million and $3.5 million represented inter-segment revenues in fiscal
2002 and 2001, respectively. All "revenues" discussed in this sub-section relate
only to IT services revenues generated from external customers and exclude
inter-segment revenues generated from services provided by Satyam Computer
Services to its subsidiaries and vice-versa.

Our revenue growth primarily reflected the higher proportion of our service
offerings that address the system maintenance and packaged software integration.

During fiscal 2002, we derived 76.5% of our revenues from the United States,
10.4% from Europe, 2.4% from Japan, 1.6% from India and the remaining 9.1% from
the Middle East, Africa, Singapore and Australia. During fiscal 2001, we derived
78.6% of our revenues from the United States, 7.0% from Europe, 2.7% from Japan,
2.2% from India and the remaining 9.5% from the Middle East, Africa, Singapore
and Australia.

For purposes of the remainder of the discussion of the results of operations for
our business segments, except as specifically indicated, we have included all
inter-segment data for all items under discussion. Please refer to the "Results
of Operations" table above for an analysis of consolidation of the business
segments.

Cost of revenues. Cost of revenues increased 17.8% to $213.5 million in fiscal
2002 from $181.3 million in fiscal 2001. Cost of revenues represented 56.5% of
revenues in fiscal 2002 as compared to 65.5% in fiscal 2001. The increase in
cost of revenues was attributable primarily to an increase in associate
compensation and benefits; depreciation expenses and other expenses.
Compensation and benefit expenses increased 42.2% to $142.5 million, or 37.7% of
revenues in fiscal 2002 from $100.2 million, or 36.2% of revenues, in fiscal
2001 respectively. Depreciation expense increased 40.2% to $21.6 million, or
5.7% of revenues, in fiscal 2002 from $15.4 million, or 5.6% of revenues, in
fiscal 2001. Other expenses primary comprised cost of direct supplies, rental
expenses and professional charges. Other expenses increased 83.4% to $20.4
million, or 5.4% of revenues, in fiscal 2002 from $11.1million, or 4.0% of
revenues, in fiscal 2001. These increases were partly offset by a decrease in
deferred stock based compensation expense and travel expenses. Deferred stock
based compensation expense decreased 76.9% to $7.1 million, or 1.9% of revenues,
in fiscal 2002 from $30.9 million, or 11.1% of revenues. Travel expenses
decreased 12.0% to $17.5 million, or 4.6% of revenues, in fiscal 2002 from $19.9
million, or 7.2% of revenues, in fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 37.5% to $92.1 million in fiscal 2002 from
$67.0 million in fiscal 2001. Selling, general and administrative expenses
represented 24.4% of revenues in fiscal 2002 as compared to 24.2% in fiscal
2001. The increase in selling, general and administrative expenses was
attributable primarily to an increase in compensation and benefit expenses;
marketing expenses; profressional charges; travelling expenses and other
expenses. Compensation and benefit expenses increased 186.0% to $33.3 million,
or 8.8% of revenues, in fiscal 2002 from $11.6 million, or 4.2% of revenues, in
fiscal 2001. Marketing expenses increased 31.6% to $6.7 million, or 1.8% of
revenues, in fiscal 2002 from $5.1 million, or 1.8% of revenues, in fiscal 2001.
Professional charges increased 63.1% to $9.1 million, or 2.4% of revenues, in
fiscal 2002 from $5.6 million, or 2.0% of revenues, in fiscal 2001. Travelling
expenses increased 102.7% to $8.2 million, or 2.2% of revenues, in fiscal 2002
from $4.0 million, or 1.5% of revenues, in fiscal 2001. Other expenses increased
34.1% to $18.0 million, or 4.8% of revenues, in fiscal 2002 from $13.4 million,
or 4.9% of

                                       44
revenues, in fiscal 2001. These increase were primarily offset by a decrease in
deferred stock based compensation expense and depreciation expenses. Deferred
stock based compensation expense decreased 75.0% to $3.3 million, or 0.9% or
revenues, in fiscal 2002 from $13.4 million, or 4.8% of revenues, in fiscal
2001. Depreciation expenses decreased 24.3% of to $3.4 million, or 0.9% of
revenues, in fiscal 2002 from $4.4 million, or 1.6% of revenues, in fiscal 2001.

Amortization of goodwill. Amortization of goodwill was $4.3 million in fiscal
2002 as compared to 4.5 million in fiscal 2001. The goodwill expense reflects
the goodwill associated with the acquisition of the minority interest in SES in
September 1999.

Operating income (loss). As a result of the foregoing, operating income was
$68.0 million in fiscal 2002 as compared to $24.2 million in fiscal 2001.
Excluding primary non-cash items of amortization of goodwill expense and
deferred stock based compensation expense, operating income would have been
$82.8 million in fiscal 2002 and $72.9 million in fiscal 2001 and operating
margin would have been 21.9% and 26.3% of revenues in fiscal 2002 and 2001,
respectively.

Interest income. Interest income increased to $3.0 million in fiscal 2002 from
$0.3 million in fiscal 2001. The increase in interest income was attributable
primarily to interest earned on deposits kept out of proceeds from our ADS
offering.

Interest expense. Interest expense decreased to $2.8 million in fiscal 2002 from
$9.4 million in fiscal 2001 primarily on account of repayment of debt.

Gain of sale of shares in Infoway. Gain on sale of shares in Infoway was $45.6
million which was recognized in fiscal 2002. In June 2000, we completed a sale
of 347,200 equity shares to GSIC at a price of US$144 per share, subject to a
put option to sell the shares back to us. If Infoway had not completed an
initial public offering on a recognized stock exchange in India by September
2001. The put option held by GSIC expired unexercised on October 15, 2001.

Other income. Other income increased to $11.2 million in fiscal 2002 from $3.1
million in fiscal 2001 which was primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $58 thousand in fiscal 2002 and $0.3 million
in fiscal 2001.

Income taxes. Income taxes were $17.2 million in fiscal 2002 and $4.1 million in
fiscal 2001. The increase in income taxes is mainly on account of tax paid on
the capital gain on sale of shares of Infoway and the provision for foreign
taxes payable overseas by offsite and onsite centers, principally in the United
States.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $1.4 million in fiscal 2002 as compared to $0.9 million in fiscal
2001 primarily due to proportionate earnings associated with our investment in
Satyam Venture Engineering Services Limited and Satyam-GE Software Services (P)
Ltd.,

Net income (loss). As a result of the foregoing, net income was $109.2 million
in fiscal 2002 as compared to net income of $14.8 million in fiscal 2001.
Excluding primary non-cash items of amortization of goodwill expense and
deferred stock based compensation expense, net income would have been $124.0
million in fiscal 2002 and $63.5 million in fiscal 2001 and net margin would
have been 32.8% and 22.9% in fiscal 2002 and 2001, respectively.

Internet Services

Revenues. Internet services revenues (including inter-segment revenues) were
$39.4 million in fiscal 2002 and $39.0 million in fiscal 2001, of which
inter-segment revenues were $2.8 million in fiscal 2002 and $2.1 million in
fiscal 2001. The number of Internet access subscribers grew from more than
460,000 as of March 31, 2001 to over 600,000 as of March 31, 2002.

Cost of revenues. Cost of revenues increased 2.9% to $28.7 million in fiscal
2002 from $27.9 million in fiscal 2001. Cost of revenues represented 72.8% of
Internet services revenues in fiscal 2002 as compared to 71.5% in fiscal 2001.
The higher level of cost of revenues was attributable to compensation and
benefit expenses. Direct personnel costs for web development and customer
technical support increased 30.9% to $5.0 million, or 12.6% of revenues, in
fiscal 2002 from $3.8 million, or 9.7% of revenues, in fiscal 2001. These
increases were partially offset by a decrease in leased line costs which
decreased 8.6% to $14.1 million, or 35.9% of revenues, in fiscal 2002 from $15.5
million, or 39.7% of revenues, in fiscal 2001. Cost of hardware and software
purchased for resale was $6.0 million in fiscal 2002

                                       45
and $6.0 million fiscal 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $45.8 million in fiscal 2002 from $47.9 million in
fiscal 2001. Selling, general and administrative expense represented 116.3% of
Internet services revenues in fiscal 2002 as compared to 122.8% in fiscal 2001.
This decrease was primarily attributable to decrease in marketing expenses.
Marketing expenses decreased 66.8% to $3.2million, or 8.1% of revenues, in
fiscal 2002 from $9.6 million, or 24.5% of revenues, in fiscal 2001. This
decrease was partially offset by an increase in depreciation expense and
Indirect personnel costs. Depreciation expense increased 29.5% to $12.1 million,
or 30.7% of revenues, in fiscal 2002 from $9.3 million, or 24.0% of revenues, in
fiscal 2001. Personnel costs increased 0.3% to $9.6 million, or 24.5% of
revenues, in fiscal 2002 from $9.6 million, or 24.6% of revenues, in fiscal
2001.

Amortization of goodwill. Amortization of goodwill expense was $12.7 million in
fiscal 2002 as compared to $24.7 million in fiscal 2001.

Impairment of goodwill: In the year ended March 31, 2002, Satyam recorded an
impairment charge of $81.1 million relating to goodwill acquired in the
IndiaWorld, India Plaza and Eduempire acquisitions by Infoway as a result of an
ongoing impairment assessment of goodwill recorded in connection with various
acquisitions. Since the operations of those entities have been completely
integrated into the operations of Infoway. Satyam assessed the recoverability of
goodwill arising out of the India World and India Plaza acquisitions at the
enterprise level of Infoway. The impairment charge was calculated as the
difference between the market value of Infoway and its net assets. The
assessment was performed due to significant decline in Infoway's stock price for
a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other-than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of $73.1 million, India Plaza of $8.0 million and
Eduempire of $50 thousand has been charged to the statement of operations for
the year ended March 31, 2002.

Operating income (loss). As a result of the foregoing, operating loss increased
to $128.9 million in fiscal 2002 from $57.0 million in fiscal 2001. Excluding
primary non-cash items of amortization and impairment of goodwill expense and
deferred stock based compensation expense, operating loss would have been $34.8
million in fiscal 2002 and $34.9 million in fiscal 2001.

Interest income. Interest income decreased to $0.8 million in fiscal 2002 as
compared to $5.5 million in fiscal 2001 primarily due to reduction in deposits
with banks

Interest expense. Interest expense decreased to $45 thousand in fiscal 2002 from
$0.3 million in fiscal 2001.

Other Income. Other income was $1.0 million in fiscal 2002 as compared to $3.7
million in fiscal 2001.

Minority Interest. Minority interest increased to $73.3 million in fiscal 2002
from $25.7 million in fiscal 2001.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $26.8 million in fiscal 2002 as compared to $6.4 million in
fiscal 2001 which was primarily due to impairment of goodwill associated with
our investment in CricInfo Limited. Satyam evaluates the recoverability of
goodwill relating to the investment in associated companies as current events or
circumstances warrant to determine whether adjustments are needed to their
carrying values. In the year ended March 2002, Satyam recorded a impairment
charge of $21.4 million relating to goodwill on the Cricinfo acquisition by
Infoway as a result of an ongoing impairment assessment of goodwill recorded in
connection with various acquisitions.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth assumption
for Cricinfo at the time of acquisition. Due to the change in market realities,
management believes those revenue growth estimates would require significant
downward revision. The anticipated leadership and synergistic benefits have also
largely not realized. The current fair value of Cricinfo as an independent
entity is negligible due to its mounting cash losses coupled with the adverse
current market conditions. The impairment was based on
discounted cash flow method considering historical results adjusted to reflect
management's best estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-

                                       46
than temporary. Hence, out of the carrying value of goodwill as at September 30,
2001 of $24.5 million, $21.4 million has been charged to the statement of
operations for the year ended March 31, 2002. The management believes that
balance goodwill of $3.1 million is attributable to the future discounted cash
flows from Infoway's share in revenue.

Net income (loss). As a result of the foregoing, net loss increased to $80.7
million in fiscal 2002 from $28.8 million in fiscal 2001. Excluding primary
non-cash items of amortization and impairment of goodwill expense and deferred
stock based compensation expense, net income would have been $13.4 million in
fiscal 2002 as compared to net loss of $6.7 million in fiscal 2001.

Software Products

In fiscal 2002, VCI has generated revenues of $0.9 million of which $0.3 million
was from intersegment revenues. VCI incurred a $2.6 million net loss in fiscal
2002 as compared to a $13.9 million net loss in fiscal 2001.

The net loss of $2.6 million in fiscal 2002 was attributable primarily to
selling and general administrative expenses, research and development expenses
which primarily comprised employee compensation and benefits of $1.7 million and
professional charges of $0.4 million. The net loss of $13.9 million in fiscal
2001 was attributable primarily to research and development, selling and general
administrative expenses, which primarily comprised professional charges of $3.4
million and employee compensation and benefits of $6.3 million.

Comparison of fiscal 2001 and 2000

Revenues. Revenues increased by 88.7% to $310.3 million in fiscal 2001 from
$164.5 million in fiscal 2000. The revenue growth was primarily a result of
increases in revenues from IT services, which represented $273.5 million of
revenues in fiscal 2001 as compared to $149.3 million in fiscal 2000, and to a
lesser extent increases in revenues from Internet services. In fiscal 2001, we
derived approximately 88.1% of our total revenues from IT services,
approximately 11.9% of our total revenues from Internet services and no revenues
were generated from software products.

During fiscal 2001, we derived 72.3% of our revenues from the United States,
10.1% from India, 2.4% from Japan, 6.6% from Europe and the remaining 8.6% from
other countries. During fiscal 2000, we derived 74.9% of our revenues from the
United States, 10.0% from India, 6.3% from Japan, 5.2% from Europe, and the
remaining 3.6% from other countries.

Cost of revenues. Cost of revenues increased 130.1% to $208.1 million in fiscal
2001 from $90.4 million in fiscal 2000. This increase was attributable primarily
to increases in associate compensation and benefits expenses, deferred stock
based compensation expense, costs of international travel, communication
expenses and an increase in other expenses. Associate compensation and benefits
expenses increased 118.5% to $103.3 million, or 33.3% of revenues, in fiscal
2001 from $47.3 million, or 28.8% of revenues, in fiscal 2000. Deferred stock
based compensation expense increased 134.6% to $31.3 million, or 10.1% of
revenues, in fiscal 2001 from $13.4 million, or 8.1% of revenues, in fiscal 2000
due to higher prevailing prices of our equity shares and those of Infoway on the
dates we granted options. Travel expenses increased 94.3% to $19.9 million, or
6.4% of revenues, in fiscal 2001 from $10.3 million, or 6.2% of revenues, in
fiscal 2000. Communication expenses increased 248% to $19.3 million, or 6.2% of
revenues, in fiscal 2001 from $5.5 million, or 3.4% of revenues, in fiscal 2000.
Depreciation expense increased 94.0% to $15.4 million, or 5.0% of revenues, in
fiscal 2001 from $8.0 million, or 4.8% of revenues, in fiscal 2000. Other
expenses increased 211% to $18.8 million, or 6.1% of revenues, in fiscal 2001
from $6.1 million, or 3.7% of revenues, in fiscal 2000. Inter-segment cost of
revenues were $1.2 million in fiscal 2001 as compared to $5.9 million in fiscal
2000 and have not been allocated to the individual components that make up cost
of revenues. Cost of revenues represented 67.1% of revenues in fiscal 2001 and
55.0% in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 78.3% to $124.1 million in fiscal 2001 from
$69.6 million in fiscal 2000. This increase was a result primarily of increases
in associate compensation and benefits, deferred stock based compensation
expense, Marketing expenses and other expenses. Compensation and benefits
expenses increased 139.3% to $26.3 million, or 8.5% of revenues, in fiscal 2001
from $11.0 million, or 6.7% of revenues, in fiscal 2000. Deferred stock based
compensation expense increased 314% to $14.8 million, or 4.8% of revenues, in
fiscal 2001 from $3.6 million, or 2.2% of revenues, in fiscal 2000. Marketing
expenses increased 66.1% to $15.0 million, or 4.8% of revenues, in fiscal 2001
from $9.0 million, or 5.5% of revenues, in fiscal 2000. Other expenses increased
157.6% to $22.8 million, or 7.4% of revenues, in fiscal 2001 from $8.9 million,
or 5.4% of revenues, in fiscal 2000. Inter-segment selling, general and
administrative expenses were $4.7 million in fiscal 2001 as compared to $2.6
million in fiscal 2000 and have not been allocated to the individual

                                       47
components that make up selling, general and administrative expenses. Selling,
general and administrative expenses represented 40.0% of revenues in fiscal 2001
as compared to 42.3% of revenues in fiscal 2000.

Amortization of goodwill. Amortization of goodwill was $24.7 million in fiscal
2001 as compared to $5.0 million in fiscal 2000. The goodwill expense in fiscal
2001 reflects the amortization of goodwill associated with the acquisition of
the minority interest in SES in September 1999, the acquisition of IndiaWorld
and IndiaPlaza.com by Infoway.

Operating income (loss). As a result of the foregoing, we incurred an operating
loss of $46.6 million in fiscal 2001 as compared to $0.6 million in fiscal 2000.
Excluding primary non-cash items of amortization of goodwill and deferred stock
based compensation expense, operating income would have been $24.2 million in
fiscal 2001 and $21.3 million in fiscal 2000 and operating margin would have
been 7.8% and 13.0% of total revenues in fiscal 2001 and 2000, respectively.

Interest income. Interest income increased to $5.7 million in fiscal 2001 from
$2.6 million in fiscal 2000. This increase was attributable primarily to
interest earned on deposits placed with banks from Infoway's public offerings
proceeds.

Interest expense. Interest expense decreased to $9.6 million in fiscal 2001 from
$11.3 million in fiscal 2000.

Other income. Other income increased to $6.8 million in fiscal 2001 from $1.5
million in fiscal 2000. The increase is primarily on account of foreign currency
translation gains.

Other expense. Other expenses were $0.3 million in fiscal 2001 and $0.4 million
in fiscal 2000.

Income taxes. Income taxes were $4.1 million in fiscal 2001 as compared to $1.6
million in fiscal 2000. The increase in income taxes is mainly on account of
provision for foreign taxes payable overseas by offsite and onsite centers,
principally in United States.

Equity in earnings (losses) of associated companies. Equity losses of associated
companies were $5.5 million in fiscal 2001 as compared to $0.1 million in fiscal
2000 which was primarily due to proportionate losses associated with our
investment in Satyam Venture Engineering Services Limited, and amortization of
goodwill associated with our investment in CricInfo Limited.

Net income (loss). As a result of the foregoing, net loss was $27.9 million in
fiscal 2001 as compared to a net loss of $6.9 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, net income would have been $42.9 million in fiscal
2001 and $15.0 million in fiscal 2000 and net margin would have been 13.8% and
9.1% in fiscal 2001 and 2000, respectively.

IT Services

Revenues. IT services revenues (including inter-segment revenues) increased
78.7% to $277.0 million in fiscal 2001 from $155.0 million in fiscal 2000, of
which $3.5 million and $5.8 million represented inter-segment revenues in fiscal
2001 and 2000, respectively. All revenues discussed in this sub-section
"Revenues" relate only to IT services revenues generated from external customers
and exclude inter-segment revenues generated from services provided by Satyam
Computer Services to its subsidiaries and vice-versa.

Revenues continued to increase in all aspects of our services, except for system
maintenance. Our revenue growth primarily reflected the higher proportion of our
service offerings that address the software design and development, packaged
software integration and eBusiness requirements of our customers. In particular,
revenues from eBusiness projects were $74.9 million, or 27.4%, of our revenues
in fiscal 2001 as compared to $30.8 million, or 20.6%, of our revenues in fiscal
2000. The decline in revenues from system maintenance resulted from a reduction
in Year 2000 conversion projects. We derived 0% of our revenues from Year 2000
conversion projects in fiscal 2001 as compared to 5.5% of our revenues in fiscal
2000.

During fiscal 2001, we derived 78.6% of our revenues from the United States,
7.0% from Europe, 2.7% from Japan, 2.2% from India and the remaining 9.5% from
the Middle East, Africa, Singapore and Australia. During fiscal 2000,
we derived 81.4% of our revenues from the United States, 5.7% from Europe, 6.9%
from Japan, 2.1% from India and the remaining 3.9% from the Middle East, Africa,
Singapore and Australia.

For purposes of the remainder of the discussion of the results of operations for
our business segments, except as specifically indicated, we have included all
inter-segment data for all items under discussion. Please refer to the

                                       48
"Results of Operations" table above for an analysis of consolidation of the
business segments.

Cost of revenues. Cost of revenues increased 102.9% to $181.3 million in fiscal
2001 from $89.4 million in fiscal 2000. Cost of revenues represented 65.5% of
revenues in fiscal 2001 as compared to 57.7% in fiscal 2000. The increase in
cost of revenues as a percentage of revenues was attributable primarily to an
increase in associate compensation and benefits; travel expenses; depreciation
expenses and other expenses. Deferred stock based compensation expense increased
134.0% to $30.9 million, or 11.1% of revenues, in fiscal 2001 from $13.2
million, or 8.5% of revenues, in fiscal 2000 primarily due to higher market
prices of our equity shares on the dates we granted options and reduced vesting
periods for our options. Compensation and benefit expenses increased 95.1% to
$100.2 million, or 36.2% of revenues in fiscal 2001 from $51.4 million, or 33.1%
of revenues, in fiscal 2000 respectively, resulting primarily from a larger
number of technical associates, which increased 74.4% from 4,478 to 7,798, and
an increase in salaries. Travel expenses increased 94.3% to $19.9 million, or
7.2% of revenues, in fiscal 2001 from $10.3 million, or 6.6% of revenues, in
fiscal 2000. Depreciation expense increased 94.0% to $15.4 million, or 5.6% of
revenues, in fiscal 2001 from $8.0 million, or 5.1% of revenues, in fiscal 2000.
Other expenses increased 165.0% to $11.1 million, or 4.0% of revenues, in fiscal
2001 from $4.2 million, or 2.7% of revenues, in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 49.1% to $67.0 million in fiscal 2001 from
$44.9 million in fiscal 2000. Selling, general and administrative expenses
represented 24.2% of revenues in fiscal 2001 as compared to 29.0% in fiscal
2000. The decrease in selling, general and administrative expenses as a
percentage of revenues was attributable primarily to a decrease in marketing
expenses resulting from an increase in our direct marketing efforts, as well as
decreased depreciation expenses, rent expense and compensation and benefit
expenses as a percentage of revenues. Depreciation expenses decreased to 1.6% of
revenues, or $4.4 million, in fiscal 2001 from 5.3% of revenues, or $8.2
million, in fiscal 2000. Marketing expenses decreased to 1.8% of revenues, or
$5.1 million, in fiscal 2001 from 4.3% of revenues, or $6.7 million, in fiscal
2000. Rental expenses decreased to 0.7% of revenues, or $2.0 million, in fiscal
2001 from 2.2% of revenues, or $3.4 million, in fiscal 2000. Compensation and
benefit expenses decreased to 4.2% of revenues, or $11.6 million, in fiscal 2001
from 5.1% of revenues, or $7.9 million, in fiscal 2000. These decreases were
partially offset by an increase in deferred stock based compensation expense and
other expenses as a percentage of revenues. Deferred stock based compensation
expense increased to 4.8% of revenues, or $13.4 million, in fiscal 2001 from
2.1% of revenues, or $3.3 million, in fiscal 2000. Other expenses increased to
4.9% of revenues, or $13.4 million in fiscal 2001 from 4.2% of revenues, or $6.4
million in fiscal 2000.

Amortization of goodwill. Amortization of goodwill was $4.5 million in fiscal
2001 as compared to $2.4 million in fiscal 2000. The goodwill expense reflects
the goodwill associated with the acquisition of the minority interest in SES in
September 1999.

Operating income (loss). As a result of the foregoing, operating income was
$24.2 million in fiscal 2001 as compared to an operating income of $18.4 million
in fiscal 2000. Excluding primary non-cash items of amortization of goodwill
expense and deferred stock based compensation expense, operating income would
have been $72.9 million in fiscal 2001 and $37.2 million in fiscal 2000 and
operating margin would have been 26.3% and 24.0% of revenues in fiscal 2001 and
2000, respectively.

Interest income. Interest income increased to $0.3 million in fiscal 2001 from
$0.2 million in fiscal 2000.

Interest expense. Interest expense was $9.4 million in fiscal 2001 and $10.5
million in fiscal 2000.

Other income. Other income decreased to $3.1 million in fiscal 2001 from $3.8
million in fiscal 2000. The other income was primarily on account of foreign
currency translation gains.

Other expense. Other expenses were $0.3 million in fiscal 2001 and $0.2 million
in fiscal 2000.

Income taxes. Income taxes were $4.1 million in fiscal 2001 and $1.7 million in
fiscal 2000. The increase in income taxes is mainly on account of provision for
foreign taxes payable overseas by offsite and onsite centers, principally in
United States.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $0.9 million in fiscal 2001 as compared to $0.1 million in fiscal
2000 primarily due to proportionate losses associated with our investment in
Satyam Venture Engineering Services Limited.

                                       49
Net income (loss). As a result of the foregoing, net income was $14.8 million in
fiscal 2001 as compared to net income of $9.8 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, net income would have been $63.5 million in fiscal
2001 and $28.6 million in fiscal 2000 and net margin would have been 22.9% and
18.5% in fiscal 2001 and 2000, respectively.

Internet Services

Revenues. Internet services revenues (including inter-segment revenues)
increased 153.1% to $39.0 million in fiscal 2001 from $15.4 million in fiscal
2000, of which inter-segment revenues were $2.1 million in fiscal 2001 and $0.2
million in fiscal 2000. This increase was attributable primarily to a
significant increase in the corporate services businesses and a significant
number of new orders from prominent customers throughout India. The number of
Internet access subscribers grew from more than 151,000 as of March 31, 2000 to
over 460,000 as of March 31, 2001. Corporate customers grew from more than 500
as of March 31, 2000 to more than 650 as of March 31, 2001.

Cost of revenues. Cost of revenues increased 302% to $27.9 million in fiscal
2001 from $6.9 million in fiscal 2000. Cost of revenues represented 71.5% of
Internet services revenues in fiscal 2001 as compared to 45.0% in fiscal 2000.
The higher level of cost of revenues as a percentage of revenues was
attributable primarily to increases in the cost of hardware and software
purchased from strategic partners for resale, leased line costs resulting
primarily from increased requirement for international bandwidth and last mile
connectivity. The cost of hardware and software purchased for resale was $6.0
million, or 15.4% of revenues, in fiscal 2001 from $1.6 million, or 10.3% of
revenues in fiscal 2000. Leased line costs increased 399% to $15.5 million, or
39.7% of revenues, in fiscal 2001 from $3.1 million, or 20.1% of revenues, in
fiscal 2000. These increases were partially offset by a decrease in direct
personnel costs for web development and customer technical support as a
percentage of revenues. Direct personnel costs for web development and customer
technical support decreased to 9.7% of revenues or $3.8 million, in fiscal 2001
from 11.8% of revenues, or $1.8 million, in fiscal 2000.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 191.3% to $47.9 million in fiscal 2001 from
$16.4 million in fiscal 2000. Selling, general and administrative expense
represented 122.8% of Internet services revenues in fiscal 2001 as compared to
106.6% in fiscal 2000. This increase was attributable to an increase in indirect
personnel costs, depreciation expenses and marketing expenses. Indirect
personnel costs increased 349% to $9.6 million, or 24.6% of revenues, in fiscal
2001 from $2.1 million, or 13.9% of revenues, in fiscal 2000 primarily due to a
growth in staff from 622 as of March 31, 2000 to 1,044 as of March 31, 2001.
Marketing expenses increased 306% to $9.6 million, or 24.5% of revenues, in
fiscal 2001 from $2.4 million, or 15.3% of revenues, in fiscal 2000 primarily
due to the launch of our consumer Internet Access Services Division and Portals
Division.

Amortization of goodwill expense. Amortization of goodwill was $20.2 million in
fiscal 2001 as compared to $2.7 million in fiscal 2000. The goodwill expense in
fiscal 2001 reflects the amortization of goodwill associated with the
acquisition of IndiaWorld, IndiaPlaza and investment in CricInfo Limited.

Operating income (loss). As a result of the foregoing, operating loss increased
to $57.0 million in fiscal 2001 from $10.6 million in fiscal 2000. Excluding
primary non-cash items of amortization of goodwill expense and deferred stock
based compensation expense, operating loss would have been $34.9 million in
fiscal 2001 and $7.5 million in fiscal 2000.

Interest income. Interest income increased to $5.5 million in fiscal 2001 as
compared to $2.4 million in fiscal 2000. This increase was attributable
primarily to interest earned from short term deposits.

Interest expense. Interest expense decreased to $0.3 million in fiscal 2001 from
$0.6 million in fiscal 2000.

Other Income. Other income increased to $3.7 million in fiscal 2001 from $80
thousand in fiscal 2000.

Minority Interest. Minority interest increased to $25.7 million in fiscal 2001
from $3.1 million in fiscal 2000.

Equity earnings (losses) of associated companies. Equity losses of associated
companies were $6.4 million in fiscal 2001 primarily due to amortization of
goodwill associated with our investment in Refco Sify, Placements.com and
CricInfo Limited.

Net income (loss). As a result of the foregoing, net loss increased to $28.8
million in fiscal 2001 from $5.7 million in fiscal 2000. Excluding primary
non-cash items of amortization of goodwill expense and deferred stock based

                                       50
compensation expense, net loss would have been $6.7 million in fiscal 2001 and
$2.6 million in fiscal 2000.

Software Products

VCI was building its sales and marketing team and generated no revenues in
fiscal 2001. VCI incurred a $13.9 million net loss in fiscal 2001 as compared to
a $11.0 million net loss in fiscal 2000.

The net loss of $13.9 million in fiscal 2001 was attributable primarily to
research and development, selling and general administrative expenses, which
primarily comprised professional charges of $3.4 million and employee
compensation and benefits of $6.3 million. The net loss of $11.0 million in
fiscal 2000 was attributable primarily to professional charges and software
product research and development expenses of $8.7 million, most of which were
costs paid to Satyam for development work undertaken on the product.

Liquidity and Capital Resources

Net cash provided by (used in) operating activities. Net cash provided by
operating activities was $116.4 million, $5.9 million and $14.1 million in
fiscal 2002, 2001 and 2000, respectively.

In fiscal 2000, non-cash adjustments to reconcile the $6.9 million net loss to
net cash provided by operating activities consisted primarily of depreciation
and amortization of $25.3 million and deferred stock based compensation expenses
of $16.9 million. These adjustments were partially offset by an increase in
working capital, consisting mainly of an increase in net accounts receivable and
unbilled revenues of $23.2 million, and an increase in pre-paid expenses, other
receivables and inventory of $10.3 million. Net accounts receivable and unbilled
revenues increased primarily as a result of a significant increase in our
revenues. Pre-paid expenses, other receivables and inventory increased primarily
as a result of increased prepayments relating to Infoway's use of leased
telecommunications lines, satellite link charges and insurance premiums.

In fiscal 2001, non-cash adjustments to reconcile the $27.9 million net loss to
net cash provided by operating activities consisted primarily of deferred stock
based compensation expenses of $46.1 million and depreciation and amortization
of $54.5 million. These adjustments were partially offset by an increase in net
accounts receivable and unbilled revenues of $49.5 million. Net accounts
receivable and unbilled revenues increased primarily as a result of a
significant increase in our revenues.

In fiscal 2002, non-cash adjustments to reconcile the $25.9 million net income
to net cash used in operating activities consisted primarily of deferred stock
based compensation expense of $10.8 million and depreciation, amortization and
impairment of goodwill expense of $136.3 million.

Net cash used in investing activities. Net cash used in investing activities was
$40.4 million, $137.8 million and $83.6 million in fiscal 2002, 2001 and 2000,
respectively. Net cash used in investing activities was primarily related to
purchases of premises and equipment of $40.8 million and acquisitions and
investments in associated companies of $40.2 million in fiscal 2000. Net cash
used in investing activities in fiscal 2001 was primarily related to
acquisitions and investments in associated companies of $52.5 million; and
purchases of premises and equipment of $84.8 million consisted primarily of
infrastructure, computers and other equipment associated with the expansion in
headcount as we continued to grow. Net cash used in investing activities in
fiscal 2002 was primarily related to acquisitions and investments in associated
companies of $4.6 million; and purchases of premises and equipment of $34.2
million consisted primarily of infrastructure, computers and other equipment
associated with the expansion.

Net cash provided by financing activities. Net cash provided by financing
activities was $110.7 million, $14.2 million and $251.7 million in fiscal 2002,
2001 and 2000, respectively. In addition to using cash generated from
operations, we financed our continuing expansion primarily through capital
raising activities in fiscal 2000, through sale of investments in fiscal 2001
and through capital raising activities in fiscal 2002.

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) at a price of $9.71 per ADS. We received approximately
$152.7 million in cash, net of underwriting discounts, commissions and
other offering costs. Our Securities Act registration statement on Form F-1 with
respect to the offering was declared effective by the Securities and Exchange
Commission on May 14, 2001 (Registration No. 333-13464). As of April 30, 2002,
approximately $64.3 million of these proceeds have been used for prepayment of
loans ($26.9 million); strategic investments in our subsidiaries and others
($10.6 million); development of facilities and infrastructure ($7.2 million) and
working capital and general corporate purposes ($19.6 million). We intend to use
the balance of the net proceeds

                                       51
to fund expansion of our existing facilities and communication network in
different locations in India and outside India; to develop new facilities within
and outside India; to invest in joint ventures and other strategic investments;
and for working capital and general corporate purposes. None of the net proceeds
from our ADS offering were paid, directly or indirectly, to any of our
directors, officers or general partners or any of their associates, or to any
persons owning ten percent or more of any class of our equity securities, or any
affiliates.

As of March 31, 2002, we had $243.5 million in cash and cash equivalents (of
which $16.7 million was held by Infoway and therefore may not be accessible to
us), $1.8 million in short term debt, $5.5 million in other outstanding rupee
denominated loans. As of March 31, 2002, we have unused short term working
capital line of credit of $7.2 million from a bank and unused non-funded lines
of credit of $4.8 million from banks.

The following table describes our outstanding credit facilities as at March 31,
2002 :
Amount          Interest         Computation
                                                                     -------------------------------------------------
Loan Type                            Lenders                          Outstanding      (per annum)          Method
---------                            -------                         -----------------------------          ------
                                                                     (in thousands)
Rupee Loan of Satyam            Citibank N.A. and                        $4,155       13.0% to 14.25%      Variable
Associates Trust                    ICICI Bank

Other loans                       Various parties                         1,344      different interest     Fixed
                                                                                           rates

Short Term Debt of Satyam
Manufacturing Technology Inc         T R W Inc                              789                  6.0%       Fixed

Short term Overdraft of
Satyam Europe Ltd., .........                                               975

Total .......................                                            $7,263
We expect Infoway to continue incurring losses in the near future. Based upon
Infoway's present business and funding plans and a May 2001 government policy
change that increased the permissible foreign ownership in certain internet
service providers, including Infoway, from 49.0% to 74.0%, we believe that
Infoway's cash and cash equivalents of $16.7 million as of March 31, 2002 and,
if necessary, other resources believed to be available, are sufficient to meet
its currently known requirements through March 31, 2003, and we do not expect to
have to provide it with any funds. In light of the highly dynamic nature of
Infoway's business, however, we cannot assure you that its capital requirements
and sources will not change significantly in the future or whether or not it may
seek future financial support from us.

In order to provide further financial flexibility, Infoway is actively
investigating opportunities to raise additional capital, which could be in
the form of debt, equity, or a combination. Infoway's ability to raise funds
through the sale of equity is limited by foreign ownership restrictions
imposed on it by Indian law and the terms of its Internet service provider
license.  Government of India policies previously limited the total foreign
equity in an Internet service provider to 49%. In May 2001, the Department
of Commerce and Industry increased the limit on foreign direct investment
for Internet companies, such as Infoway,  from 49% to 74%.  Infoway's
license was reissued in April 2002, increasing the maximum permitted level
of foreign equity investment in Infoway to 74% and also permitting Infoway
to provide Internet telephony, subject to the terms of operation as detailed
in the license. If additional funds are raised through the issuance of
equity or convertible debt securities, the percentage ownership of Infoway's
stockholders and the holders of its ADSs will be reduced and these
securities may have rights, preferences or privileges senior to those of
Infoway's stockholders and the holders of its ADSs.  We cannot assure you
that additional financing will be available on terms favorable to Infoway,
at all. If adequate funds are not available on acceptable terms, Infoway's
ability to fund and expand its operations, take advantage of unanticipated
opportunities, develop or enhance Internet content, features or services, or
otherwise respond to competitive pressures will be significantly limited.
Infoway's business, results of operations and financial condition could be
materially adversely affected by any such limitation.

We anticipate capital expenditures of approximately $40.0 million during fiscal
2003, principally to finance construction of new facilities in our offshore
centres; expand facilities in offshore centers in India and establish offsite
centers outside India. We believe that existing cash and cash equivalents, net
proceeds from our May 2001 ADS offering and funds generated from operations will
be sufficient to meet these requirements. However, we may significantly alter
our proposed capital expenditures plans and accordingly, may require additional
financing to meet our requirements. After fiscal 2003, we may require additional
financing to fund our working capital and capital expenditure requirements. In
either case, we cannot assure you that additional financing will be available at
all or, if available, that such financing will be obtained on terms favorable to
us or that any additional financing will not be dilutive to our shareholders.

The following table sets forth our contractual obligations and commitments to
make future payments as of March 31, 2002. The following table does not give
effect to the issuance of our convertible notes and excludes our accounts
payable, accrued operating expenses and other current liabilities which are
payable in normal course of operations.
Fiscal ended March 31, 2002, Payments due
                                        ------------------------------------------------------------------------------
                                        within 1 year   2-3 years       4-5 years      after 5 years         Total
                                        -------------  -------------   -------------   ---------------   -------------
                                                                       (thousands)
Long term debt                              $2,787        $2,712             -           -                  $5,499
Capital leases                                  82            84             2           -                     168
Operating leases
Unconditional purchase obligations:
    Other commercial commitments             1,034           500             -           -                   1,534
52
Bank guarantees                     1,356        281       173         -        1,810
    Letters of credit                     754          -         -         -          754
Total contractual cash obligations      6,001      3,589       175         -        9,765
In April 2001, following the completion of the latest version of VisionCompass,
we decided to restructure VCI by reducing product development and general and
administrative expenses. As part of the restructuring, the services of
approximately forty personnel, including the Chief Executive Officer, Dr. Robert
Bismuth, were terminated.

Following the restructuring, VCI put in place a business development plan that
has begun to show results. VCI recorded revenues of $0.9 million in fiscal 2002.

Income Tax Matters

As of March 31, 2002, we had an operating loss carry forward of approximately
$35.1 million for tax purposes including valuation allowance. Under Indian law,
loss carry forwards from a particular year may be used to offset taxable income
over the next eight years.

The statutory corporate income tax rate in India is currently 35.0%. This tax
rate is presently subject to a 2.0% surcharge resulting in an effective tax rate
of 35.7%. However, we cannot assure you that additional surcharges will not be
implemented by the government of India. Satyam Computer Services benefits from
certain significant tax incentives provided to software entities under Indian
tax laws. These incentives presently include: (i) an exemption from payment of
Indian corporate income taxes for a period of ten consecutive years of
operations of software development facilities designated as "Software Technology
Parks" ("STP units"); and (ii) a tax deduction for profits from exporting
computer software. The benefits of these tax incentives have historically
resulted in an effective tax rate for Satyam Computer Services well below
statutory rates. Further, most of Satyam Computer Services operations are from
STP units which are entitled to a tax holiday of ten years from the date of
commencement of operations. STP units registered after March 31, 2001 are not
entitled to the above exemption. In case of Satyam Computer Services for various
registered STP units these exemptions expire starting from fiscal 2006 through
fiscal 2010. However, Satyam Computer Services earns certain other income and
domestic income, which are taxable irrespective of the tax holiday as stated
above. Satyam Computer Services subsidiaries are subject to income taxes of the
countries in which they operate.

Effects of Inflation

Inflation has not had a significant effect on our results of operations and
financial condition to date. However, India has experienced relatively high
rates of inflation in the recent past. According to the Economist Intelligence
Unit, the rates of inflation in India for 1997, 1998, 1999 and 2000 were 7.2%,
13.2%, 4.7% and 5.1%, respectively, and the projected rate of inflation in India
for 2001 is 5.3%.

Under Infoway's Internet service provider license, Infoway is given the right to
establish the prices it charges to its subscribers, as determined by market
forces. However, under the conditions of Infoway's license, the TRAI may review
and fix the prices Infoway charges its subscribers at any time. If the TRAI were
to fix prices for the Internet service provider services Infoway provides,
Infoway might not be able to increase the prices it charges its subscribers to
mitigate the impact of inflation, which could seriously harm Infoway's business.

Exchange Rates

The following table sets forth, for each of the months indicated, information
concerning the number of Indian rupees for which one U.S. dollar could be
exchanged based on the average of the noon buying rate in the City of New York
on the last day of each month during each of such months for cable transfers in
Indian rupees as certified for customs purposes by the Federal Reserve Bank of
New York:
Month                              Month End    Average        High     Low
            -----                              ---------    -------        ------------
                                                           (in Rupees)
March 2001 ...............................      46.85         46.64       46.85     46.43
April 2001 ...............................      46.86         46.80       47.05     46.48
May 2001 .................................      47.00         46.94       47.05     46.74
June 2001 ................................      47.09         47.04       47.09     47.00
July 2001 ................................      47.18         47.18       47.21     47.11
53
August 2001 ...................................     47.17     47.17      47.19      47.11
September 2001 ................................     47.90     47.75      48.91      47.20
October 2001 ..................................     48.04     48.05      48.17      47.96
November 2001 .................................     47.98     48.04      48.11      47.98
December 2001 .................................     48.27     47.93      48.29      47.80
January 2002 ..................................     48.56     48.35      48.56      48.27
February 2002 .................................     48.76     48.72      48.90      48.55
March 2002 ....................................     48.83     48.77      48.83      48.71
The following table sets forth, for the fiscal years indicated, information
concerning the number of Indian rupees for which one U.S. dollar could be
exchanged based on the average of the noon buying rate in the City of New York
on the last day of each month during the period for cable transfers in Indian
rupees as certified for customs purposes by the Federal Reserve Bank of New
York:
Fiscal Year Ended March 31,                       Period End       Average      High     Low
---------------------------                       ----------       -----------------     ---
1996 (from December 12, 1995) .................      34.22           35.49    38.35    .33.65
1997 ..........................................      35.94           35.52    35.98     33.75
1998 ..........................................      39.50           37.18    40.40     35.33
1999 ..........................................      42.44           42.08    43.68     39.25
2000 ..........................................      43.63           43.34    43.82     42.20
2001 ..........................................      46.85           45.70    46.91     43.56
2002 ..........................................      48.83           47.71    48.91     46.58
CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. The following is a brief discussion of the more
significant accounting policies and methods used by us. In addition, Financial
Reporting Release No. 61 was recently released by the SEC to require all
companies to include a discussion to address, among other things, liquidity,
off-balance sheet arrangements, contractual obligations and commercial
commitments.

We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations is discussed
throughout management's Discussion and Analysis of Financial Condition and
Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 1 in the Notes to the Consolidated Financial
Statements in Item 17 of this Annual Report on Form 20-F, beginning on page
F-10.

Note that our preparation of this Annual Report on Form 20-F requires us to make
estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Management bases its estimates and judgements on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgements about the carrying values of assets and liabilities that are
not readily apparent from other sources. There can be no assurance that actual
results will not differ from those estimates.

Management believes the following critical accounting policies, among others,
affect its more significant judgements and estimates used in the preparation of
its consolidated financial statements.

Revenue recognition

Our revenue recognition policy is significant because our revenue is a key
component of our results of operations. We follow very specific and detailed
guidelines in measuring revenue; however, certain judgments affect the
application of our revenue policy. Revenue results are difficult to predict, and
any shortfall in revenue or delay in recognizing revenue could cause our
operating results to vary significantly from quarter to quarter and could result
in future operating losses.

We derive our revenue from primarily two sources (i) IT services, which includes
software development, system maintenance, package software implementation,
engineering design services and ebusiness, and (ii) internet services

                                       54
which includes consumer internet access services, corporate network / data and
e-consulting services, and online portal and content offerings.

Revenues from IT services

Revenues earned from services performed on a "time and material" basis are
recognized as the services are performed. IT services performed on time bound
fixed-price engagements, require accurate estimation of the costs which include
salaries and related expenses of technical associates, related communication
expenses, travel costs, scope and duration of each engagement. Revenue and the
related costs for these projects are recognized on percentage of completion,
with revisions to estimates reflected in the period in which changes become
known. Provisions for estimated losses on such engagements are made during the
period in which a loss becomes probable and can be reasonably estimated. We
recognize revenue based on the completed-contract method where the work to
complete cannot be reasonably estimated.

We provide our clients with one to three months warranty as post-sale support
for its fixed price engagements. Costs associated with such services are accrued
at the time the related revenues are recorded. Historically, Satyam has not
incurred any expenditure on account of warranties and since the customer is
required to formally sign off on the work performed, any subsequent work is
usually covered by an additional contract.

Revenues from Internet services

Revenues from corporate network services, which include providing e-commerce
solutions, electronic data interchange and other network based services, are
recognized upon actual usage of such services by customers and are based on
either the time for which the network is used or the volume of data transferred,
or both.

Revenues from web-site hosting are recognized ratably over the period for which
the site is hosted. Revenue from development of internet networking solutions
comprise income from time and material contracts and fixed price contracts.
Revenues are recognized in accordance with the revenue recognition policy of IT
Services.

Internet access is provided to customers either for unlimited hours or for a
specified number of hours, which is to be utilized within a specified period of
time. Customers purchase a CD-ROM that allows them to access the Internet. The
amounts received from customers on the sale of these CD-ROMs are not refundable.
Satyam recognizes revenue based on usage by the customer over the specified
period. At the end of the specified period, the remaining unutilized hours, if
any, are recognized as revenue. Unlimited internet access and electronic mail
access is sold to customers for a specified period of time over which the
related revenue is recognized.

Revenues from banner advertisements and sponsorship contracts are recognized
ratably over the period in which the advertisements are displayed. Revenues from
electronic commerce transactions are recognized when the transaction is
completed.

Impairment of Goodwill

We assess the impairment of identifiable intangibles, long-lived assets and
related goodwill and enterprise level goodwill whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors
we consider important which could trigger an impairment review include the
following:

..  significant underperformance relative to expected historical or projected
   future operating results;

..  significant changes in the manner of our use of the acquired assets or the
   strategy for our overall business;

..  significant negative industry or economic trends;

..  significant decline in our stock price for a sustained period; and

..  our market capitalization relative to net book value.

When we determine that the carrying value of intangibles, long-lived assets and
related goodwill and enterprise level goodwill may not be recoverable based upon
the existence of one or more of the above indicators of impairment, we
measure any impairment based on a projected discounted cash flow method using a
discount rate determined by our management to be commensurate with the risk
inherent in our current business model.

In 2002, Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets" became effective and upon adoption of SFAS 142,
amortization of goodwill recorded for business combinations

                                       55
consummated prior to July 1, 2001 will cease, and intangible assets acquired
prior to July 1, 2001 that do not meet the criteria for recognition under SFAS
141 will be reclassified to goodwill. We adopted SFAS 142 on April 1, 2002. As a
result of the adoption of SFAS 142, amortization of goodwill will be lower by
approximately US$4.3 million in the year ending March 31, 2003 as compared to
the year ended March 31,2002.

In lieu of amortization, we are required to perform an initial impairment review
of our goodwill in 2002 and an annual impairment review thereafter.

Future events could cause us to conclude that impairment indicators exist and
that goodwill associated with our acquired businesses is impaired. Any resulting
impairment loss could have a material adverse impact on our financial condition
and results of operations.

Accounts Receivable

The Company also estimates the amount of uncollectable receivables each period
and establishes an allowance for uncollectable amounts. The amount of the
allowance is based on the age of unpaid amounts, information about the
creditworthiness of customers, and other relevant information. Estimates of
uncollectable amounts are revised each period, and changes are recorded in the
period they become known. A significant change in the level of uncollectable
amounts would have a significant effect on the Company's results of operations.

Accounting for income taxes.

As part of the process of preparing our consolidated financial statements we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves us estimating our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items for tax and accounting purposes. These differences result in deferred
tax assets and liabilities, which are included within our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be
recovered from future taxable income and to the extent we believe that recovery
is not likely, we must establish a valuation allowance. To the extent we
establish a valuation allowance or increase this allowance in a period, we must
include an expense within the tax provision in the statement of operations.

The provision for foreign taxes is due to income taxes payable in overseas tax
jurisdictions by its offsite and onsite centers, principally in the United
States. Satyam Computer Services benefits from certain significant tax
incentives provided to software entities under Indian tax laws. These incentives
presently include: (i) an exemption from payment of Indian corporate income
taxes for a period of ten consecutive years of operations of software
development facilities designated as "Software Technology Parks"; and (ii) a tax
deduction for profits from exporting computer software. The benefits of these
tax incentives have historically resulted in an effective tax rate for Satyam
Computer Services well below statutory rates. Further, most of Satyam Computer
Services' operations are from "Software Technology Parks" ("STP units") which
are entitled to a tax holiday of ten years from the date of commencement of
operations. STP units registered after March 31, 2001 are not entitled to the
above exemption. In Satyam Computer Services various registered STP units these
exemptions expire starting from fiscal 2006 through fiscal 2010. However, Satyam
Computer Services earns certain other income and domestic income, which are
taxable irrespective of tax holiday as stated above. Satyam Computer Services
subsidiaries are subject to income taxes of the countries in which they operate.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. The valuation allowance
is based on our estimates of taxable income by jurisdiction in which we operate
and the period over which our deferred tax assets will be recoverable. In the
event that actual results differ from these estimates or we adjust these
estimates in future periods we may need to establish an additional valuation
allowance which could materially impact our financial position and results of
operations.

Impact of Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued FASB
Statements Nos. 141 and 142 ("SFAS 141" and "SFAS 142"), "Business Combinations"
and "Goodwill and Other Intangible Assets". SFAS 141 replaces APB 16 and
eliminates pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill. Adoption of SFAS No. 141 did not have an
impact on our financial position and results of operations.

SFAS 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Under SFAS 142, goodwill and indefinite-lived
intangibles will be tested annually and whenever events or circumstances occur
indicating that they might be impaired. Goodwill is tested for impairment
employing a two-step method. First

                                       56
the fair value of the reporting unit is compared to its carrying amount. If the
fair value is less than the carrying amount, the impairment is measured as the
excess of recorded goodwill over its implied fair value. Indefinite-lived
intangibles are tested for impairment by comparing the carrying amount to the
fair value. SFAS 141 and SFAS 142 are effective for all business combinations
completed after June 30, 2001. Upon adoption of SFAS 142, amortization of
goodwill recorded for business combinations consummated prior to July 1, 2001
will cease, and intangible assets acquired prior to July 1, 2001 that do not
meet the criteria for recognition under SFAS 141 will be reclassified to
goodwill. We adopted SFAS 142 on April 1, 2002, the beginning of fiscal 2002. As
a result of the adoption of SFAS 142, amortization of goodwill will be lower by
approximately $4.3 million in the year ending March 31, 2003 as compared to the
year ended March 31, 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 144 applies to all long-lived assets (including
discontinued operations) and consequently amends APB No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Division of a
Business". SFAS No. 144 develops an accounting model for long-lived assets that
are to be disposed of by sale and requires the measurement to be at the lower of
book value or fair value, less the cost to sell the assets. Additionally, SFAS
No. 144 expands the scope of discontinued operations to include all components
of an entity with operations that (1) can be distinguished from the rest of the
entity and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. We do not expect the provisions of SFAS No. 144 to have a
significant impact on our financial position or operating results following its
adoption on April 1, 2002.

Item 6. DIRECTORS, AND OFFICERS OF REGISTRANT

Directors and Officers

The following table sets forth the name, age, and position of each director and
executive officer of Satyam Computer Services, as of April, 25, 2002:
Name                                Age     Position Held
   ----                                ---     -------------
Directors

B. Ramalinga Raju .................    46      Chairman
B. Rama Raju ......................    43      Managing Director and Chief Executive Officer (3)
C. Srinivasa Raju. ................    41      Director
V. P. Rama Rao ....................    68      Director (1) (2) (3)
C. Satyanarayana ..................    73      Director (1) (2) (3)
Dr. Mangalam Srinivasan ...........    64      Director (1) (2)

Executive Officers

Anil Kekre ........................    51      Executive Vice President--Regional Business Unit--Europe
Jayaraman G .......................    46      Vice President (Corp. Affairs) & Company Secretary
Kalyan Rao K. .....................    49      Executive Vice President & Chief Technical Officer--Vertical
                                               Business Unit--Telecom
Mohan Eddy F. S. ..................    52      Director--Horizontal Business Unit--Collaborative Enterprise
                                               Solutions
Murty A. S. .......................    43      Director & Senior Vice President--Global Human Resources
Prabhat G. B. .....................    36      Director--Horizontal Business Unit--Enterprise Business Solutions
Ram Mynampati. ....................    44      Executive Vice President & Chief Operating Officer--Vertical
                                               Business Unit--Insurance, Banking & Financial Services, Healthcare
Srinivas V. .......................    42      Senior Vice President & Chief Financial Officer
Thiagarajan K. ....................    49      Director & Senior Vice President--Corporate Planning and Strategy
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Investors Grievance Committee

B. Ramalinga Raju has been on our board of directors since our inception in
1987. He became Chairman of our board of directors in 1995. Before this, he was
with the Satyam Corporate Group as Vice Chairman. Mr. Ramalinga Raju

                                       57
also sits on the board of directors of Satyam Infoway Limited, VCI and
Telecommunications Consultants India Limited. Mr. Ramalinga Raju holds a master
of business administration degree from Ohio University and has attended the
owner/president management course at Harvard Business School.

B. Rama Raju has been on our board of directors since our inception in 1987. He
became the Managing Director and Chief Executive Officer of our company in 1991.
Before 1997, he was with Maytas Infra Limited as one of its Directors. Mr. Rama
Raju also sits on the board of directors of Maytas Infra Limited, Satyam Venture
Engineering Services Private Limited and Gautami Power Limited. Mr. Rama Raju
holds a master of economics from Loyola College, Chennai and a master of
business administration from Loredo State University, Texas and has also
attended the owner/president management course at Harvard Business School. Mr.
Rama Raju is the younger brother of Mr. B. Ramalinga Raju, the Chairman of our
company.

C. Srinivasa Raju has been on our board of directors since 1990. He became the
Executive Director of our company in 1993. Effective September 1, 2000, Mr.
Srinivasa Raju relinquished his full time position as Executive Director to
devote his time to other independent projects. Mr. Srinivasa Raju will continue
to serve on the board of directors as a non-Executive director. Mr. Srinivasa
Raju also sits on the board of directors of Infoway. He has served as the Chief
Executive Officer of Dun & Bradstreet Satyam Software (Pvt) Limited, formerly a
joint venture company of Dun & Bradstreet and our company. He has also served as
Director of SES. Before this, he worked for Aqua Terra Consultants in Palo Alto,
California, as a consultant. Mr. Srinivasa Raju holds a master of engineering
degree and a master of science degree from Utah State University. Mr. Srinivasa
Raju is related by marriage to Mr. B. Ramalinga Raju, the Chairman of our
company.

V. P. Rama Rao has been on our board of directors since July 1991. Before this,
he was with the Indian Administrative Service and was the Chief Secretary to the
government of Andhra Pradesh. He was closely involved with the industrial
development of Andhra Pradesh for over two decades. He also worked as the Chief
of Industrial Infrastructure Corporation. Mr. Rama Rao holds a post-graduate
degree in arts, a bachelor degree in civil laws and a post-graduate diploma in
technical science and industrial administration, from Manchester University,
located in the United Kingdom.

C. Satyanarayana has been on our board of directors since July 1991. Before
this, he was with the Indian Revenue Service as the Assistant Commissioner of
Income Tax. Mr. Satyanarayana also sits on the boards of several leading
companies in India. Mr. Satyanarayana holds a bachelor degree in engineering
from the University of Madras.

Dr. Mangalam Srinivasan has been on our board of directors since July 1991. She
is a management consultant and a visiting professor at several U.S.
universities. Dr. Mangalam Srinivasan holds a Ph.d. in technology from George
Washington University, a master of business administration degree (international
finance and organization) from the University of Hawaii, a master of arts degree
(English) from Presidency College, Madras University and was an advanced special
scholar (astronomy and physics) at the University of Maryland. Currently, Dr.
Mangalam Srinivasan is an advisor to Center for Kennedy School of Government of
Harvard University where she is a distinguished fellow.

Anil Kekre has been our Executive Vice President--Regional Business Unit--Europe
since November 2000. Prior to this, he was our Senior Vice President, Strategic
Business Unit 5 from 1997. Before this, he was with Tata Information Systems
Ltd. as General Manager. Mr. Anil holds a master in technology (electronics and
computer science) degree from Indian Institute of Technology, Kanpur and a
master of business administration degree from the Faculty of Management Studies,
New Delhi.

Jayaraman G. has been our Vice President (Corp. Affairs) & Company Secretary
since October, 2000. From March 2000 to September, 2000 he was Asst. Vice
President and Company Secretary. Before this, he was with Samrat Spinner Limited
as Director (Finance) & Company Secretary. Mr. Jayaraman holds a Bachelor of
Science degree and is a fellow member of the Institute of Chartered Accountants
of India and the Institute of Cost and Works Accountants of India He is also an
associate member of Institute of Company Secretaries of India.

Kalyan Rao K. has been our Executive Vice President & Chief Technical
Officer--Vertical Business Unit--Telecom since November 2000. Prior to this, he
was our Director and Chief Technical Officer from 2000. Before this, he served
in various positions since joining our company in 1992. Mr. Kalyan Rao holds a
master of engineering (ECE) degree from Indian Institute of Science, Bangalore.

Mohan Eddy F. S. has been our Director--Horizontal Business Unit--Collaborative
Enterprise Solutions since November 2000. Prior to this, he was a Director,
Strategic Business Unit--Satyam Renaissance Consulting from 1995. Before this,
he was with Advent Computer Services Limited as its Chief Executive Officer. He
is also a director of

                                       58
Satyam Asia Pte Ltd. Mr. Mohan Eddy holds a bachelor of engineering degree and a
post-graduate diploma in management from Indian Institute of Management,
Calcutta.

Murty A. S. has been our Director & Senior Vice President--Global Human
Resources since November 2000. Prior to this, he was our Senior Vice President,
Human Resources from 1999. Before this, he was our Senior Vice-President of
Strategic Business Unit 1 since 1994. He is also a director of Satyam (Europe)
Limited. Before joining our company, Mr. Murty worked for Tata Consulting
Services for over 12 years. Mr. Murty holds a master of engineering degree from
Indian Institute of Science, Bangalore.

Prabhat G. B. has been our Director--Horizontal Business Unit--Enterprise
Business Solution since November 2000. Prior to this, he was a Director,
Strategic Business Unit--Satyam Renaissance Consulting from 1995. Mr. Prabhat
holds a master of science (computer sciences) degree from Indian Institute of
Technology, Chennai.

Ram Mynampati has been our Executive Vice President & Chief Operating
Officer--Vertical Business Unit--Insurance, Banking & Financial Services,
Healthcare since November 2000. Prior to this, he was our Executive Vice
President, Strategic Business Units 1, 2 & 4 from 1999. Before this, he was with
Metamor Global Solutions, USA as Senior Vice President, Operations. Mr.
Mynampati holds a master of computer science degree from California State
University.

Srinivas V. has been our Senior Vice President & Chief Financial Officer since
November 2000. Prior to this, he was our Vice President and Chief Financial
Officer from 1998. Before this, he was our General Manager, Finance. Mr.
Srinivas is a fellow member of the Institute of Chartered Accountants of India
and the Institute of Company Secretaries of India. He is also an associate
member of the Institute of Cost and Works Accountants of India. He is also a
director of Satyam--GE Software Services Private Limited. In addition, he holds
a bachelor of law degree and a master of commerce degree from Osmania
University.

Thiagarajan K. has been our Director & Senior Vice President--Corporate Planning
and Strategy since April 2001. Prior to this, he was President--E Training of
Satyam Infoway Ltd., since January, 2000. Before this, he was with Sanmar
Weighing Systems Ltd., as President. Mr. Thiagarajan holds a Bachelor of
Technology degree from Indian Institute of Technology, Chennai and Post Graduate
Diploma in Business Management from Indian Institute of Management, Ahmedabad.

Compensation

Executive Compensation

Under the Companies Act, our shareholders must approve the salary, bonus and
benefits of all associate directors at an annual general meeting of
shareholders. At our general meeting held in May 28, 1999, our shareholders
approved the employment terms and conditions for each of our associate directors
including the monthly salary, benefits, medical reimbursement and pension fund
contributions. These terms are made for a five-year period. The employment terms
of Mr. B. Ramalinga Raju, the chairman of our board of directors, and Mr. Rama
Raju, our managing director and chief executive officer, were renewed for a
period of five years with effect from April 1, 1999.

No remuneration was paid to our non-executive directors. There are no loans to,
or guarantees in favor of, directors.

The following table sets forth all compensation awarded to, earned by or paid to
Mr. B. Rama Raju, our managing director and chief executive officer, during
fiscal 2002 for services rendered in all capacities to us. Mr. Raju was
appointed as managing director and chief executive officer of our company in
1991. With the exception of three executive officers who are serving overseas,
none of our other executive officers earned a combined salary and bonus in
excess of $100,000 during any of the last three fiscal years. With respect to
the three key managerial personnel , we have not provided individual
compensation information because their compensation is attributed predominantly
to their overseas assignments, and if they were based in India, their individual
compensation would not exceed $100,000. In accordance with the rules of the
Securities Exchange Commission, other compensation in the form of perquisites
and other personal benefits has been omitted because the aggregate amount of
such perquisites and personal benefits constituted less than the lesser of
$50,000 or 10.0% of the total of annual salary and bonuses in fiscal 2001. The
total remuneration received by our executive officers and directors for their
services to us for the fiscal year ended March 31, 2002 was $0.93 million. The
total remuneration and the amounts in the following table are in dollars based
on the noon buying rate of Rs.48.83 per dollar on March 31, 2002.

                                       59
Annual Compensation
Name and Principal Position                                                    Salary     Bonus       Other(1)
                                                                                          -----       --------
B. Rama Raju, Managing Director and Chief Executive Officer                   $34,405       --          $ 50,018
(1) Includes commissions, membership fees and housing allowance.

Option Grants In Last Year

During the fiscal 2002, stock options granted and outstanding to our key
managerial personnel were 602,500 under the ASOP B plan and 133,000 under ASOP -
ADS plan.

Employee Benefit Plans

We have instituted an incentive plan, and intend to institute additional
incentive plans, to reward associates' performance through cash payments and,
since September 1999, stock options. Associate performance is measured by
reference to the associate's contribution to (1) profits and his or her tenure
of service, (2) organizational development and (3) customer satisfaction. An
associate must score a minimum number of points in each performance criterion to
be eligible for a reward. Since the introduction of stock options, cash bonuses
have decreased and we expect cash bonuses to continue to decrease in the future
as we place more emphasis on the granting of stock options.

Associate Stock Option Plan. The ASOP provides for the grant of warrants to
eligible associates, entitling such associates to apply for and receive 10
equity shares of our company per warrant. All full-time associates of our
company and our subsidiary companies are eligible associates.

Our ASOP was approved at the annual general meeting of shareholders in May 1998.
Associates may exercise warrants issued under the ASOP at the times and upon the
dates determined by a committee of our board of directors. The Trust acts as the
operating agency for administering the ASOP. In accordance with the resolutions
passed at our annual general meeting, we allotted to the Trust warrants for
equity shares in an amount not to exceed 13,000,000 shares. The Trust holds
these warrants on behalf of our associates and those of our subsidiaries. A
committee of directors constituted and authorized by our board of directors, or
advisory board, is in charge of studying and assessing eligible associates. The
advisory board identifies and recommends associates to the Trust according to
guidelines framed and approved by the board of directors. Factors considered for
the assessment of associates are performance, organizational development and
customer satisfaction. The advisory board can also recommend awards as
incentives to new associates joining us, and to associates who have shown
exceptional performance. On the recommendations of the advisory board, the Trust
advises us of offer of warrants to identified associates.

An associate must pay consideration of one rupee per warrant to the Trust before
the warrant can be transferred to the associate. These warrants are
non-transferable by the associate. However, if the associate ceases to be an
associate of our company by reason of resignation, dismissal or severance, the
warrants will be transferred back to the Trust for the same consideration paid
by the associate. If the associate ceases to be an employee by retirement or
death, the rights and obligations under the warrants accrue to the associate or
his or her legal heirs. The conversion date of warrants is determined by the
advisory board. The conversion price to be paid by the associate upon conversion
has been determined by the board of directors under the SEBI guidelines to be
Rs.450, or approximately $9.22 per share (translated at the noon buying rate of
Rs.48.83 per $1.00 on March 31, 2002). The SEBI guidelines apply to the pricing
of shares issued under employee stock option plans. Under the guidelines, the
minimum exercise price to acquire shares under our ASOP is the higher of the
following:

     (i) the average of the weekly high and low of the closing prices of the
     underlying shares quoted on the relevant Indian stock exchange during the
     six months period before the date which is 30 days before the date of our
     shareholders meeting at which the plan was approved (or April 24, 1998 in
     the case of our ASOP); and

     (ii) the average of the weekly high and low of the closing prices of the
     underlying shares quoted on the relevant Indian stock exchange during the
     two weeks period before the date which is 30 days before the date of our
     shareholders meeting at which the plan was approved (or April 24, 1998 in
     the case of our ASOP).

Shares transferred to the associate after conversion from warrants become the
absolute property of the associate. In the

                                       60
event of a bonus or rights issue or any other issue of securities to the
existing holders, the warrant holders may be given an opportunity to exercise
the conversion warrant, even before the conversion date to enable the warrant
holder to be eligible for the issue of securities. Such shares allotted upon
conversion would be in the custody of the Trust, to be released to the associate
after the conversion date.

Associates Stock Option Plan B. In May 1999, the shareholders at our annual
general meeting approved the ASOP B. ASOP B provides for the grant of options to
eligible associates, which entitles these associates to apply for and receive
five equity shares of our company per option. All full-time associates of our
company and our subsidiary companies are eligible associates. Options granted to
eligible associates under the ASOP B become vested and exercisable within time
periods selected by a committee of our board of directors.

Under our ASOP B, 13,000,000 equity shares were set aside for associate stock
options. Stock options carry a minimum vesting period decided by the committee
of our board of directors.

The ASOP B may be administered by a committee of the board. The committee has
the power to determine the terms of the options granted, including the exercise
price, the number of equity shares subject to each option, the exercisability
thereof and the form of consideration payable upon such exercise (which may be
less than the fair market value of our equity shares on the date of grant) in
accordance with the SEBI guidelines described above. In addition, the committee
has the authority to amend, suspend or terminate our ASOP B.

ASOP ADR. Our ASOP ADR provides for the grant of incentive stock options (within
the meaning of Section 422 of the Internal Revenue Code) and non-statutory
options to acquire ADRs of Satyam Computer Services to our associates, officers
and directors as well as to employees, officers and directors of our parent or
subsidiary entities. The establishment of our ASOP ADR was approved at our
annual general meeting of shareholders in May 1999, subject to a $25.0 million
limit on the aggregate market value of the equity shares initially reserved
pursuant to the ASOP ADR. Accordingly, the total equity shares reserved for
issuance may be reduced by the board of directors from time to time to comply
with the $25.0 million limit. All options under our ASOP ADR will be exercisable
for ADSs represented by ADRs.

Our ASOP ADR may be administered by the board of directors or a committee of the
board. The committee has the power to determine the terms of the options
granted, including the exercise price, the number of ADSs subject to each
option, the exercisability thereof and the form of consideration payable upon
such exercise. In addition, the committee has the authority to amend, suspend or
terminate our ASOP ADR, provided that no such action may affect any ADS
previously issued and sold or any option previously granted under our ASOP ADR.

Options granted under our ASOP ADR are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under our ASOP ADR must generally be
exercised within three months of the end of the optionee's status as an
associate of our company, but in no event later than the expiration of the
option's term. In the event of an optionee's termination as a result of death or
disability, the vesting and exercisability of the optionee's option will
accelerate in full and the option must be exercised within 12 months after such
termination, but in no event later than the expiration of the option's term. The
exercise price of incentive stock options granted under our ASOP ADR must be at
least equal to the fair market value of our ADSs on the date of grant. The
exercise price of non-statutory stock options granted under our ASOP ADR must be
at least equal to 90.0% of the fair market value of our ADSs on the date of
grant. With respect to any participant owning stock possessing more than 10.0%
of the voting power of all classes of our outstanding capital stock, the
exercise price of any incentive stock option granted must equal at least 110.0%
of the fair market value on the grant date and the term of such incentive stock
option must not exceed five years. The term of all other options granted under
our ASOP ADR may not exceed 10 years.

Our ASOP ADR provides that in the event of a merger of our company with or into
another corporation, a sale of substantially all of our assets or a like
transaction involving our company, each option shall be assumed or an equivalent
option substituted by the successor corporation. If the outstanding options are
not assumed or substituted as described in the preceding sentence, the vesting
and exercisability of each option will accelerate in full.

IASOP. In fiscal 1999, Infoway established the IASOP which provides for the
issuance of warrants to purchase Infoway shares to eligible associates of
Infoway. The IASOP is substantially similar to the ASOP and is administered by
an employee welfare trust, the Infoway Trust. Infoway issued to the Infoway
Trust 825,000 warrants of Rs.1 each to purchase equity shares in Infoway. In
turn, the Infoway Trust from time to time grants to eligible associates warrants
to purchase equity shares held by or reserved for issuance to the Infoway Trust.
An associate must pay consideration of Rs.1 per warrant to the Infoway Trust and
each warrant entitles the associate-holder to purchase one

                                       61
share of Infoway at an exercise price decided by the board of directors. The
board of directors has determined that in no event will the exercise price be
less than 90.0% of the market price of the shares on the Nasdaq National Market
as of the grant date. The warrants and the shares received upon the exercise of
warrants are subject to progressive vesting over a three year period from the
date the warrants were issued to the associate. The exercise period for these
warrants is 30 days from the vesting period. The intrinsic value of each warrant
is the market price of the shares underlying the warrants on the date of the
grant. The warrants allotted and the underlying shares are not subject to any
repurchase obligations by Infoway. We account for the IASOP as a fixed warrant
plan. We expect that the exercise price of warrants granted in the future will
not be less than 90.0% of the fair market value of the underlying shares and
therefore we do not expect to incur a compensation expense with respect to those
future grants.

VCI ASOP Plan. In April 2000, VCI established the VCI Stock Option Plan, or the
VCI Plan. The VCI Plan provides for the grant of incentive stock options (within
the meaning of Section 422 of the Internal Revenue Code) and non-statutory
options to acquire shares of common stock of VCI to VCI employees, directors and
consultants as well as to employees, directors and consultants of VCI's parent
or subsidiary entities, including our employees, directors and consultants. The
option price is determined by the board of directors at the time the option is
granted, and, in the case of incentive stock options, in no event is less than
the fair market value of the shares at the date of grant as determined by the
board of directors. The shares acquired through the exercise of options are
subject to the restrictions specified in the VCI Plan. Options generally vest
over a four-year period and expire ten years from the date of grant.

The VCI board of directors or a committee of the VCI board may administer the
VCI Plan. Options granted under the VCI Plan are not generally transferable by
the optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. The exercise price of options granted under the VCI Plan
is determined by the administrator of the VCI Plan; provided that the exercise
price of incentive stock options granted under the VCI Plan must be at least
equal to the fair market value of VCI shares on the date of grant. With respect
to any participant who owns stock possessing more than 10.0% of the voting power
of all classes of VCI's outstanding stock, the exercise price of any incentive
stock option granted must equal at least 110.0% of the fair market value of
VCI's shares on the grant date. The term of options granted under the VCI Plan
is determined by the administrator of the VCI Plan; provided that the term of
any incentive stock option may not exceed 10 years, and may not exceed five
years if granted to any participant owning more than 10.0% of the voting power
of all classes of VCI's outstanding stock.

The VCI Plan provides that in the event of a merger of VCI with or into another
corporation, a sale of substantially all of VCI's assets or a like transaction
involving VCI, each option shall be assumed or an equivalent option substituted
by the successor corporation. If the outstanding options are not assumed or
substituted as described in the preceding sentence, the vesting and
exercisability of each option will accelerate in full. A total of 25,000,000
shares of VCI common stock are currently reserved for issuance. The exercise
prices of the prior options grants have been at fair value of the underlying
shares. We expect that the exercise prices of all options granted under the VCI
Plan will be equal to the fair market value of the underlying shares and
therefore we do not expect to incur compensation expense with respect to those
future grants.

The SEBI guidelines, effective June 1999, has removed the limits on the amount
of stock options or warrants a company can grant to its employees and the amount
of discount to market price at which a company can grant such options. The
guideline requires companies to account for the difference between the market
price of its shares and the exercise price of its employee stock options as
personnel expenses in its profit and loss accounts.

Board Practices

Board Composition

Our Articles of Association set the minimum number of directors at three and the
maximum number of directors at 12. We currently have six directors. The
Companies Act and our Articles of Association require the following:

     .  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.

Messrs. B. Ramalinga Raju and B. Rama Raju are permanent directors and are not
subject to retirement by rotation. The term of Mr. C. Srinivasa Raju expired and
he was re-elected to an additional 4 year term at our AGM in June, 2001. The
terms of Messrs. C. Satyanarayana, V.P. Rama Rao and Dr. Managalam Srinivasan
will expire, and each of them is up for re-election to an additional 4 year term
at our Annual General Meetings to be held in 2002, 2003 and

                                       62
2004 respectively.

Board Committees

The audit committee of board of directors reviews, acts on and reports to the
board of directors with respect to various auditing and accounting matters,
including the recommendation of our independent auditors, the scope of the
annual audits, fees to be paid to the independent auditors, the adequacy and
effectiveness of the accounting and financial controls of our company and our
accounting practices. The members of the audit committee are Mr. V.P. Rama Rao,
Mr. C. Satyanaryana and Dr. Mangalam Srinivasan, each of whom is an independent
director.

The compensation committee of the board of directors determines the salaries and
benefits for our executive directors and some of our key managerial personnel
and the stock options for all associates. The members of the compensation
committee are Mr. V.P. Rama Rao, Mr. C. Satyanaryana and Dr. Mangalam
Srinivasan, each of whom is an independent director.

The investors grievance committee of the board of directors formed in January
2001 focuses on strengthening investor relations and addressing investors'
concerns. The members of the committee are Mr. V.P. Rama Rao and Mr. C.
Satyanarayana, each of whom is an independent director, and Mr. B. Rama Raju,
Managing Director and CEO of the Company.

Director Compensation

Our Articles of Association provides that each of our directors shall receive a
sitting fee not exceeding the maximum amount allowed under the Companies Act.
Currently, our directors receive Rs.5,000 for every board and committee meeting.
Independent directors do not receive any additional compensation for their
service on our board of directors. Directors are reimbursed for travel and
out-of-pocket expenses in connection with their attendance at board and
committee meetings.

Employment, Severance And Other Agreements

Our Articles of Association provides that directors are appointed by the
shareholders by resolutions passed at general meetings; however, the board of
directors has the power to appoint additional directors for a period up to the
date of the next annual general meeting. Key managerial personnel are appointed
by the management. There are no severance and other agreements.

Employees

Our success depends in large part on our ability to attract, develop, motivate
and retain highly skilled technical associates. We offer competitive salaries,
incentive pay, including, since May 1998, stock options, extensive training, an
entrepreneurial work environment and opportunities to work overseas. As of March
31, 2002, we had 8,634 employees whom we refer to as "associates," including
7,898 technical associates. We had 5,107 and 8,593 associates as of March 31,
2000 and 2001, respectively. As of date, we had none of our associates are
represented by a union. We believe that our relationship with our associates is
good.

Recruiting. We recruit top graduates from the engineering departments of India's
universities and engineering and technical colleges. India has over 1,500 such
schools and, with the rapid growth of the IT services industry in India, the
number of students pursuing education in software engineering has increased in
recent years. This has allowed us to recruit from a large pool of qualified
applicants who undergo our demanding selection process involving a series of
tests and interviews. In fiscal 2000, we received approximately 32,000 job
applications, from both recent graduates and those with previous experience,
tested and/or interviewed approximately 2,400 and extended job offers to 1,336,
of whom 1,073 joined our company. In fiscal 2001, we received approximately
25,000 job applications, from both recent graduates and those with previous
experience, tested and/or interviewed approximately 15,000 and extended job
offers to 5,458 of whom 3,660 joined our company. In fiscal 2002, we received
approximately 90,543 job applications, from both recent graduates and those with
previous experience, tested and/or interviewed approximately 4,722,
extended job offers to 1,259 and 1,287 joined our company.

Training of associates. We devote significant resources to training our
associates. We established the Satyam Learning Center, which is responsible for
conducting training programs. To assist our technical associates to better
understand and implement new technologies, each new technical associate must
participate in a three to six-month software engineering training program and
all technical associates are expected to undertake between 40 and 80 hours per
year

                                       63
of development training. Through such ongoing training, we build the
competencies in emerging disciplines necessary to meet customers' project needs.
At the Satyam Learning Center, our technical associates are trained on skill
sets and encompassing Microsoft, Sun, IBM, Linux and other platforms. Training
is done keeping in view project requirements and proactive competency
development based on forecasted market needs. This expertise allows us the
flexibility to ramp up to meet the demands of particular projects and to
redeploy our personnel among projects. We also recruit managers in non-software
engineering fields for positions as project leaders and project managers and
provide them with extensive training, usually over a six-month period, in
software engineering and project management skills. To focus our associates on
selecting the best technologies to match customer requirements, all of our
associates are also required to undergo a customer orientation program.

Retention. To attract, retain and motivate our associates, we seek to provide an
environment that rewards entrepreneurial initiative and performance. We also
provide competitive salaries and benefits as well as incentives in the form of
cash bonuses and stock options. In fiscal 2000, fiscal 2001 and fiscal 2002, we
experienced associate attrition at a rate of 12.9%, 15.1% and 13.2%,
respectively. As the pool of software engineers in India becomes larger and as
we increase the opportunities for our associates to work overseas, either for
onsite work at the customers' premises or in the offsite centers which we are
establishing as one of our strategic priorities, we believe our current rates of
turnover will continue.

At any given time, our technical associates are working overseas, either onsite
at customer premises or at our offsite centers, while the balance are working in
the offshore centers in India. On average, approximately 14.5%, 17.6% and 20.0%
of our technical associates worked overseas, primarily in the United States, in
fiscal 2000, fiscal 2001 and fiscal 2002, respectively. As at March 31, 2002, we
employed 1,894 technical and 173 support staff in our onsite and offsite centers
in the United States, Japan, the United Kingdom, Singapore and Australia. We
have staffed the offsite centers mainly through local hiring, supplemented by
associates from India. Our professionals who work onsite at customers' premises
in the United States on temporary and extended assignments are typically
required to obtain visas. H-1B visas are generally used for sending personnel to
the United States for onsite work, and L-1 visas are typically used only for
inter-company transfers of high level managers. Although there is no limit to
new L-1 petitions, there is a limit to the number of new H-1B petitions that the
United States Immigration and Naturalization Service may approve in any
government fiscal year and in recent years this limit has been reached well
before the end of the fiscal year. We are generally able to obtain H-1B and L-1
visas within two to four months of applying for such visas, which remain valid
for three years and can be extended for a further three years. We plan for our
visa requirements by forecasting our annual needs for such visas in advance and
applying for such visas as soon as practicable. We do not anticipate any
problems obtaining enough visas for our needs in the current U.S. government
fiscal year. In addition, we utilize L-1 visas whenever available and redeploy
existing H-1B visa holders to minimize the number of new H-1B visas we need.

Share Ownership

The following table sets forth information with respect to the beneficial
ownership of our equity shares as of April, 25, 2002 by each of our directors
and our chief executive officer and all of our directors and executive officers
as a group. The table gives effect to equity shares issuable within 60 days of
April 25, 2002 upon the exercise of all options and other rights beneficially
owned by the indicated shareholders on that date. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to equity
shares. Unless otherwise indicated, the persons named in the table have sole
voting and sole investment control with respect to all equity shares
beneficially owned.
Equity
                                                                                               ------
                                                                                               Shares
                                                                                               ------
                                                                                            Beneficially
                                                                                            ------------
                                                                                               Owned
                                                                                               -----
   Beneficial Owner                                                                  Number             Percent
   ----------------                                                                                     -------
B. Rama Raju ...............................................................       15,102,000 (1)          4.9
B. Ramalinga Raju ..........................................................       13,746,000 (2)          4.4
C. Srinivasa Raju ..........................................................        5,121,904              1.6
V.P. Rama Rao ..............................................................               --               --
C. Satyanarayana ...........................................................           14,000                *
Dr. Mangalam Srinivasan ....................................................               --               --
All directors and executive officers as a group (15 persons)                        5,212,949            11.31
64
(1) Includes 3,874,000 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) Includes 4,047,000 equity shares held by B. Ramalinga Raju's wife, B.
     Nandini Raju. B. Ramalinga Raju disclaims beneficial ownership of any
     equity shares held by B. Nandini Raju.
*    Less than 0.1% of total

Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Share Ownership

The only person or group of affiliated persons who is known to us to
beneficially own 5% or more of our equity shares as of April 25, 2002 is Unit
Trust of India which holds 6.54%. Unit Trust of India has the same voting rights
as our other shareholders.

As of April 25, 2002, 431,705 of our equity shares, representing 0.14% of our
outstanding shares, were held by a total of 126 holders of record with addresses
in the United States. As of April 25, 2002, we have issued 16,675,000 ADSs
(representing 33,350,000 equity shares), which represent 10.71% of our
outstanding equity shares and which are held by 1,476 beneficial holders and 3
registered holders.

Related Party Transactions

In December 1998, we entered into a joint venture with GE Pacific (Mauritius)
Ltd, an affiliate of GE Industrial Systems. The joint venture company, called
Satyam-GE Software Services Private Limited, provides GE Industrial Systems with
engineering design services, software development and system maintenance. Under
our joint venture agreement, we granted GE Pacific an option to purchase our
interest in the joint venture. Subject to the joint venture meeting performance
targets and other conditions, In January 2002 we have initiated the process of
transfer of our 50% shareholding in Satyam GE Software Services Private Limited
in accordance with the shareholders' agreement. The transfer is subject to
fulfillment of terms and conditions specified in the agreement and obtaining
necessary approvals from appropriate authorities. The sale value is
approximately $ 4.0 million.

For fiscal 2001 and fiscal 2002, we provided infrastructure and other services
to Satyam-GE, which amounted to $461 thousand and $142 thousand respectively. As
of March 31, 2002, Satyam-GE owes $189 thousand to us.

In October, 1999, we entered into a joint venture with Venture Global
Engineering LLC, USA. The joint venture company, called Satyam Venture
Engineering Services Private Limited ("Satyam Venture"), formed in January 2000,
provides engineering services and computer services to the automotive industry.
We hold 50% stake in the Joint venture company. For fiscal 2001 and fiscal 2002,
we provided infrastructure and other services to Satyam Venture, which amounted
to $1,031 thousand and $928 thousand respectively. As of March 31, 2002, Satyam
Venture owes $267 thousand to us.

In December 2000, we entered an agreement with Computer Associates
International, Inc. ("CA") to form an equally held joint venture company CA
Satyam ASP Private Limited ("CA Satyam"). The joint venture was formed in
January 2001 at Mumbai, India. As per the agreement, we and CA are to invest $
1,500 thousand each in the joint venture. During the year ended March 31, 2002
we invested $ 500 thousand in CA Satyam. As of March 31, 2002, we owe $287
thousand to CA Satyam.

We acquired Infoway's software services division with effect from January 1,
2002 in a transaction approved by Infoway's shareholders. This acquisition
included the purchase of specified tangible and intangible fixed assets, current
assets and current liabilities of the division as well as the assignment of its
continuing business in favour of Satyam. The objective of the acquisition is to
permit us to concentrate on our core business of software services and to permit
Infoway to concentrate on Internet services. The acquisition was valued by an
independent valuer at US$6.9 million, which was the amount paid to Infoway.

                                       65
Item 8. FINANCIAL INFORMATION

Financial Statements

We have elected to provide financial statements pursuant to Item 18 of Form 20 -
F.

Legal Proceedings

As of the date of this document, we are not a party to any legal proceedings
that could reasonably be expected to seriously harm our company.

Dividends

Although the amount varies, it is customary for public companies in India to pay
cash dividends. Under Indian law, a corporation pays dividends upon a
recommendation by the board of directors and approval by a majority of the
shareholders, who have the right to decrease but not increase the amount of the
dividend recommended, by the board of directors. However, approval of
shareholders is not required for distribution of Interim dividend. Under the
Companies Act, dividends may be paid out of profits of a company in the year in
which the dividend is declared or out of the undistributed profits of previous
fiscal years. We paid out dividends of Rs.54.0 million ($1.3 million), Rs.91.6
million ($2.2 million), Rs.120.0 million ($2.8 million), Rs.187.8 million ($4.1
million) and Rs. 279.0 million ($ 6.4 million.) in fiscal 1998, fiscal 1999,
fiscal 2000, fiscal 2001 and fiscal 2002 respectively. These dividends include
interim dividends for the current fiscal year and dividends paid with respect to
previous fiscal year. Under Indian law, dividends are declared with respect to
the shares outstanding during the prior fiscal year and are paid in the
subsequent fiscal year after approval by shareholders in the Annual General
Meeting. The dividend is paid on the outstanding shares as at the end of fiscal
year and is prorated for shares issued during the fiscal year to take into
account the amount of time such shares have been issued. For example, our ADSs
were issued in May, 2001 and therefore our ADS holders were not entitled to
receive the dividend payment made on July 14, 2001 for the fiscal year ended
March 31, 2001. However, the ADS holders will be entitled to receive their share
of any dividends for the fiscal year ending March 31, 2002 prorated from May
until March. Although we have no current intention to discontinue dividend
payments, we cannot assure you that any future dividends will be declared or
paid or that the amount thereof will not be decreased. Some of our loan
documents restrict us from paying dividends other than from profits generated
from the then current fiscal year.

Owners of ADSs will be entitled to receive dividends payable in respect of the
equity shares represented by such ADSs. Cash dividends in respect of the equity
shares represented by the ADSs will be paid to the depositary in rupees and,
will generally be converted by the depositary into U.S. dollars and distributed,
net of depositary fees and expenses, to the holders of such ADSs.

Item 9. THE OFFER AND LISTING

Trading Markets

Our equity shares are traded in India on the Stock Exchange, Mumbai, the
National Stock Exchange and the Hyderabad Stock Exchange. Our ADSs evidenced by
American Depositary Receipts, or ADRs, are traded in the United States on the
New York Stock Exchange. Each ADS represents two equity shares. The ADRs
evidencing ADSs were issued by our depositary, Citibank, N.A., pursuant to a
Deposit Agreement.

The number of outstanding equity shares (including the underlying shares for
ADSs) in our company as of April, 25, 2002 was 311,391,210 . As of April, 25,
2002, there were 16,675,000 ADSs outstanding (representing 33,350,000 equity
shares).

Price History

The information presented in the table below represents, for the periods
indicated: (1) the reported high and low sales prices quoted in Indian rupees
for the equity shares on the BSE; and (2) the imputed high and low sales prices
for the equity shares based on such high and low sales prices, translated into
U.S. dollars based on the noon buying rate on the last date of each period
presented.

                                       66
Rupee Price per         U.S. Dollar Price
                                                     Equity Share (1)          Per Equity Share
                                                     ----------------          ----------------
Annual high and low market prices                  High            Low         High       Low
---------------------------------                  ----            ---         ----       ---
Fiscal Year Ended March 31, (2)
-------------------------------
1999                                               169.50         24.70        4.03        0.59
2000                                              1445.99         99.20       33.13        2.28
2001                                               901.98        291.50       20.18        3.84
2002                                               331.15        111.00        6.78        2.27

Fiscal year 2001
First Quarter                                      901.98        383.96       20.18        8.59
Second Quarter                                     680.00        420.15       14.76        9.12
Third Quarter                                      511.00        291.50       10.93        6.23
Fourth Quarter                                     429.70        179.00        9.22        3.84

Fiscal year 2002
First Quarter                                      271.95        148.60        5.77        3.15
Second Quarter                                     198.80        145.00        4.15        3.03
Third Quarter                                      278.00        200.40        5.76        4.15
Fourth Quarter                                     331.15        255.75        6.78        5.24
Price Range
Month high and low market prices                                   High                     Low
November, 2001                                               Rs. 233.00              Rs. 141.80
December, 2001                                                   278.00                  200.40
January, 2002                                                    331.15                  225.00
February, 2002                                                   304.00                  251.25
March, 2002                                                      300.50                  255.75
April, 2002                                                      280.15                  250.45
May, 2002                                                        269.90                  208.10
(1) Data derived from the BSE website. The prices and volumes quoted on the
National Stock Exchange and the Hyderabad Stock Exchange may be different.

(2) For comparative purposes, the price per equity share data above is adjusted
for the September 1, 1999 two-for-one stock split which took effect on the BSE
on August 16, 1999 and the August 25, 2000 five-for-one stock split which took
effect on the BSE on August 7, 2000. The average daily equity share trading
volume has not been adjusted.

Our ADSs commenced trading on the New York Stock Exchange on May 15, 2001 at an
initial offering price of $9.71 per ADS. The tables below set forth, for the
periods indicated, high and low trading prices for our ADS.
Price Range
Fiscal Year ended March 31, 2002                               High             Low
--------------------------------
Quarterly High and low market prices of ADSs
First Quarter (beginning May 15)                             $12.57             7.90
Second Quarter                                                 9.80             7.24
Third Quarter                                                 13.74             9.75
Fourth Quarter                                                14.74            11.60
Price Range
Monthly High and low market prices of ADSs                    High               Low
November, 2001                                                10.70             6.64
December, 2001                                                13.74             9.45
January, 2002                                                 14.74            11.10
February, 2002                                                13.90            11.12
March, 2002                                                   14.45            11.60
April, 2002                                                   12.56            11.25
67
May, 2002                                               12.06            9.46

Item 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

The following are summaries of our Articles of Association and Memorandum of
Association and the Companies Act which govern our affairs. Our Articles of
Association provides that the regulations contained in Table "A" of the
Companies Act apply to our company, so long as the regulations do not conflict
with the provisions of our Articles of Association. We have filed complete
copies of our Memorandum of Association and Articles of Association, as well as
Table "A" of the Companies Act, as exhibits to our registration statement on
Form F-1 filed with the Securities and Exchange Commission on May 7, 2001
(Registration No. 333-13464).

Objects and Purposes

Under clause III(A) of our Memorandum of Association, the main objectives of our
company include, but are not limited to:

.. manufacturing and selling computer systems, peripherals, accessories,
  consumables and other computer products;

.. 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

.. providing electronic data processing centers, word processing, software
  consultancy, system studies, management consultancy, feasibility studies and
  computer training.

Board of Directors

At each annual general meeting at least, one-third of our directors must retire
from office by rotation. A retiring director is eligible for re-election and the
directors to retire every year are those who have been longest in office since
their last re-election or appointment. No shares are required to be held by a
director for qualification as a director. In addition, save in respect of the
following managerial personnel, there are no age-limit requirements for serving
on our board of directors. Under the Companies Act, no person under the age of
25 or over the age of 70 is eligible for appointment as a managing director or a
whole-time director or a manager of our Company, provided that persons under the
age of 25 or over age 70 may be appointed with either the approval of our
shareholders by a special resolution or with the approval of the Central
Government. Under the Companies Act, our directors must refrain from
participating in discussions and voting on any matters in which they are
interested party. In addition, directors are also required to disclose such
interests, if any, at meetings of the board of directors.

Managerial Remuneration

Under the Companies Act, the remuneration payable to our directors is to be
determined either by the articles of the company or by an ordinary resolution
passed by the company in the general meeting, unless the articles require a
special resolution for the same.

As a public company, the total managerial remuneration in any year cannot exceed
11 per cent of our profits in that year. In addition, the remuneration payable
to a managing or any whole-time director in any year cannot exceed 5 per cent of
our net profits in that year. If there is more than one managing or whole-time
director, then the aggregate remuneration to all of them cannot exceed 10 per
cent of our net profits.

In addition, where a company has made no or inadequate profits, there are
additional limits on the maximum remuneration payable to the directors. Approval
of the Central Government would be required for payment of remuneration in
excess of the limits prescribed.

Under our Articles of Association, our board of directors may, at its discretion
and by means of a resolution, borrow funds on behalf of the company, create
mortgages or liens on the company's property or uncalled capital and issue
debentures. However, the Companies Act imposes some restrictions on the powers
of the board to act without the consent of the shareholders including, for
example, the ability to borrow money beyond the aggregate of our paid up

                                       68
capital and free reserves.

Equity Shares

Our authorized share capital is 375,000,000 equity shares, par value Rs.2 per
share. The equity shares are our only class of share capital. However, our
Articles of Association and the Companies Act permit us to issue preference
shares in addition to the equity shares. The rights attached to a class of
shares may, subject to the provisions of the Companies Act, be varied only with
either the written consent of the holders of 75% of the issued shares of that
class or by special resolution passed at a separate meeting of the holders of
that class.

Our equity shares are under the control of our board of directors, who may, with
prior approval from the shareholders at a general meeting, allot or otherwise
dispose of new equity shares in its discretion, including allotments of shares
at a premium or discount in accordance with the provisions of the Companies Act.
Our Articles of Association permit our board of directors to make calls on our
equity shares, but only in respect of unpaid amounts unpaid on equity shares
which are not fully paid-up. All of our issued and outstanding equity shares are
fully paid-up.

Dividends

We paid out dividends of Rs.54.0 million ($1.3 million) in fiscal 1998, Rs.91.6
million ($2.2 million) in fiscal 1999, Rs.120.0 million ($2.8 million) in fiscal
2000, Rs. 187.8 million ($ 4.1 million) in fiscal 2001 and Rs. 279.0 million
($6.4 million) in fiscal 2002.

Under the Companies Act, unless our board of directors recommends the payment of
a dividend, we may not declare a dividend. Similarly, under our Articles of
Association, although the shareholders may, at the annual general meeting,
approve a dividend in an amount less than that recommended by the board, they
cannot increase the amount of the dividend. In India, dividends generally are
declared as a percentage of the par value of a company's equity shares. The
dividend recommended by the board, if any, and subject to the limitations
described above, is distributed and paid to shareholders in proportion to the
paid up value of their shares within 30 days of the approval by the shareholders
at the annual general meeting. Pursuant to our Articles of Association and the
Companies Act, our board has discretion to declare and pay interim dividends
without shareholder approval. With respect to equity shares issued during a
particular fiscal year (including any equity shares underlying ADSs issued to
the depositary), cash dividends declared and paid for such fiscal year generally
will be prorated from the date of issuance to the end of such fiscal year. Under
the Companies Act, dividends can only be paid in cash to the registered
shareholder at a record date fixed during or before the annual general meeting
or to his order or his banker's order.

Under the Companies Act, dividends and interim dividends may be paid out of
profits of a company in the year in which the dividend and/or interim dividend
is declared or out of the undistributed profits of previous fiscal years. Before
declaring a dividend and/or interim dividend greater than 10.0% of the par value
of its equity shares, a company is required under the Companies Act to transfer
to its reserves a minimum percentage of its profits for that year, ranging from
2.5% to 10.0% depending upon the dividend percentage to be declared in such
year. The Companies Act further provides that, in the event of an inadequacy or
absence of profits in any year, a dividend and/or interim dividend may be
declared for such year out of the accumulated profits, subject to the following
conditions:

     .  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;

     .  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

     .  the balance of reserves after withdrawals shall not fall below 15.0% of
        its paid up capital.

For additional information regarding dividends, please see "Item 8. Financial
Information.

Bonus Shares

In addition to permitting dividends to be paid out of current or retained
earnings as described above, the Companies Act permits us to distribute an
amount transferred from the general reserve or surplus in our profit and loss
account to

                                       69
our shareholders in the form of bonus shares, which are similar to a
stock dividend. The Companies Act also permits the issuance of bonus shares from
a share premium account. Bonus shares are distributed to shareholders in the
proportion recommended by the board. Shareholders of record on a fixed record
date are entitled to receive such bonus shares. The last bonus shares issued by
us was in September 1999.

Preemptive Rights and Issue of Additional Shares

The Companies Act gives shareholders the right to subscribe for new shares in
proportion to their respective existing shareholding unless otherwise determined
by a special resolution passed by a general meeting of the shareholders. For
approval, a special resolution must be approved by a number of votes which is
not less than three times the number of votes against the special resolution. If
we issue equity shares and a special resolution is not approved by our
shareholders, the new shares must first be offered to the existing shareholders
as of a fixed record date. The offer must include: (1) the right, exercisable by
the shareholders of record, to renounce the shares offered in favor of any other
person; and (2) the number of shares offered and the period of the offer, which
may not be less than 15 days from the date of offer. If the offer is not
accepted it is deemed to have been declined. Our board is authorized under the
Companies Act to distribute any new shares not purchased by the preemptive
rights holders in the manner that it deems most beneficial to our company.

Annual General Meetings of Shareholders

We must convene an annual general meeting of shareholders within six months
after the end of each fiscal year to adopt the accounts for such fiscal year and
to transact other businesses and may convene an extraordinary general meeting of
shareholders when necessary or at the request of a shareholder or shareholders
holding at least 10.0% of our paid up capital carrying voting rights. The annual
general meeting of the shareholders is generally convened by our Secretary
pursuant to a resolution of the board. Written notice setting out the agenda of
the meeting must be given at least 21 days (excluding the day of mailing) before
the date of the general meeting to the shareholders on record. Shareholders who
are registered as shareholders on the date of the general meeting are entitled
to attend or vote at such meeting. Our Articles of Association provides that a
quorum for a general meeting is the presence of at least five shareholders in
person.

The annual general meeting of shareholders must be held at our registered office
or at such other place within the city in which the registered office is
located; meetings other than the annual general meeting may be held at any other
place if so determined by the board. Our registered office is located at Mayfair
Centre, S P Road, Secunderabad 500 003, Andhra Pradesh, India.

Voting Rights

At any general meeting, voting is by show of hands unless a poll is demanded by
a shareholder or shareholders present in person or by proxy holding at least
10.0% of the total shares entitled to vote on the resolution or by those holding
shares with an aggregate paid up value of at least Rs.50,000. Upon a show of
hands, every shareholder entitled to vote and present in person has one vote
and, on a poll, every shareholder entitled to vote and present in person or by
proxy has voting rights in proportion to the paid up capital held by such
shareholder. The chairman of our board has a deciding vote in the case of any
tie.

Any shareholder may appoint a proxy. The instrument appointing a proxy must be
delivered to us at least 48 hours before the meeting. A proxy may not vote
except on a poll. A corporate shareholder may appoint an authorized
representative who can vote on behalf of the shareholder, both upon a show of
hands and upon a poll.

Ordinary resolutions may be passed by simple majority of those present and
voting at any general meeting for which the required period of notice has been
given. However, special resolutions such as amendments to our Articles of
Association and the object clause of the Memorandum of Association, commencement
of a new line of business, the waiver of preemptive rights for the issuance of
any new shares and a reduction of share capital, require that votes cast in
favor of the resolution (whether by show of hands or poll) are not less than
three times the number of votes, if any, cast against the resolution. Under a
recent amendment to the Indian Companies Act, certain resolutions may and
certain resolutions must be passed by means of a postal ballot instead of a vote
at a meeting of shareholders.

Audit and Annual Report

At least 21 days before the date of the annual general meeting of shareholders
(excluding the day of mailing), we must distribute to our shareholders a
detailed version of our audited balance sheet and profit and loss account and
the related

                                       70
reports of the board and the auditors, together with a notice convening the
annual general meeting. Under the Companies Act, we must file the balance sheet
and annual profit and loss account presented to the shareholders within 30 days
of the conclusion of the annual general meeting with the Registrar of Companies
in Andhra Pradesh, India, which is the state in which our registered office is
located. We must also file an annual return containing a list of our
shareholders and other information, within 60 days of the conclusion of the
meeting.

Register of Shareholders; Record Dates; Transfer of Shares

We maintain a register of shareholders. For the purpose of determining the
shares entitled to annual dividends, the register is closed for a specified
period before the annual general meeting. The date on which this period begins
is the record date.

To determine which shareholders are entitled to specified shareholder rights, we
may close the register of shareholders. The Companies Act and our listing
agreements with the Indian stock exchanges require us to give at least seven
days' prior notice to the public before such closure. We may not close the
register of shareholders for more than 30 consecutive days, and in no event for
more than 45 days in a year.

Following the introduction of the Depositories Act, 1996, and the repeal of
Section 22A of the Securities Contracts (Regulation) Act, 1956, which enabled
companies to refuse to register transfers of shares in some circumstances, the
equity shares of a public company are freely transferable, subject only to the
provisions of Section 111A of the Companies Act. Because we are a public
company, the provisions of Section 111A apply to us. Our Articles currently
contain provisions which give our directors discretion to refuse to register a
transfer of shares in some circumstances. According to our Articles, our
directors are required to exercise this right in the best interests of our
company. While our directors are not required to provide a reason for any such
refusal in writing, they must give notice of the refusal to the transferee
within one month after receipt of the application for registration of transfer
by our company. In accordance with the provisions of Section 111A(2) of the
Companies Act, our directors may exercise this discretion if they have
sufficient cause to do so. If our directors refuse to register a transfer of
shares, the shareholder wishing to transfer his, her or its shares may file a
civil suit or an appeal with the Company Law Board, or CLB. Pursuant to Section
111A(3), if a transfer of shares contravenes any of the provisions of the
Securities and Exchange Board of India Act, 1992 or the regulations issued
thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 or
any other Indian laws, the CLB may, on application made by the company, a
depositary incorporated in India, an investor, the Securities and Exchange Board
of India or other parties, direct the rectification of the register of records.
The CLB may, in its discretion, issue an interim order suspending the voting
rights attached to the relevant shares before making or completing its
investigation into the alleged contravention. Notwithstanding such
investigation, the rights of a shareholder to transfer the shares will not be
restricted.

There are no maximum limits on foreign direct equity participation in the
business in which our Company is engaged. With regard to share transfers, if a
person resident outside India were to sell its shares to a person resident in
India, approval of the RBI would be required unless the sale is made on a stock
exchange or in connection with an offer made under the regulations regarding
takeovers. For additional information regarding ownership restrictions, please
see "Investment by Foreign Institutional Investors" below.

Our shares in excess of 500 are required to be transferred in dematerialized
form. Under the Companies Act, unless the shares of a company are held in a
dematerialized form, a transfer of shares is effected by a duly stamped
instrument of transfer in the form prescribed by the Companies Act and the rules
thereunder together with delivery of the share certificates.

We have entered into listing agreements with three of the Indian stock
exchanges: the BSE, the National Stock Exchange and the Hyderabad Stock
Exchange. Clause 40A of each of the listing agreements provides that if an
acquisition of a listed company's shares results in the acquirer and its
associates holding 5.0% or more of the company's outstanding equity shares or
voting rights, the acquirer must report its holding to the company and the
relevant stock exchanges. If an acquisition results in the acquirer and its
associates holding equity shares that have 15.0% or more of the voting rights,
then the acquirer must, before acquiring such equity shares, make an offer, in
accordance with clause 40B of the listing agreements, on a uniform basis to all
remaining shareholders of the company to acquire equity shares that have at
least an additional 20.0% of the voting rights of the total equity shares of the
company at a prescribed price. The acquisition of shares of a company listed on
an Indian stock exchange may be subject to regulations governing takeovers of
Indian companies. Although clauses 40A and 40B and such regulations will not
apply to the equity shares so long as they are represented by ADSs, holders of
ADSs may be required to comply with such notification and disclosure obligations
pursuant to the provisions of the deposit agreements.

                                       71
Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian
companies who are not holders of record to declare to us details of the holder
of record and the nature and details of the beneficial owner's interest in the
shares. Any person who fails to make the required declaration within 30 days may
be liable for a fine of up to Rs.1,000 for each day the declaration is not made.
Any lien, promissory note or other collateral agreement created, executed or
entered into with respect to any equity share by its registered owner, or any
hypothecation by the registered owner of any equity share, shall not be
enforceable by the beneficial owner or any person claiming through the
beneficial owner if such declaration is not made. Failure to comply with Section
187C will not affect our obligation to register a transfer of shares or to pay
any dividends to the registered holder of any shares pursuant to which the
declaration has not been made. While it is unclear under Indian law whether
Section 187C applies to holders of ADSs, investors who exchange ADSs for the
underlying equity shares will be subject to the restrictions of Section 187C.
Additionally, holders of ADSs may be required to comply with the notification
and disclosure obligations pursuant to the provisions of the deposit agreement
covering the ADSs.

Company Acquisition of Equity Shares

Under the Companies Act, approval of at least 75.0% of our shareholders voting
on the matter and approval of the High Court of Andhra Pradesh is required to
reduce our share capital. We may, under some circumstances, acquire our own
equity shares without seeking the approval of the High Court. However, we would
have to extinguish any shares we have so acquired within the prescribed time
period. Generally, a company is not permitted to acquire its own shares for
treasury operations. An acquisition of our own shares (without having to obtain
the approval of the High Court) must comply with prescribed rules, regulations
and conditions as laid down in the Companies Act and the Securities and Exchange
Board of India (Buy-back of Securities) Regulations, 1998, or Buy-back
Regulations.

Liquidation Rights

Subject to the rights of creditors, employees and the holders of any shares
entitled by their terms to preferential repayment over the equity shares, if
any, in the event of our winding-up the holders of the equity shares are
entitled to be repaid the amounts of paid up capital or credited as paid up on
those equity shares. All surplus assets after payments due to the holders of any
preference shares at the commencement of the winding-up shall be paid to holders
of equity shares in proportion to their shareholding.

Takeover Code

Disclosure and mandatory bid obligations under Indian law are governed by the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, the Takeover Code, which prescribes the thresholds
or trigger points that give rise to these obligations. The Takeover Code is
under constant review by the Securities and Exchange Board of India and was
recently amended.

The most important features of the Takeover Code, as amended, are as follows:

Any acquirer (meaning a person who, directly or indirectly, acquires or agrees
to acquire shares or voting rights in a company, either by himself or with any
person acting in concert) who acquires shares or voting rights that would
entitle him to more than 5.0% of the shares or voting rights in a company is
required to disclose the aggregate of his shareholding or voting rights in that
company to the company (which in turn is required to disclose the same to each
of the stock exchanges on which the company's shares are listed) within four
working days of (a) the receipt of allotment information, or (b) the
acquisitions of shares or voting rights, as the case may be.

   . A person who holds more than 15.0% of the shares or voting rights in any
     company is required to make annual disclosure of his holdings to that
     company (which in turn is required to disclose the same to each of the
     stock exchanges on which the company's shares are listed).

   . Promoters or persons in control of a company are also required to make
     annual disclosure of their holdings in the same manner.

   . An acquirer cannot acquire shares or voting rights which (taken together
     with existing shares or voting rights,

                                       72
if any, held by him or by persons acting in concert with him) would entitle
     such acquirer to exercise 15.0% or more of the voting rights in a company,
     unless such acquirer makes a public announcement offering to acquire a
     further 20.0% of the shares of the company.

   . An acquirer who, together with persons acting in concert with him, holds
     between 15.0% and 75.0% of the shares cannot acquire additional shares or
     voting rights that would entitle him to exercise a further 5.0% of the
     voting rights in any period of 12 months unless such acquirer makes a
     public announcement offering to acquire a further 20.0% of the shares of
     the company.

   . Any further acquisition of shares or voting rights by an acquirer who holds
     75.0% of the shares or voting rights in a company triggers the same public
     announcement requirements.

   . In addition, regardless of whether there has been any acquisition of shares
     or voting rights in a company, an acquirer acting in concert cannot
     directly or indirectly acquire control over a company (for example, by way
     of acquiring the right to appoint a majority of the directors or to control
     the management or the policy decisions of the company) unless such acquirer
     makes a public announcement offering to acquire a minimum of 20.0% of the
     shares of the company.

The Takeover Code sets out the contents of the required public announcements as
well as the minimum offer price.

The Takeover Code permits conditional offers as well as the acquisition and
subsequent delisting of all shares of a company and provides specific guidelines
for the gradual acquisition of shares or voting rights. Specific obligations of
the acquirer and the board of directors of the target company in the offer
process have also been set out. Acquirers making a public offer are also
required to deposit in an escrow account a percentage of the total consideration
which amount will be forfeited if the acquirer does not fulfill his obligations.
In addition, the Takeover Code introduces the "chain principle" by which the
acquisition of a holding company will obligate the acquirer to make a public
offer to the shareholders of each subsidiary company which is listed.

The general requirements to make such a public announcement do not, however,
apply entirely to bail-out takeovers when a promoter (i.e., a person or persons
in control of the company, persons named in any offer document as promoters and
specified corporate bodies and individuals) is taking over a financially weak
company but not a "sick industrial company" pursuant to a rehabilitation scheme
approved by a public financial institution or a scheduled bank. A "financially
weak company" is a company which has at the end of the previous financial year
accumulated losses, which have resulted in erosion of more than 50.0% but less
than 100.0% of the total sum of its paid up capital and free reserves at the end
of the previous financial year. A "sick industrial company" is a company
registered for more than five years which has at the end of any financial year
accumulated losses equal to or exceeding its entire net worth.

The Takeover Code does not apply to acquisitions involving the acquisition of
shares (i) by allotment in a public, rights and preferential issue, (ii)
pursuant to an underwriting agreement, (iii) by registered stockbrokers in the
ordinary course of business on behalf of customers, (iv) in unlisted companies,
(v) pursuant to a scheme of reconstruction or amalgamation or (vi) pursuant to a
scheme under Section 18 of the Sick Industrial Companies (Special Provisions)
Act, 1985. The Takeover Code does not apply to acquisitions in the ordinary
course of business by public financial institutions either on their own account
or as a pledgee. In addition, the Takeover Code does not apply to the
acquisition of ADSs so long as they are not converted into equity shares.

Material Contracts

Except as described herein, we have not entered into any material contracts,
other than contracts entered into in the ordinary course of business. For a
description of Satyam's material joint venture agreement with TRW Inc., please
see "Item 5.-Operating and Financial Review and Prospects-Joint Venture with TRW
Inc.".

Exchange Controls

General

Prior to June 1, 2000, investment in Indian securities was regulated by the
Indian Foreign Exchange Regulation Act, 1973. Under Section 29(1)(b) of the
Indian Foreign Exchange Regulation Act, 1973, no person or company resident
outside India that is not incorporated in India (other than a banking company)
could purchase the shares of any company carrying on any trading, commercial or
industrial activity in India without the permission of the Reserve Bank of
India. Also, under Section 19(1)(d) of the Indian Foreign Exchange Regulation
Act, 1973, the transfer and

                                       73
issuance of any security of any Indian company to a person resident outside
India required the permission of the Reserve Bank of India. Under Section 19(5)
of the Indian Foreign Exchange Regulation Act, 1973, no transfer of shares in a
company registered in India by a non-resident to a resident of India was valid
unless the transfer was confirmed by the Reserve Bank of India upon application
filed by the transferor or the transferee. Furthermore, the issuance of rights
and other distributions of securities to a non-resident also requires the prior
consent of the Reserve Bank of India. However, the Reserve Bank of India has
issued notifications over the past few years relaxing the restrictions on
foreign investment in Indian companies.

As of June 1, 2000, the Indian Foreign Exchange Regulation Act, 1973 was
replaced by the Indian Foreign Exchange Management Act, 1999. The Indian Foreign
Exchange Management Act, 1999 contains provisions regarding current account
convertibility and amendments to the definition of a resident of India. However,
some of the preexisting controls and restrictions on capital account
transactions remain in force. While many of the restrictions imposed by the
Indian Foreign Exchange Regulation Act, 1973 have been relaxed under this new
legislation, the Notifications and Guidelines issued by the Reserve Bank of
India which are not inconsistent with the Indian Foreign Exchange Management
Act, 1999 continue to be in force. The purchase and the transfer of shares of
Indian companies continues to be regulated by the RBI. Therefore, transaction
involving foreign investment in Indian securities is regulated by the provisions
of the Indian Foreign Exchange Management Act, 1999 and continues to be
regulated by the Reserve Bank of India.

ADR Guidelines

Shares of Indian companies represented by ADSs are no longer required to be
approved for issuance to foreign investors by the either Ministry of Finance or
the Reserve Bank of India under the Issue of Foreign Currency Convertible Bonds
and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993, as
modified from time to time, notified by the Government of India. This change was
effected through the guidelines for ADR and GDR issues by Indian companies
issued by the Ministry of Finance on January 19, 2000 and a notification issued
by the Reserve Bank of India. Hence we do not require the approval of the
Ministry of Finance and the Reserve Bank of India under the Issue of Foreign
Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993. However, we will be required to furnish full
particulars of the issue, including the underlying equity shares representing
the ADRs, to the Ministry of Finance and the Reserve Bank of India within 30
days of the completion of an offering.

The Issue of Foreign Currency Convertible Bonds and Ordinary Shares Scheme is
distinct from other policies or facilities, as described below, relating to
investments in Indian companies by foreign investors. The issuance of ADSs
pursuant to the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme also affords to owners of ADSs the benefits of Section 115AC of the
Indian Income-tax Act, 1961 for purposes of the application of Indian tax law.
For additional information, please see "Taxation -- Indian Taxation."

Foreign Direct Investment

Currently, due to recent changes in Indian policy, subject to certain
exceptions, foreign direct investment and investment by individuals of Indian
nationality or origin residing outside India, or non-resident Indians, and
overseas corporate bodies at least 60% owned by such persons, or overseas
corporate bodies, in Indian companies do not require the approval of the Foreign
Investment Promotion Board, or FIPB, a body formed by the Government of India to
negotiate with large foreign companies interested in making long-term
investments in India. Furthermore, henceforth no prior approval of the Reserve
Bank of India is required although a post-investment declaration in giving
details of the foreign investment in the company pursuant to the ADR issue must
be filed with the Reserve Bank of India within thirty days of our ADR offering.

In cases where FIPB approval is obtained, no prior approval of the Reserve Bank
of India is required, although a declaration in the prescribed form as mentioned
above must be filed with the Reserve Bank of India once the foreign investment
is made in the Indian company. In cases where no prior approval of the FIPB is
required, prior approval of the Reserve Bank of India would also not be
required. However, a declaration in the prescribed form giving details of the
foreign investment must be filed with the Reserve Bank of India once the foreign
investment is made in the Indian company.

In May 1994, the Government of India announced that purchases by foreign
investors of ADSs and foreign currency convertible bonds of Indian companies
will be treated as foreign direct investment in the equity issued by Indian
companies for such offerings.

                                       74
In November 1998, the Reserve Bank of India issued a notification to the effect
that foreign investment in preferred shares will be considered as part of the
share capital of a company and the provisions relating to foreign direct
investment in the equity shares of a company discussed above would apply.
Investments in preferred shares are included as foreign direct investment for
the purposes of sectoral caps on foreign equity, if such preferred shares carry
a conversion option. If the preferred shares are structured without a conversion
option, they would fall outside the foreign direct investment limit.

The discussion on the foreign direct investment regime in India set forth above
applies only to a new issuance of shares made by Indian companies, not to a
transfer of shares.

Investment by Non-Resident Indians and Overseas Corporate Bodies

A variety of special facilities for making investments in India in shares of
Indian companies is available to individuals of Indian nationality or origin
residing outside India, or non-resident Indians, and to overseas corporate
bodies ("OCBs"), at least 60% owned by such persons. These facilities permit
non-resident Indians and overseas corporate bodies to make portfolio investments
in shares and other securities of Indian companies on a basis not generally
available to other foreign investors. These facilities are different and
distinct from investments by foreign direct investors described above.

Apart from portfolio investments in Indian companies, non-resident Indians and
overseas corporate bodies may also invest in Indian companies through foreign
direct investments. For additional information, please see "--Foreign Direct
Investment.". Under the foreign direct investment rules, non-resident Indians
and overseas corporate bodies may invest up to 100% in high-priority industries
in which other foreign investors are permitted to invest only up to 50%, 51%,
74% or 100%, depending on the industry category.

Investment by Foreign Institutional Investors

In September 1992, the Government of India issued guidelines which enable
foreign institutional investors, including institutions such as pension funds,
investment trusts, asset management companies, nominee companies and
incorporated/institutional portfolio managers, to make portfolio investments in
all the securities traded on the primary and secondary markets in India. Under
the guidelines, foreign institutional investors must obtain an initial
registration from the Securities and Exchange Board of India to make these
investments. Foreign institutional investors must also comply with the
provisions of the Securities Exchange Board of India Foreign Institutional
Investors Regulations, 1995. When it receives the initial registration, the
foreign institutional investor also obtains general permission from the Reserve
Bank of India to engage in transactions regulated under the Indian Foreign
Exchange Regulation Act. Together, the initial registration and the Reserve Bank
of India's general permission enable the registered foreign institutional
investor to buy, subject to the ownership restrictions discussed below, and sell
freely securities issued by Indian companies whether or not they are listed, to
realize capital gains on investments made through the initial amount invested in
India, to subscribe or renounce rights offerings for shares, to appoint a
domestic custodian for custody of investments held and to repatriate the
capital, capital gains, dividends, income received by way of interest and any
compensation received towards sale or renunciation of rights offerings of
shares. The foreign institutional investor regulations also set out the general
obligations and responsibilities and investment conditions and restrictions
applicable to foreign institutional investors. One such restriction is that
unless the foreign Institutional Investor is registered as a debt fund with the
Securities Exchange Board of India, the total investment in equity and
equity-related instruments should not be less than 70% of the aggregate of all
investments of a foreign institutional investor in India.

Apart from making portfolio investments in Indian companies as described above,
foreign institutional investors may direct foreign investments in Indian
companies. For additional information, please see "--Foreign Direct Investment."

Ownership Restrictions

The Securities and Exchange Board of India and Reserve Bank of India regulations
restrict portfolio investments in Indian companies by foreign institutional
investors, non-resident Indians and overseas corporate bodies, all of which we
refer to as foreign portfolio investors. The Reserve Bank of India issued a
circular in August 1998 stating that foreign institutional investors in
aggregate may hold no more than 30% of the equity shares of an Indian company
and non-resident Indians and overseas corporate bodies in aggregate may hold no
more than 10% of the shares of an Indian company through portfolio investments.
Under current Indian law, foreign institutional investors in the aggregate may
hold no more than 24% of the equity shares of an Indian company, and
non-resident Indians and overseas corporate bodies in aggregate may hold no more
than 10% of the shares of an Indian company through portfolio investments. The
24% limit referred to above can be entirely removed, if the stockholders of the
company pass a special resolution

                                       75
to that effect. The Reserve Bank of India circular also states that no single
foreign institutional investor may hold more than 10% of the shares of an Indian
company and no single non-resident Indian or overseas corporate body may hold
more than 5% of the shares of an Indian company.

There is uncertainty under Indian law about the tax regime applicable to foreign
institutional investors that hold and trade ADSs. Foreign institutional
investors are urged to consult with their Indian legal and tax advisers about
the relationship between the foreign institutional investor regulations and the
ADSs and any equity shares withdrawn upon surrender of ADSs.

Under the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 approved by the Securities and Exchange
Board of India in January 1997 and notified by the Government of India in
February 1997, which replaced the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, upon the
acquisition of more than 5% of the outstanding shares of a public Indian
company, a purchaser is required to notify the company and the company and the
purchaser are required to notify all the stock exchanges on which the shares of
the company are listed. Upon the acquisition of 15% or more of such shares or a
change in control of the company, the purchaser is required to make an open
offer to the other stockholders offering to purchase at least 20% of all the
outstanding shares of the company at a minimum offer price as determined
pursuant to the new regulations. Upon conversion of ADSs into equity shares, an
ADS holder will be subject to the Takeover Code. However, since we are an
unlisted company, the provisions of the new regulations will not apply to us. If
our shares are listed on an Indian stock exchange in the future, the new
regulations will apply to the holders of our ADSs.

Open market purchases of securities of Indian companies in India by foreign
direct investors or investments by non-resident Indians, overseas corporate
bodies and foreign institutional investors above the ownership levels set forth
above require Government of India approval on a case-by-case basis.

Voting Rights of Deposited Equity Shares Represented by ADSs

Holders of ADSs generally have the right under the deposit agreement to instruct
the depositary bank to exercise the voting rights for the equity shares
represented by the related ADSs.

At our request, the depositary bank will mail to the holders of ADSs any notice
of stockholders' meeting received from us together with information explaining
how to instruct the depositary bank to exercise the voting rights of the
securities represented by ADSs.

If the depositary bank timely receives voting instructions from a holder of
ADSs, it will endeavor to vote the securities represented by the holder's ADSs
in accordance with such voting instructions. In the event that voting takes
place by a show of hands, the depositary bank will cause the custodian to vote
all deposited securities in accordance with the instructions received by holders
of a majority of the ADSs for which the depositary bank receives voting
instructions.

Please note that the ability of the depositary bank to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the securities on deposit. We cannot assure you that ADS holders will receive
voting materials in time to enable them to return voting instructions to the
depositary bank in a timely manner. Securities for which no voting instructions
have been received will not be voted except as discussed above.

Taxation

Indian Taxation

General. The following relates to the principal Indian tax consequences for
holders of ADSs and equity shares received upon withdrawal of such equity shares
who are not resident in India, whether of Indian origin or not. We refer to
these persons as non-resident holders. The following is based on the provisions
of the Income-tax Act, 1961, including the special tax regime contained in
Section 115AC and the Issue of Foreign Currency Convertible Bonds and Ordinary
Shares (through Depository Receipt Mechanism) Scheme, 1993. The Income-tax Act
is amended every year by the Finance Act of the relevant year. Some or all of
the tax consequences of the Section 115AC may be amended or changed by future
amendments of the Income-tax Act.

This section is not intended to constitute a complete analysis of the individual
tax consequences to non-resident holders under Indian law for the acquisition,
ownership and sale of ADSs and equity shares. Personal tax consequences of an
investment may vary for non-resident holders in various circumstances, and
potential investors

                                       76
should therefore consult their own tax advisers on the tax consequences of such
acquisition, ownership and sale, including specifically the tax consequences
under the law of the jurisdiction of their residence and any tax treaty between
India and their country of residence.

Residence. For purposes of the Income-tax Act, an individual is considered to be
a resident of India during any fiscal year if he or she is in India in that year
for:

     .  a period or periods amounting to 182 days or more; or

     .  60 days or more and, in case of a citizen of India or a person of Indian
        origin, who, being outside India, comes on a visit to India, is in India
        for 182 days or more effective April 1, 1995 and in each case within the
        four preceding years has been in India for a period or periods amounting
        to 365 days or more.

A company is a resident of India if it is registered in India or the control and
the management of its affairs is situated wholly in India. A firm or other
association of persons is resident in India except where the control and
management of its affairs is situated wholly outside India. Individuals,
companies, firms and other associations of persons that are not residents of
India would be treated as non-residents for purposes of the Income-tax Act.

Taxation of Distributions. Until March 31, 2002 there was no withholding tax on
dividends paid to stockholders and the company paying the dividends was subject
to a dividend distribution tax of 10% and applicable surcharge. The recent
Indian Finance Bill, 2002, provides for a withholding tax on dividends payable
by Indian Companies, which exceed Rs. 1000. The applicable tax rates to be
withheld is dependent on status of the stockholders receiving the dividend,
categorized as Indian resident individuals, Non resident Indians/foreign
nationals, Indian companies or foreign companies. The applicable withholding tax
on dividends payable to ADS holders is 10.5% including the present surcharge of
5%. Consequently, effective April 1, 2002, Indian companies will no longer be
taxed on declared dividends.

Any distributions of additional ADSs, equity shares or rights to subscribe for
equity shares made to non-resident holders with respect to ADSs or equity shares
will not be subject to Indian tax. Similarly, the acquisition by a non-resident
holder of equity shares upon redemption of ADSs will not constitute a taxable
event for Indian income tax purposes. Such acquisition will, however, give rise
to a stamp duty as described below under "Stamp Duty and Transfer Tax."

Taxation of Capital Gains. Any gain realized on the sale of ADSs or equity
shares by a non-resident holder to any non-resident outside India is not subject
to Indian capital gains tax.

Since our ADS offerings were approved by the Government of India under the Issue
of Foreign Currency Convertible Bonds and Ordinary Shares Scheme, non-resident
holders of the ADSs have the benefit of tax concessions available under Section
115AC. As a result, gains realized on the sale of ADSs will not be subject to
Indian taxation. The effect of the Scheme in the context of Section 115AC is
unclear as to whether such tax treatment is available to a non-resident who
acquires equity shares outside India from a non-resident holder of equity shares
after receipt of the equity shares upon surrender of the ADSs. If concessional
tax treatment is not available, gains realized on the sale of such equity shares
will be subject to customary Indian taxation on capital gains as discussed
below. The Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme provides that if the equity shares are sold on a recognized stock
exchange in India against payment in Indian rupees, they will no longer be
eligible for such concessional tax treatment.

Subject to any relief provided pursuant to an applicable tax treaty, any gain
realized on the sale of equity shares to an Indian resident or inside India
generally will be subject to Indian capital gains tax which is to be withheld at
the source by the buyer. However, the acquisition by non-resident holders of
equity shares in exchange for ADSs will not be subject to Indian capital gains
tax. Under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares
Scheme, the cost of acquisition of equity shares received in exchange for ADSs
will be the cost of the underlying shares on the date that the depositary gives
notice to the custodian of the delivery of the equity shares in exchange for the
corresponding ADSs. In the case of companies listed in India, the cost of
acquisition of the equity shares would be the price of the equity shares
prevailing on the Stock Exchange, Mumbai or the National Stock Exchange on the
date the depositary gives notice to the custodian of the delivery of the equity
shares in exchange for the corresponding ADSs. However, the Issue of Foreign
Currency Convertible Bonds and Ordinary Shares Scheme and Section 115AC do not
provide for determination of the cost of acquisition for the purposes of
computing capital gains tax where the shares of the Indian company are not
listed on the Stock Exchange, Mumbai or the National Stock Exchange in India.
Therefore, in the case of our company, which is not listed on either the Stock
Exchange, Mumbai or the National Stock

                                       77
Exchange, the mode of determination of the cost of acquisition of equity shares
is unclear. Therefore, the original cost of acquisition of the ADSs may be
treated as the cost of acquisition for the purposes of determining the capital
gains tax. According to the Issue of Foreign Currency Convertible Bonds and
Ordinary Shares Scheme, a non-resident holder's holding period for purposes of
determining the applicable Indian capital gains tax rate in respect of equity
shares received in exchange for ADSs commences on the date of the notice of the
redemption by the depositary to the custodian. The India-U.S. Treaty does not
provide an exemption from the imposition of Indian capital gains tax.

Under Section 115AC, taxable gain realized in respect of equity shares held for
more than 12 months, or long-term gain, is subject to tax at the rate of 10%.
Taxable gain realized in respect of equity shares held for 12 months or less, or
short-term gain, is subject to tax at variable rates with a maximum rate of 48%.
The actual rate of tax on short-term gain depends on a number of factors,
including the residential status of the non-resident holder and the type of
income chargeable in India.

Buy-back of Securities. Currently, Indian companies are not subject to any tax
in respect of the buy-back of their shares. However, the stockholders will be
taxed on any gain at the long-term or short-term, as applicable, capital gains
rates. For additional information, please see "--Taxation of Capital Gains."

Stamp Duty and Transfer Tax. Upon issuance of the equity shares underlying our
ADSs, we are required to pay a stamp duty of 0.1% of the aggregate value of the
shares issued, provided that the issue of dematerialized shares is not subject
to Indian stamp duty. A transfer of ADSs is not subject to Indian stamp duty.
However, upon the acquisition of equity shares in physical form from the
depositary in exchange for ADSs, the non-resident holder will be liable for
Indian stamp duty at the rate of 0.5% of the market value of the equity shares
on the redemption date. Similarly upon a sale of shares in physical form, stamp
duty at the rate of 0.5% of the market value of the equity shares on the trade
date is payable, although customarily such duty is borne by the purchaser.
Blocks of 500 or less of our equity shares may be issued and traded in physical
form, and are thus subject to Indian stamp duty. Blocks of more than 500 of our
equity shares must be issued and traded in dematerialized form and are not
subject to Indian stamp duty.

Wealth Tax. The holding of the ADSs in the hands of non-resident holders and the
holding of the underlying equity shares by the depositary as a fiduciary will be
exempt from Indian wealth tax. Non-resident holders are advised to consult their
own tax advisers in this context.

Gift Tax and Estate Duty. Indian gift tax was abolished in October 1998. In
India, there is no estate duty law. As a result, no estate duty would be
applicable to non-resident holders. Non-resident holders are advised to consult
their own tax advisors in this context.

Service Tax. Brokerage or commissions paid to stockbrokers in connection with
the sale or purchase of shares is subject to a service tax of 5.0%. The
stockbroker is responsible for collecting the service tax and paying it to the
relevant authority.

United States Federal Taxation

The following is a summary of the material U.S. federal income and estate tax
consequences that may be relevant with respect to the acquisition, ownership and
disposition of equity shares or ADSs. This summary addresses the U.S. federal
income and estate tax considerations of holders that are U.S. persons, i.e.,
citizens or residents of the United States, partnerships or corporations created
in or under the laws of the United States or any political subdivision thereof
or therein, estates, the income of which is subject to U.S. federal income
taxation regardless of its source and trusts for which a U.S. court exercises
primary supervision and a U.S. person has the authority to control all
substantial decisions and that will hold equity shares or ADSs as capital
assets. We refer to these persons as U.S. holders. This summary does not address
tax considerations applicable to holders that may be subject to special tax
rules, such as banks, insurance companies, dealers in securities or currencies,
tax-exempt entities, persons that hold equity shares or ADSs as a position in a
"straddle" or as part of a "hedging" or "conversion" transaction for tax
purposes, persons that have a "functional currency" other than the U.S. dollar
or holders of 10% or more, by voting power or value, of the stock of our
company. This summary is based on the tax laws of the United States as in effect
on the date of this Annual Report and on United States Treasury

Regulations in effect or, in some cases, proposed, as of the date of this Annual
Report, as well as judicial and administrative interpretations thereof available
on or before such date and is based in part on representations of the depositary
and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. All of the foregoing
are subject to change, which change could apply retroactively and could affect
the tax consequences described below.

                                       78
Each prospective investor should consult his, her or its own tax advisor with
respect to the U.S. Federal, state, local and foreign tax consequences of
acquiring, owning or disposing of equity shares or ADSs.

Ownership of ADSs. For U.S. federal income tax purposes, holders of ADSs will be
treated as the owners of equity shares represented by such ADSs.

Dividends. Subject to special rules discussed below governing passive foreign
investment companies, distributions of cash or property (other than equity
shares, if any, that are distributed pro rata to all stockholders of our
company, including holders of ADSs and also meet certain conditions) with
respect to equity shares will be includible in income by a U.S. holder as
foreign source dividend income at the time of receipt, which in the case of a
U.S. holder of ADSs generally will be the date of receipt by the depositary, to
the extent such distributions are made from the current or accumulated earnings
and profits of our company as determined under U.S. federal income tax
principles. Such dividends will not be eligible for the dividends received
deduction generally allowed to corporate U.S. holders. To the extent, if any,
that the amount of any distribution by our company exceeds our company's current
and accumulated earnings and profits, it will be treated first as a tax-free
return of the U.S. holder's tax basis in the equity shares or ADSs and
thereafter as capital gain.

A U.S. holder will not be eligible for a foreign tax credit against its U.S.
federal income tax liability for Indian dividend distribution taxes paid by our
company, unless it is a U.S. company holding at least 10% of our company paying
the dividends. U.S. holders should be aware that dividends paid by our company
generally will constitute "passive income" for purposes of the foreign tax
credit (or, in the case of certain holders, "financial services income").

If dividends are paid in Indian rupees, the amount of the dividend distribution
includible in the income of a U.S. holder will be in the U.S. dollar value of
the payments made in Indian rupees, determined at a spot exchange rate between
Indian rupees and U.S. dollars applicable to the date of distribution,
regardless of whether the payment is in fact converted into U.S. dollars.
Generally, gain or loss, if any, resulting from currency exchange fluctuations
during the period from the date the dividend is paid to the date such payment is
converted into U.S. dollars will be treated as ordinary income or loss.

Sale or Exchange of equity shares or ADSs. A U.S. holder generally will
recognize gain or loss on the sale or exchange of equity shares or ADSs equal to
the difference between the amount realized on such sale or exchange and the U.S.
holder's tax basis in the equity shares or ADSs. Subject to special rules
described below governing passive foreign investment companies, such gain or
loss will be capital gain or loss, and will be long-term capital gain or loss if
the equity shares or ADSs were held for more than one year. Gain or loss, if
any, recognized by a U.S. holder generally will be treated as U.S. source gain
or loss for U.S. foreign tax credit purposes. The deductibility of capital
losses may be subject to limitation.

Estate Taxes. An individual stockholder who is a citizen or resident of the
United States for U.S. federal estate tax purposes will have the value of the
equity shares or ADSs owned by such holder included in his or her gross estate
for U.S. federal estate tax purposes.

Passive Foreign Investment Company. A non-U.S. corporation will be classified as
a passive foreign investment company for U.S. Federal income tax purposes if
either:

     .  75% or more of its gross income for the taxable year is passive income;
        or

     .  on a quarterly average for the taxable year by value (or, if it is not a
        publicly traded corporation and so elects, by adjusted basis) 50% or
        more of its assets produce or are held for the production of passive
        income.

We do not believe that we satisfy either of the tests for passive foreign
investment company status. If we were to be a passive foreign investment company
for any taxable year, U.S. holders would be required to either:

     .  pay an interest charge together with tax calculated at maximum ordinary
        income rates on "excess distributions," which is defined to include gain
        on a sale or other disposition of equity shares;

     .  if a qualified electing fund election is made, to include in their
        taxable income their pro rata share of undistributed amounts of our
        income; or

                                       79
.  if the equity shares are "marketable" and a mark-to-market election is
        made, to mark-to-market the equity shares each taxable year and
        recognize ordinary gain and, to the extent of prior ordinary gain,
        ordinary loss for the increase or decrease in market value for such
        taxable year.

Backup Withholding Tax and Information Reporting Requirements. Dividends paid on
equity shares to a holder who is not an "exempt recipient," if any, may be
subject to information reporting and, unless a holder either furnishes its
taxpayer identification number or otherwise establishes an exemption, may also
be subject to U.S. backup withholding tax. In addition, information reporting
will apply to payments of proceeds from the sale or redemption of equity shares
or ADSs by a paying agent, including a broker, within the United States to a
U.S. holder, other than an "exempt recipient." An "exempt recipient" includes a
corporation. In addition, a paying agent within the United States will be
required to withhold 31% of any payments of the proceeds from the sale or
redemption of equity shares or ADSs within the United States to a holder, other
than an "exempt recipient," if such holder fails to furnish its correct taxpayer
identification number or otherwise fails to comply with such backup withholding
requirements.

The above summary is not intended to constitute a complete analysis of all tax
consequences relating to ownership of equity shares or ADSs. You should consult
your own tax advisor concerning the tax consequences of your particular
situation.

DOCUMENTS ON DISPLAY

Publicly filed documents concerning our company which are referred to in this
document may be inspected and copied at the public reference facilities
maintained by the SEC at:

Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

Copies of these materials can also be obtained from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.

The SEC maintains a website at www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that make
electronic filings with the SEC using its EDGAR system. As a foreign private
issuer, we are not required to use the EDGAR system but we have done so in the
past and will continue to do in order to make our reports available over the
Internet.

Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our currency, maturity and interest rate information relative to our short-term
and long-term debt are disclosed in Note "Borrowings" to our consolidated
financial statements.

The table below provides information about our financial instruments that are
sensitive to changes in interest rates and foreign currencies as of the dates
shown. Weighted average variable rates were based on average interest rates
applicable to the loans. The information is presented in U.S. dollar
equivalents, which is our reporting currency, based on the applicable exchange
rates as of the relevant period end. Actual cash flows are denominated in
various currencies, including U.S. dollars and Indian rupees.
As of March 31, 2001       As of March 31, 2002
                                                        --------------------       --------------------
                                                          Total                     Total
                                                          -----                     -----
                                                        Recorded                   Recorded
                                                        --------                   --------
                                                         Amount   Fair Value        Amount   Fair Value
                                                         -------------------        -------------------
    ($equivalent in thousands)
Debt:
Fixed rate short-term debt ...........................       --         --              --       --
Average interest rate ................................
Variable rate short-term debt ........................  $ 7,358    $ 7,358         $ 1,764   $1,764
Average interest rate ................................     12.7%                       9.5%
Fixed rate long-term debt ............................  $24,384    $24,411         $ 5,499   $5,516
Average interest rate ................................     14.1%                      12.7%
80
Variable rate long-term debt .........................  $18,458    $18,458              --       --
Average interest rate ................................     12.1%
Limitations. Fair value estimates are made at a specific point in time and are
based on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.

We also face market risk relating to foreign exchange rate fluctuations,
principally relating to the fluctuation of U.S. dollar to Indian rupee exchange
rate. Our foreign exchange risk principally arises from accounts payable to
overseas vendors. This risk is partially mitigated as we have receipts in
foreign currency from overseas customers and hold balances in foreign currency
with overseas banks.

During fiscal 2001 and the Fiscal 2002, 89.8% and 92.3%, respectively, of our
revenues were generated outside of India. Using sensitivity analysis, a
hypothetical 10.0% increase in the value of the Indian rupee against all other
currencies would decrease revenue by 1.8%, or $ 5.6 Million, in fiscal 2001 and
1.7% or $ 7.2 Million in the Fiscal 2002, while a hypothetical 10.0% decrease in
the value of the Indian rupee against all other currency would increase revenue
by 1.8%, or $ 5.6 Million, in fiscal 2001 and 1.7%, or $ 7.2 Million, in the
Fiscal 2002. In the opinion of management, a substantial portion of this
fluctuation would be offset by expenses incurred in local currencies. As a
result, a hypothetical 10.0% movement of the value of the Indian rupee against
all other currencies in either direction would have impacted our earnings before
interest and taxes by $ 5.6 Million in fiscal 2001 and $ 7.2 Million in the
Fiscal 2002. This amount would be offset, in part, from the impacts of local
income taxes and local currency interest expense. As at March 31, 2002, we had
approximately $222.0 million of non-Indian rupee denominated cash and cash
equivalents.

Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

                                       81
PART II

Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

In May 2001, we completed an offering of 16,675,000 ADSs (representing
33,350,000 equity shares) at a price of $9.71 per ADS. We received approximately
$152.7 million in cash, net of underwriting discounts, commissions and other
offering costs. Our Securities Act registration statement on Form F-1 with
respect to the offering was declared effective by the Securities and Exchange
Commission on May 14, 2002 (Registration No. 333-13464). As of April 30, 2002,
approximately $64.3 million of these proceeds has been used for prepayment of
loans ($26.9 million); strategic investments in our subsidiaries ($10.6
million); development of facilities and infrastructure ($7.2 million) and
working capital and general corporate purposes ($19.6 million). We intend to use
the balance of the net proceeds to fund expansion of our existing facilities and
communication network in different locations in India and outside India; to
develop new facilities within and outside India; to investment in joint ventures
and other strategic investments; and for working capital and general corporate
purposes. None of the net proceeds from our ADS offering were paid, directly or
indirectly, to any of our directors, officers or general partners or any of
their associates, or to any persons owning ten percent or more of any class of
our equity securities, or any affiliates.

Item 15. RESERVED

Item 16. RESERVED

                                       82
PART III

Item 17. FINANCIAL STATEMENTS

See Item 18 for a list of financial statements filed under Item 17.

Item 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this document, together
with the report of the independent auditors:

          Independent Auditor's Report

          Consolidated Balance Sheets as of March 31, 2001 and 2002

          Consolidated Statements of Operations and Comprehensive Income (Loss)
          for the years ended March 31, 2000, 2001, 2002.

          Consolidated Statements of Shareholder's Equity for the years ended
          March 31, 2000, 2001 and 2002.

          Consolidated Statements of Cash Flows for the years ended March 31,
          2000, 2001, 2002.

          Notes to Consolidated Financial Statements

Item 19. EXHIBITS

Number                  Description
------                  -----------

1.1       Memorandum and Articles of Association of Satyam Computer Services.
          (1)

1.2       Schedule 1 - Table A: Regulations for Management of a Company Limited
          by Shares. (1)

2.1       Specimens of Share Certificates. (1)

2.2       Deposit Agreement dated May 14, 2001, by and among Satyam Computer
          Services, Citibank, N.A. and the holders from time to time of American
          Depositary Receipts issued thereunder (including as an exhibit, the
          form of American Depositary Receipt).(4)

4.1       Associate Stock Option Plan (including Deed of Trust). (1)

4.2       Associate Stock Option Plan B. (1)

4.3       Associate Stock Option Plan ADR. (1)

4.4       Joint Venture Agreement between TRW Inc. and Satyam Computer Services,
          dated September 26, 2000. (1) *

4.5       Agreement for the Sale of Shares in CricInfo Limited, dated April 5,
          2000, by and between Indigo Holdings Limited and Satyam Infoway
          Limited. (2)

4.6       Subscription Agreement, dated May 26, 2000, by and among CricInfo
          Limited, Satyam Infoway Limited and the Senior Management. (2)

4.7       Agreed Form of Shareholders Agreement by and among CricInfo Limited,
          Satyam Infoway Limited and the Non-SIL Shareholders. (2)

                                       83
4.8       Letter Agreement, dated May 2000, between Satyam Infoway Limited and
          Indigo Holdings Limited. (2)

4.9       Share Purchase Agreement, dated November 29, 1999, by and among Satyam
          Infoway Limited, IndiaWorld Communications Private Limited, Rajesh
          Jain and the other shareholders of IndiaWorld Communications Private
          Limited listed on the signature pages thereto. (3)

4.10      Agreement For Option to Purchase Shares, dated November 29, 1999, by
          and among Satyam Infoway Limited, IndiaWorld Communications Private
          Limited, Rajesh Jain and the other shareholders of IndiaWorld
          Communications Private Limited listed on the signature pages thereto.
          (3)

4.11      Share Purchase Agreement, dated as of June 30, 2000, by and among
          Rajesh Jain, Bhavana Jain, C.M. Jain Impex and Investments Private
          Limited, Satyam Infoway Limited and IndiaWorld Communications Private
          Limited. (2)

8.1       List of Subsidiaries. (5)

10.1      Consent of Price Waterhouse, Independent Accountants. (5)

(1) 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.

(2) Previously filed by Satyam Infoway Limited with the Commission as an exhibit
to the Registration Statement on Form F-2 (File No. 333-42292) filed on July 26,
2000 and incorporated herein by reference.

(3) Previously filed by Satyam Infoway Limited with the Commission as an exhibit
to Form 6-K (File No. 000-27663) filed on December 6, 1999 and incorporated
herein by reference.

(4) Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed
on August 13, 2001 and incorporated herein by reference.

(5) Filed herewith.

* Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the SEC. The omitted potions have been
separately filed with the SEC.

                                       84
SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and authorized the undersigned to sign this annual report on its
behalf.

                        SATYAM COMPUTER SERVICES LIMITED

                                       By:     /s/ G. Jayaraman
                                               ----------------
                                       Name:   G. Jayaraman
                                       Title:  Vice President (Corp. Affairs) &
                                               Company Secretary

     Date: July 1, 2002

                                       85
SATYAM COMPUTER SERVICES LIMITED

            INDEX TO THE U.S. GAAP CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Price Waterhouse, Independent Accountants ......................................................     F-2

    Consolidated Balance Sheets as of March 31, 2001 and 2002 ................................................     F-3

    Consolidated Statements of Operations for the years ended March 31, 2000, 2001 and 2002 ..................     F-4

    Consolidated Statements of Shareholders' Equity and Comprehensive Income for the  years ended
    March 31, 2000, 2001 and 2002 ............................................................................     F-5

    Consolidated Statements of Cash Flows for the years ended March 31, 2000, 2001 and 2002 ..................     F-8

    Notes to the Consolidated Financial Statements ...........................................................    F-10
F-1
Report of Independent Accountants

To the Board of Directors of:
Satyam Computer Services Limited

In our opinion, based upon our audits and the report of other independent
auditors', the accompanying consolidated balance sheets, the related
consolidated statements of operations, of cash flows and of shareholders' equity
and comprehensive income present fairly, in all material respects, the financial
position of Satyam Computer Services Limited and its subsidiaries as at March
31, 2001 and 2002, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Satyam Infoway Limited,
a 52.51% owned subsidiary, as at March 31, 2002 and for the year then ended,
which statements reflect total assets of US$84,953 thousands as at March 31,
2002 and total revenues of US$33,050 thousands for the year then ended. Those
statements were audited by other independent auditors' whose report thereon has
been furnished to us, and our opinion expressed herein, insofar as it relates to
the amounts included for Satyam Infoway Limited as at March 31, 2002 and for the
year then ended, is based solely on the report of the other independent
auditors'. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the report of
other independent auditors' provide a reasonable basis for our opinion.

Price Waterhouse

/s/

Secunderabad, India

April 24, 2002

                                      F-2
Satyam Computer Services Limited
Consolidated Balance Sheets
(Thousands of US Dollars except per share data and as stated otherwise)
As of March 31
                                                                                        -------------------------------
                                                                                               2001               2002
ASSETS
-----------------------------------------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents                                                                  $ 66,068           $243,454
Accounts receivable, net of allowance for doubtful debts                                     92,564             88,209
Unbilled revenue on contracts                                                                 4,676              3,860
Inventory                                                                                     2,350                725
Deferred income taxes                                                                           966              3,151
Prepaid expenses and other receivables, net of allowances                                    22,556             13,439
-----------------------------------------------------------------------------------------------------------------------
Total current assets                                                                        189,180            352,838

Premises and equipment, net                                                                 133,231            123,507
Goodwill and other intangible assets, net                                                   109,995             14,697
Investments                                                                                   2,708              3,423
Investments in associated companies                                                          33,989             10,735
Other assets                                                                                 11,996             10,302
=======================================================================================================================
Total assets                                                                               $481,099           $515,502
=======================================================================================================================

Liabilities and Shareholders' Equity
-----------------------------------------------------------------------------------------------------------------------

Current liabilities
Short-term and current portion of long-term debts                                          $ 40,575           $  4,551
Accounts payable                                                                             13,780             11,077
Accrued expenses and other current liabilities                                               33,908             39,740
Unearned and deferred revenue                                                                 4,132              3,079
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                    92,395             58,447

Long-term debt, excluding current portion                                                     9,625              2,712
Deferred income taxes                                                                        36,777             36,682
Excess of cash received over carrying value of investment in Infoway,
net of taxes (Note No.6 )                                                                    35,156                  -
Other liabilities                                                                             5,408             16,935
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                           179,361            114,776
-----------------------------------------------------------------------------------------------------------------------

Contingencies and Commitments (Note No 20)

Minority interest                                                                           107,043             30,884
Shareholders' equity

Common stock - par value Rs.2 (US$0.041*) per equity share;
(375 million and 375 million equity shares authorized and 281,190,000
and 314,540,000 equity shares issued as of March 31, 2001 and 2002 respectively)             15,726             17,144
Additional paid-in capital                                                                  253,409            405,530
Deferred stock based compensation                                                           (11,787)            (2,511)
Accumulated deficit                                                                         (29,456)            (9,996)
Accumulated other comprehensive loss                                                        (21,659)           (36,727)
-----------------------------------------------------------------------------------------------------------------------
                                                                                            206,233            373,440
Shares held by the SC-Trust under associate stock option plan
(11,170,070 and 3,483,820 equity shares as of March 31, 2001 and 2002
respectively)                                                                               (11,538)            (3,598)
-----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                                  194,695            369,842
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                                                 $481,099           $515,502
=======================================================================================================================
* the par value in US$ has been converted at the closing rate as of March 31,
2002, 1US$ = Rs.48.83

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

                                      F-3
Satyam Computer Services Limited
Consolidated Statements of Operations
(Thousands of US Dollars except per share data and as statd otherwise)
-------------------------------------------------------------------------------------------------------------------

                                                                                                Year ended March 31
                                                                    -----------------------------------------------
                                                                      2000               2001               2002

-------------------------------------------------------------------------------------------------------------------
Revenues                                                             $164,455          $310,307           $414,491

Cost of revenues
(Includes deferred stock- based compensation of $13,356,
$31,336 and $7,212 for the years ended March 31, 2000, 2001
and 2002 respectively)                                                 90,449           208,121            238,996
-------------------------------------------------------------------------------------------------------------------
Gross profit                                                           74,006           102,186            175,495

Selling, general and administrative expenses
(Includes deferred stock- based compensation of US$3,575,
US$14,782 and US$3,582 for the years ended March 31, 2000,
2001 and 2002 respectively)                                            69,592           124,100            140,896

Amortization of goodwill                                                5,043            24,728             16,997
Impairment of goodwill                                                      -                 -             81,115
-------------------------------------------------------------------------------------------------------------------
Total operating expenses                                               74,635           148,828            239,008

-------------------------------------------------------------------------------------------------------------------
Operating loss                                                           (629)          (46,642)           (63,513)

Interest income                                                         2,625             5,732              3,806
Interest expense                                                      (11,290)           (9,632)            (2,856)
Gain on sale of shares in Infoway (Note No.6 )                              -                 -             45,594
Other income                                                            1,471             6,806             12,168
Other expense                                                            (418)             (344)               (78)
-------------------------------------------------------------------------------------------------------------------
Loss before income taxes, minority interest and equity in
earnings/ (losses) of associated companies                             (8,241)          (44,080)            (4,879)

Income taxes                                                           (1,619)           (4,137)           (17,234)
Minority Interest                                                       2,785            25,772             73,406
-------------------------------------------------------------------------------------------------------------------
Income/ (loss) before equity in earnings/ (losses) of
associated companies                                                   (7,075)          (22,445)            51,293

Equity in earnings/ (losses) of associated companies,
net of taxes                                                              135            (5,467)           (25,401)
-------------------------------------------------------------------------------------------------------------------
Net income / (loss)                                                  $ (6,940)         $(27,912)          $ 25,892
===================================================================================================================

Earnings / (loss) per share:

Basic and Diluted                                                    $  (0.03)         $  (0.10)          $   0.08
                                                                     ========          ========           ========
Weighted average shares used in computing earnings /
(loss) per share -(in thousands)*
       Basic                                                          264,720           269,943            305,751
       Diluted                                                        264,720           269,943            307,113
-------------------------------------------------------------------------------------------------------------------
*on an adjusted basis

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

                                      F-4
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)
---------------------------------------------------------------------------------------------------------------------------
                                     --------------------------------------------------------------------------------------
                                           Common Stock            Additional     Deferred       Retained    Accumulated
                                                                paid-in capital  stock-based     earnings /     Other
                                                                                 compensation   accumulated  Comprehensive
                                                                                                 (deficit)   Income/(loss)
                                         Shares      Par Value
                                     --------------------------------------------------------------------------------------
Balance as of March 31, 1999         260,190,000      $ 8,765         $ 26,394       $(11,164)      $18,749        $(6,852)

Net loss                                       -            -                -              -        (6,940)             -
Other comprehensive income
    Loss on foreign currency
    translation                                -            -                -              -             -         (2,362)
    Unrealized gains on securities,
    net of taxes                               -            -                -              -             -             20

Total Comprehensive loss                       -            -                -              -             -              -

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes                    -            -          101,839              -             -              -
Acquisition of minority interest       8,000,000          183           24,878              -             -              -
Stock Split (effected in the form
of a dividend)                                 -        6,480                -              -        (6,480)             -

Deferred stock-based compensation              -            -           23,265        (23,265)            -              -

Amortization of deferred
stock-based compensation                       -            -                -         16,457             -              -

Shares issued to the SC-Trust for
stock based compensation plan         13,000,000          298           13,132              -             -              -

Shares transferred by SC-Trust to
employees on vesting                           -            -                -              -             -              -

Cash dividend paid at the rate of
US$0.012 per share                                                                                   (2,766)

---------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2000         281,190,000      $15,726         $189,508       $(17,972)      $ 2,563        $(9,194)
===========================================================================================================================
-------------------------------------------------------------------------------
                                      Shares held by       Total
                                         SC- Trust      Shareholders'
                                                           Equity
-------------------------------------------------------------------------------
Balance as of March 31, 1999                     -       $ 35,892

Net loss                                         -         (6,940)
Other comprehensive income
    Loss on foreign currency
    translation                                  -         (2,362)
    Unrealized gains on securities,
    net of taxes                                 -             20
                                                         --------
Total Comprehensive loss                         -         (9,282)

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes                      -        101,839
Acquisition of minority interest                 -         25,061
Stock Split (effected in the form
of a dividend)                                   -              -

Deferred stock-based compensation                -              -

Amortization of deferred
stock-based compensation                         -         16,457

Shares issued to the SC-Trust for
stock based compensation plan                 (13,430)          -

Shares transferred by SC-Trust to
employees on vesting                            1,273       1,273

Cash dividend paid at the rate of
US$0.012 per share                                         (2,766)
-------------------------------------------------------------------------------
Balance as of March 31, 2000                 $(12,157)   $168,474
===============================================================================
The accompanying notes are an integral part of these consolidated financial statements.               (Continuing on following page)
F-5
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)
-----------------------------------------------------------------------------------------------------------------------------
                                            Common Stock        Additional        Deferred     Retained       Accumulated
                                                              paid-in capital    stock-based   earnings/         Other
                                                                                compensation  accumulated    Comprehensive
                                                                                               (deficit)     Income/(loss)
                                          Shares  Par Value
                                    -----------------------------------------------------------------------------------------
Balance as of March 31, 2000         281,190,000    $15,726          $189,508      $ (17,972)    $  2,563         $ (9,194)

Net loss                                       -          -                 -              -      (27,912)               -
Other comprehensive income
    Loss on foreign currency
    translation                                -          -                 -              -            -          (12,429)
    Unrealized losses on
    securities, net of taxes                   -          -                 -              -            -              (36)

Total Comprehensive loss

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No. 4)                                         -          -            24,599              -            -                -
Loss on sale of Infoway shares held
by CricInfo                                    -          -             (466)              -            -                -
Warrants issued to TRW (Note No.5)             -          -             1,657              -            -                -
Deferred stock-based compensation              -          -            38,034        (38,034)           -                -
Amortization of deferred
stock-based compensation                       -          -                 -         44,219            -                -
Shares transferred by SC-Trust to
employees on vesting                           -          -                77              -            -                -
Cash dividend paid at the rate of
US$0.008 per share                             -          -                 -              -       (4,107)               -
-----------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2001         281,190,000    $15,726          $253,409      $ (11,787)    $(29,456)        $(21,659)
=============================================================================================================================
---------------------------------
                                     Shares held by        Total
                                       SC- Trust        Shareholders'
                                                           Equity
                                     ---------------------------------
Balance as of March 31, 2000               $(12,157)        $ 168,474

Net loss                                          -           (27,912)
Other comprehensive income
    Loss on foreign currency
    translation                                   -           (12,429)
    Unrealized losses on
    securities, net of taxes                      -               (36)
                                                     ----------------
Total Comprehensive loss                                      (40,377)

Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No. 4)                                            -            24,599
Loss on sale of Infoway shares held
by CricInfo                                       -              (466)
Warrants issued to TRW (Note No.5)                -             1,657
Deferred stock-based compensation                 -                 -
Amortization of deferred
stock-based compensation                          -            44,219
Shares transferred by SC-Trust to
employees on vesting                            619               696
Cash dividend paid at the rate of
US$0.008 per share                                -            (4,107)
---------------------------------------------------------------------
Balance as of March 31, 2001               $(11,538)        $194,695
=====================================================================
The accompanying notes are an integral part of these consolidated financial statements.         (Continuing on following page)
F-6
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Thousands of US Dollars except per share data and as stated otherwise)
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                   Common Stock             Additional    Deferred      Retained       Accumulated
                                                                             paid-in     stock-based   earnings /         Other
                                                                             capital     compensation  accumulated    Comprehensive
                                                Shares        Par Value                                 (deficit)    Income / (loss)
                                            ----------------------------------------------------------------------------------------
Balance as of March 31, 2001                 281,190,000     $    15,726   $   253,409   $   (11,787)   $   (29,456)   $   (21,659)

Net income                                             -               -             -             -         25,892              -
Other comprehensive income
    Loss on foreign currency
    translation                                        -               -             -             -              -        (15,063)
    Unrealized losses on
    securities, net of taxes                           -               -             -             -              -             (5)

Total Comprehensive income
Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No.4 )                                                 -               -           375             -              -              -
Loss on sale of Infoway shares held
by CricInfo                                            -               -          (645)            -              -              -
Issuance of common stock, net of
issuance cost                                 33,350,000           1,418       149,196             -              -              -
Deferred stock-based compensation                      -               -         1,203        (1,203)             -              -
Amortization of deferred
stock-based compensation                               -               -             -        10,479              -              -
Shares transferred by SC-Trust to
employees on vesting                                   -               -         1,992             -              -              -
Cash dividend paid at the rate of
US$ 0.01 per share (Note No. 23)                       -               -             -             -         (6,432)             -
----------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2002                 314,540,000     $    17,144   $   405,530   $    (2,511)   $    (9,996)   $   (36,727)
==================================================================================================================================
--------------------------------
                                             Shares held by      Total
                                                SC-Trust     Shareholders'
                                                                 Equity

                                            --------------------------------
Balance as of March 31, 2001                 $   (11,538)       $   194,695

Net income                                             -             25,892
Other comprehensive income
    Loss on foreign currency
    translation                                        -            (15,063)
    Unrealized losses on
    securities, net of taxes                           -                 (5)
                                                                -----------
Total Comprehensive income                                           10,824
Gain on dilution of interest in
subsidiary on subsidiary's issuance
of new shares, net of taxes (Note
No.4 )                                                 -                375
Loss on sale of Infoway shares held
by CricInfo                                            -               (645)
Issuance of common stock, net of
issuance cost                                          -            150,614
Deferred stock-based compensation                      -                  -
Amortization of deferred
stock-based compensation                               -             10,479
Shares transferred by SC-Trust to
employees on vesting                               7,940              9,932
Cash dividend paid at the rate of
US$ 0.01 per share (Note No. 23)                       -             (6,432)
---------------------------------------------------------------------------
Balance as of March 31, 2002                 $    (3,598)       $   369,842
===========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-7
Satyam Computer Services Limited
Consolidated Statements of Cash Flows
(Thousands of US Dollars except per share data and as stated otherwise)
--------------------------------------------------------------------------------
Year  ended March 31
                                                                                --------------------------------------
                                                                                    2000          2001            2002
Cash Flows From Operating Activities
  Net income / (loss)                                                           $ (6,940)    $ (27,912)       $ 25,892
  Adjustments to reconcile net income / (loss) to net cash provided by
  operating activities:
     Depreciation, amortization and impairment of goodwill                        25,268        54,493         136,318
     Deferred stock based compensation                                            16,931        46,118          10,794
     Deferred income taxes                                                           261           154            (427)
     (Gain) / loss on sale of investments                                             (2)           (1)              2
     (Gain) / loss on sale of premises and equipment                                  72            43             (59)
     Foreign currency translation on excess of amount received on sale
     of shares of Infoway over its carrying value                                      -         1,014             928
     Excess of cash received over carrying value of investment in
     Infoway, net of taxes                                                             -             -         (35,156)
     Amortization of discount on share warrants issued to TRW and change
     in fair value of put option                                                       -         2,685          10,144
     Minority Interest                                                            (2,785)      (25,772)        (73,406)
     Equity in share of (earnings) / losses of associated companies                 (135)        5,467          25,401
  Changes in assets and liabilities:
     Accounts receivable, net and unbilled revenues                              (23,199)      (49,452)          1,262
     Prepaid expenses, other receivables, and inventory                          (10,330)      (10,164)          9,840
     Other assets, non-current                                                      (694)       (9,797)          1,356
     Accounts payable                                                              9,141         4,584          (4,363)
     Accrued expenses and other liabilities                                        4,261        20,348           8,342
     Unearned and deferred revenue                                                 1,531           937            (904)
     Other liabilities, non-current                                                  735        (6,810)            407
----------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                       14,115         5,935         116,371

  Cash Flows From Investing Activities
----------------------------------------------------------------------------------------------------------------------
  Purchase of premises and equipment                                            $(40,847)    $ (84,764)       $(34,157)
  Expenditure on license fees                                                          -          (612)         (1,238)
  Proceeds from sale of premises and equipment                                        32            68             503
  Acquisitions and investments in associated companies                           (40,176)      (52,470)         (4,608)
  Purchase of investments                                                         (2,641)            -          (3,131)
  Proceeds from sale of investments                                                   13             3           2,271
----------------------------------------------------------------------------------------------------------------------
  Net cash used in investing activities                                          (83,619)     (137,775)        (40,360)

  Cash Flows From Financing Activities
----------------------------------------------------------------------------------------------------------------------
  Proceeds from / (repayments of) short-term debt                               $ 14,318     $   8,330        $(35,725)
  Share warrant consideration                                                          -           500               -
  Issuance of common stock, net of issuance cost                                                     -         150,614
  Issuance of common stock under Associate Stock Option Plans                      1,273           696           9,932
  Issuance of common stock by Infoway and other subsidiaries, net
  of issuance cost                                                               232,534           240               -
  Proceeds from long-term debts                                                   30,582             -               -
  Repayment of long-term debts                                                   (24,277)      (40,425)         (7,642)
  Proceeds from sale of shares of Infoway, net of cost                                 -        48,978               -
  Cash dividends paid                                                             (2,766)       (4,107)         (6,432)
----------------------------------------------------------------------------------------------------------------------
  Net cash provided by financing activities                                      251,664        14,212         110,747
(Continuing on following page)

                                      F-8
Satyam Computer Services Limited
Consolidated Statements of Cash Flows
(Thousands of US Dollars except per share data and as stated otherwise)
-----------------------------------------------------------------------------------------------------------------
                                                                                             Year ended March 31
                                                                           --------------------------------------
                                                                              2000          2001           2002
Effect of exchange rate changes on cash and cash equivalents               (3,071)       (8,608)         (9,372)
  Net change in cash and cash equivalents                                   179,089      (126,236)        177,386

  Cash and cash equivalents at beginning of the year                         13,215       192,304          66,068
  Cash and cash equivalents at end of the year                             $192,304     $  66,068       $ 243,454

Supplementary information:
-----------------------------------------------------------------------------------------------------------------

Cash paid during the period for:

Income taxes                                                               $  1,591     $   4,898       $   7,744
Interest                                                                      9,826         9,250           2,859

Non-cash items:

Shares issued on acquisition of minority interest                          $ 25,061             -               -
Shares issued by Infoway on acquisitions                                          -     $  69,815       $   1,044
Capital leases and hire purchase                                                657         1,624           1,300
For a number of reasons, principally the effects of translation differences and
 acquisitions, certain items in the statements of cash flows do not correspond
 to the differences between the balance sheet amounts for the respective items.

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

                                      F-9
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

1. Description of Business

Satyam Computer Services Limited and its consolidated subsidiaries and
associated companies (hereinafter referred to as "Satyam") are engaged in
providing information technology services, internet services and developing
software products.

Satyam Computer Services Limited (hereinafter referred to as "Satyam Computer
Services") is an information technology ("IT") services provider that uses a
global infrastructure to deliver value-added services to its customers, to
address IT needs in specific industries and to facilitate electronic business,
or eBusiness, initiatives. Satyam Computer Services was incorporated on June 24,
1987 in Hyderabad, Andhra Pradesh, India. Satyam Computer Services has offshore
development centers located throughout India that enable it to provide high
quality and cost-effective solutions to clients. It also has offsite centers
located in the United States, Europe, Japan, Singapore, Australia, China,
Malaysia, Hongkong, Dubai and Germany. Satyam offers a comprehensive range of IT
services, including software development, packaged software integration, system
maintenance and engineering design services. Satyam Computer Services has
established a diversified base of corporate customers in a wide range of
industries including insurance, banking and financial services, manufacturing,
telecommunications, transportation and engineering services.

Satyam Infoway Limited (hereinafter referred to as "Infoway"), a subsidiary of
Satyam Computer Services, is engaged in providing various services such as
corporate network and technology services, internet access services, online
portal and content offerings.

In August 2001 Satyam Computer Services decided to close down four of its wholly
owned subsidiaries. Consequent to this decision Satyam Computer Services has
initiated legal formalities and the process of transfer of substantial business
of three marketing subsidiaries namely Satyam (Europe) Limited, Satyam Asia Pte.
Limited and Satyam Japan KK to its offsite centers. The assets and liabilities
will be transferred at book value and management does not expect significant
costs to arise as a result of cessation of operations of these marketing
subsidiaries. In respect of the fourth subsidiary Dr. Millennium Inc., an
application for its dissolution was made with the appropriate authorities and
approval for the same has been obtained.

2. Summary of Significant Accounting Policies

a) Principles of Consolidation and Basis of Presentation

The consolidated financial statements of Satyam Computer Services and its
majority owned domestic and foreign subsidiaries are prepared in accordance with
Generally Accepted Accounting Principles applicable in the United States ("U.S.
GAAP"). All significant inter-company balances and transactions are eliminated.

Minority interest in subsidiaries represents the minority shareholders'
proportionate share of the net assets and the results of operations of Satyam's
majority owned subsidiaries.

Investments in business entities in which Satyam does not have control, but has
the ability to exercise significant influence over operating and financial
policies (generally 20-50 percent ownership), are accounted for by the equity
method.

On occasion, a subsidiary or associated company accounted for by the equity
method ("offering company") may issue its shares to third parties as either a
public offering or private placement at per share amounts in excess of or less
than Satyam's average per share carrying value. With respect to such
transactions, the resulting gains or losses arising from the change in interest
are recorded in additional paid-in capital. Gains or losses arising on the
direct sales by Satyam of its investment in its subsidiaries or associated
companies to third parties are recognized as income in the statement of
operations. Such gains or losses are the difference between the sale proceeds
and net carrying value of investments.

The excess of the cost over the underlying net equity of investments in
subsidiaries and associated companies accounted for on an equity basis is
allocated to identifiable assets based on fair values at the date of
acquisition. The unassigned residual value of the excess of the cost over the
underlying net equity is recognized as goodwill.

                                      F-10
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

b)  Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as of the date of the financial statements and the reported amount
of revenues and expenses during the reported period. Examples of such estimates
include: estimates of expected contract costs to be incurred to complete
software development, allowance for doubtful debts, future obligations under
employee benefit plans, valuation allowances for deferred taxes, useful lives of
premises and equipment (fixed assets) and goodwill. Actual results could differ
materially from those estimates.

Certain items previously reported in specific financial statement captions have
been reclassified to conform to the 2002 presentation.

c)  Foreign Currency Translation

The accompanying consolidated financial statements are reported in U.S. dollars.
The Indian rupee is the functional currency for Satyam Computer Services, its
domestic subsidiaries and associated companies. However, the Japanese Yen, U.S.
Dollar, Pound Sterling and Singapore Dollar are the functional currencies for
its foreign subsidiaries located in Japan, U.S., UK and Singapore respectively.
The translation of the functional currencies into U.S. dollars (reporting
currency) is performed for assets and liabilities using the current exchange
rates in effect at the Balance Sheet date and for revenues, costs and expenses
using average exchange rates prevailing during the reporting periods.
Adjustments resulting from the translation of functional currency financial
statements to reporting currency are accumulated and reported as other
comprehensive income/(loss), a separate component of shareholders' equity.

Transactions in foreign currency are recorded at the exchange rate prevailing on
the date of transaction. Monetary assets and liabilities denominated in foreign
currencies are expressed in the functional currency at the exchange rates in
effect at the Balance Sheet date. Revenues, costs and expenses are recorded
using average exchange rates prevailing during the reporting periods. Gains or
losses resulting from foreign currency transactions are included in the
statement of operations.

d)  Revenue Recognition

i) IT Services

Revenues from IT services, which includes software development, system
maintenance, package software implementation, engineering design services and
ebusiness consist of revenues earned from services performed either on a "time
and material" basis or time bound fixed price engagements.

Revenues earned from services performed on a "time and material" basis are
recognized as the services are performed. IT services performed on time bound
fixed-price engagements, require accurate estimation of the costs which include
salaries and related expenses of technical associates, related communication
expenses, travel costs, scope and duration of each engagement. Revenue and the
related costs for these projects are recognized on percentage of completion,
with revisions to estimates reflected in the period in which changes become
known. Provisions for estimated losses on such engagements are made during the
period in which a loss becomes probable and can be reasonably estimated. Satyam
recognizes revenue based on the completed-contract method where the work to
complete cannot be reasonably estimated.

Amounts included in the financial statements, which relate to recoverable costs
and accrued profits not yet billed on contracts, are classified in current
assets as "Unbilled revenue on contracts". Billings on uncompleted contracts in
excess of accrued cost and accrued profit are classified in current liabilities
under the heading "Unearned and deferred revenue". Satyam provides its clients
with one to three months warranty as post-sale support for its fixed price
engagements. Costs associated with such services are accrued at the time the
related revenues are recorded. Satyam has not provided for any warranty costs
for the years ended March 31, 2001 and 2002 as historically Satyam has not
incurred any expenditure on account of warranties and since the customer is
required to formally sign off on the work performed, any subsequent work is
usually covered by an additional contract.

In accordance with EITF Topic D 103, "Income Statement Characterization of
Reimbursements Received for "Out-of-Pocket" Expenses Incurred", Satyam has
accounted for reimbursements received for out-of-pocket expenses incurred as
revenues in the statement of operations. Because these additional revenues are
offset by the reimbursable expenses incurred, adoption of EITF Topic D-103 does
not impact loss from operations or net income / (loss).

                                      F-11
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

ii) Internet Services

Revenues from corporate network services, which include providing e-commerce
solutions, electronic data interchange and other network based services, are
recognized upon actual usage of such services by customers and are based on
either the time for which the network is used or the volume of data transferred,
or both.

Revenues from web-site hosting are recognized ratably over the period for which
the site is hosted. Revenue from development of internet networking solutions
comprise income from time and material contracts and fixed price contracts.
Revenues are recognized in accordance with the revenue recognition policy of IT
Services.

Internet access is provided to customers either for unlimited hours or for a
specified number of hours, which is to be utilized within a specified period of
time. Customers purchase a CD-ROM that allows them to access the Internet. The
amounts received from customers on the sale of these CD-ROMs are not refundable.
Satyam recognizes revenue based on usage by the customer over the specified
period. At the end of the specified period, the remaining unutilized hours, if
any, are recognized as revenue. Unlimited internet access and electronic mail
access is sold to customers for a specified period of time over which the
related revenue is recognized.

Revenues from banner advertisements and sponsorship contracts are recognized
ratably over the period in which the advertisements are displayed. Revenues from
electronic commerce transactions are recognized when the transaction is
completed.

e)  Cash and Cash Equivalents

Satyam considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Cash equivalents are stated at
cost, which approximates their fair value due to the short maturity of the
investments. Cash and claims to cash that are restricted as to withdrawal or use
in the ordinary course of business are classified as other receivables under
current assets, unless they are to be utilized for other than current operations
in which case they are classified as other assets, non-current.

f)  Inventory

Inventories are generally stated at the lower of cost as determined using the
first-in-first-out method (FIFO), and net realisable value.

g)  Premises, Equipment and Depreciation

Premises and equipment are stated at actual cost less accumulated depreciation.
Assets under capital leases are stated at the present value of minimum lease
payments. Depreciation is computed using the straight-line method over the
estimated useful lives. Assets under capital leases and leasehold improvements
are amortized straight-line over their estimated useful life or the lease term,
as appropriate.

Costs of application software for internal use are generally charged to income
as incurred due to its estimated useful lives being relatively short, usually
less than one year. The third party software expense amounted to US$1,038
thousand, US$885 thousands and US$836 thousands for the years ended March 31,
2000, 2001 and 2002 respectively.

The cost and the accumulated depreciation for premises and equipment sold,
retired or otherwise disposed off are removed from the stated values and the
resulting gains and losses are included in the statement of operations. Interest
related to the construction of qualifying assets is capitalized. Advances paid
towards the acquisition of premises and equipment outstanding at each balance
sheet date and the cost of premises and equipment not put to use before such
date are disclosed as Assets under Construction.

                                      F-12
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

h) Software Development Costs

Satyam capitalizes internally generated software development costs under the
provisions of Statement of Financial Accounting (SFAS) 86, "Accounting for Costs
of Computer Software to be Sold, Leased or Otherwise Marketed." Capitalization
of computer software development cost begins upon the establishment of
technological feasibility, which Satyam has defined as the completion of a
prototype. Costs incurred prior to establishment of technological feasibility
and other research and development expenses are charged to income as incurred.
Costs incurred by Satyam between completion of the prototype and the point at
which the product is ready for general release have been insignificant.

Research and development expenses charged to income amounted to US$5,787
thousand, US$3,124 thousands and US$2,156 thousands for the years ended March
31, 2000, 2001and 2002 respectively.

i) Goodwill and Other Intangible Assets

Goodwill represents the difference between either a) the purchase price and the
fair value of assets and liabilities acquired and/or b) the purchase price and
additional interest in subsidiaries acquired from minority shareholders.
Goodwill is amortized on a straight-line basis principally over a period of 5
years based on management estimate. Other intangible assets include licensing
fees, which are being amortized over the license period of 5 years.

j) Impairment of Long-lived Assets

Satyam has adopted the provisions of SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of". Satyam reviews
long-lived assets, including goodwill and identifiable intangibles, for
impairment whenever events or changes in business circumstances indicate the
carrying amount of assets may not be fully recoverable. Each impairment test is
based on a comparison of the undiscounted cash flows expected to be generated
from the use of the asset to its recorded value. If an impairment is indicated,
the asset is written down to its fair value. Assets to be disposed are reported
at the lower of the carrying value or the fair value less cost to sell.

k) Investments

Satyam has evaluated its investment policies consistent with the provisions of
SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities",
and determined that all of its marketable investment securities are to be
classified as available-for-sale. Accordingly, such securities are carried at
fair value with unrealized gains and losses, net of taxes, reported as a
separate component of other comprehensive income/(loss) until realized. Realized
gains and losses and declines in value judged to be other-than-temporary are
included in other income. The cost of securities sold is based on the
first-in-first-out (FIFO) method. Interest and dividends on securities
classified as available-for-sale are recognized when earned and included in
other income. Other investments that are not marketable are carried at cost,
subject to tests of other than temporary impairment.

l) Cost of Revenues and Selling, General and Administrative Expenses

Cost of revenues primarily include the compensation cost of technical staff,
depreciation on dedicated assets and system software, travel costs, data
communication expenses and other expenses incurred that are related to the
generation of revenue.

Selling, general and administrative expenses generally include the compensation
costs of sales, management and administrative personnel, travel costs, research
and development costs, advertising, business promotion, depreciation on assets,
application software costs, rent, repairs, electricity and other general
expenses not attributable to cost of revenues.

m) Advertising Costs

Satyam expenses all advertising costs as incurred. Advertising costs charged to
income amounted to US$3,575 thousand, US$11,301 thousands and US$1,008 thousands
for the years ended March 31, 2000, 2001 and 2002 respectively.

                                      F-13
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

n)    Employee Benefits

i)   Provident Fund

  In accordance with Indian law, all employees in India are entitled to receive
  benefits under the Provident Fund, which is a defined contribution plan. Both
  the employee and the employer make monthly contributions to the plan at a
  predetermined rate (presently 12.0%) of the employees' basic salary. Satyam
  has no further obligations under the plan beyond its monthly contributions.
  These contributions are made to the fund administered and managed by the
  Government of India. Satyam's monthly contributions are charged to income in
  the period they are incurred.

ii)  Gratuity Plan

  Satyam makes contributions to a defined benefit retirement plan (the "Gratuity
  Plan") covering all its employees in India. The Gratuity Plan provides a lump
  sum payment to vested employees at retirement or termination of employment
  based on the respective employee's salary and years of employment with Satyam.
  Satyam provides for the Gratuity Plan on the basis of actuarial valuations.
  The entire Gratuity Plan of Satyam Computer Services is unfunded. Infoway
  makes annual contributions to a fund administered and managed by the Life
  Insurance Corporation of India ("LIC"). Under this scheme, the settlement
  obligation remains with Infoway, although the LIC administers the scheme and
  determines the contribution premium required to be paid by Infoway.

iii) Superannuation Plan

In addition to the above benefits, the senior employees of Satyam Computer
Services in India are entitled to receive benefits under the Superannuation
Plan, a defined contribution plan. Satyam Computer Services makes yearly
contributions under the superannuation plan administered and managed by LIC,
based on a specified percentage (presently 10.0%) of each covered employee's
basic salary. Satyam Computer Services has no further obligations under the plan
beyond its contributions.

iv)  Other Benefit Plans

Satyam maintains a 401(k) retirement plan (the "401(k) Plan") covering all its
employees in the United States. Each participant in the 401(k) Plan may elect to
contribute up to 15.0% of his or her annual compensation to the 401(k) Plan.
Satyam matches 50.0% of employee contributions, subject to a maximum of 3.0% of
gross salary for all employees participating in the 401(k) plan.

o)    Income Taxes

In accordance with the provisions of SFAS 109, "Accounting for Income Taxes",
income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period of change. Based on management's
judgment, the measurement of deferred tax assets is reduced, if necessary, by a
valuation allowance for any tax benefits for which it is more likely than not
that some portion or all of such benefits will not be realized.

p)    Earnings Per Share

In accordance with the provisions of SFAS 128, "Earnings Per Share", basic
earnings per share is computed on the basis of the weighted average number of
shares outstanding during the period. Diluted earnings per share is computed on
the basis of the weighted average number of common and dilutive common
equivalent shares outstanding during the period, using the "treasury stock"
method for options and warrants, except where the results will be anti-dilutive.

                                      F-14
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

q) Stock-Based Compensation

Satyam uses the intrinsic value-based method of Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees", to account for
its employee stock-based compensation plan. Satyam has therefore adopted the pro
forma disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation". Pursuant to SFAS No. 123, all equity instruments issued to
non-employees are accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable.

r) Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued FASB
Statements Nos. 141 and 142 ("SFAS 141" and "SFAS 142"), "Business Combinations"
and "Goodwill and Other Intangible Assets". SFAS 141 replaces APB 16 and
eliminates pooling-of-interests accounting prospectively. It also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill. Adoption of SFAS No. 141 did not have an
impact on our financial position and results of operations.

SFAS 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach. Under SFAS 142, goodwill and indefinite-lived
intangibles will be tested annually and whenever events or circumstances occur
indicating that they might be impaired. Goodwill is tested for impairment
employing a two-step method. First the fair value of the reporting unit is
compared to its carrying amount. If the fair value is less than the carrying
amount, the impairment is measured as the excess of recorded goodwill over its
implied fair value. Indefinite-lived intangibles are tested for impairment by
comparing the carrying amount to the fair value. SFAS 141 and SFAS 142 are
effective for all business combinations completed after June 30, 2001. Upon
adoption of SFAS 142, amortization of goodwill recorded for business
combinations consummated prior to July 1, 2001 will cease, and intangible assets
acquired prior to July 1, 2001 that do not meet the criteria for recognition
under SFAS 141 will be reclassified to goodwill. We adopted SFAS 142 on April 1,
2002, the beginning of fiscal 2002. As a result of the adoption of SFAS 142,
amortization of goodwill will be lower by approximately US$4,310 thousands in
the year ending March 31, 2003 as compared to the year ended March 31, 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 144 applies to all long-lived assets (including
discontinued operations) and consequently amends APB No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Division of a
Business". SFAS No. 144 develops an accounting model for long-lived assets that
are to be disposed of by sale and requires the measurement to be at the lower of
book value or fair value, less the cost to sell the assets. Additionally, SFAS
No. 144 expands the scope of discontinued operations to include all components
of an entity with operations that (1) can be distinguished from the rest of the
entity and (2) will be eliminated from the ongoing operations of the entity in a
disposal transaction. We do not expect the provisions of SFAS No. 144 to have a
significant impact on our financial position or operating results following its
adoption on April 1, 2002.

                                      F-15
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

3.  Business Combinations

a)  Acquisition of India World Communication by Infoway

On November 29, 1999, Infoway entered into an agreement with the shareholders of
IndiaWorld Communications Private Limited (IndiaWorld) to acquire 49,000 shares
(equivalent to 24.5%) of IndiaWorld for a consideration of US$28,149 thousand.
Infoway simultaneously made a non-refundable deposit of US$11,801 thousands
towards the acquisition of the remaining shares of IndiaWorld for US$84,654
thousands in conjunction with a purchase Option Agreement, expiring on June 30,
2000, that gave control of IndiaWorld to Infoway over the option period.
Accordingly, Infoway consolidated its accounts with IndiaWorld from December 1,
1999, and completed the acquisition of IndiaWorld on June 30, 2000 upon payment
of US$48,244 thousands in cash and 268,500 equity shares for the balance
amounting to US$24,609 thousand.

The transaction to purchase IndiaWorld has been accounted for, as a two-step
acquisition under the purchase method of accounting. The allocation of purchase
price was almost entirely related to goodwill. Infoway recognized goodwill of
US$40,048 thousands on the acquisition of 24.5% of IndiaWorld on November 29,
1999 equal to the excess of the consideration paid of US$39,950 thousands and
the related expenses of US$141 thousands over the fair value of that portion of
the net assets acquired. Upon completion of the acquisition of IndiaWorld on
June 30, 2000, Infoway recognized additional goodwill of US$73,098 thousands
equal to the excess of consideration of US$72,853 thousands paid in cash and
equity shares of Infoway and other related expenses of US$422 thousands over the
fair value of the net assets acquired at June 30, 2000.

b)  Acquisition of IndiaPlaza.com by Infoway

On July 13, 2000, Infoway entered into an agreement (the "Merger Agreement") to
acquire all the outstanding equity shares of IndiaPlaza.com Inc., an internet
company which through its website operates an online internet shopping mall. The
consideration amounted to 455,192 ADS (113,798 shares) of which 340,192 ADS
(85,048 shares) have been paid and 115,000 ADS (28,750 shares) were placed in
escrow until January 1, 2002 to be adjusted for any breach of representations or
covenants set forth in the merger agreement. Management had considered the
release of the shares held in the escrow to be probable and had accordingly
included them in the computation of the purchase price and net loss per share.
The acquisition, which was consummated on December 15, 2000, upon completion of
regulatory formalities, has been accounted for by the purchase method. The
115,000 ADS (28,750 shares) that were placed in escrow until January 1, 2002
have been subsequently released in January 2002.

Infoway recognized goodwill of US$9,510 thousand, equal to the excess of the
consideration paid of US$7,921 thousand, being the fair value of 113,798 equity
shares of Infoway over the fair value of the net assets acquired of US$(1,589)
thousand.

c)  Acquisition of Kheladi.com by Infoway

On October 12, 2000, Infoway entered into an agreement to acquire a 100% stake
in Kheladi.com (India) Private Limited ("Kheladi"), a sports portal promoted by
sports personalities in India. Infoway's intention is to assimilate the
strengths of Kheladi, including the network of sports personalities, into its
portal, Khel.com. Infoway paid cash and issued an aggregate of 19,073 equity
shares to the shareholders of Kheladi on July 20, 2001 of which 5,019 shares and
10,039 equity shares have been issued which are subject to a lock in until
September 14, 2001 and September 14, 2002, respectively. Infoway paid US$1,108
thousands as consideration for the above acquisition and the acquisition has
been accounted for using the purchase method.

The acquisition was consummated on July 20, 2001, upon issuance of shares and
the completion of regulatory formalities. The cost of acquisition has been
allocated primarily to employment contract-based intangible assets amounting to
US$795 thousands and the excess of cost over fair value of assets acquired has
been recognized as goodwill amounting to US$309 thousand. In accordance with the
provisions of SFAS 142, the goodwill has not been amortized post acquisition.

The intangible assets relate to employment contracts with sports personalities,
which are being amortized over the contract period of 60 months. The terms of
the purchase also provide for contingent consideration of 3,089 equity shares
based on the achievement of certain specified profitability and revenue targets.
Infoway will record contingent payments as compensation for post-combination
services to be expensed in the period in which the contingency is resolved.

                                      F-16
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

4. Sale of shares by Infoway

In the years ended March 31, 2000, 2001 and 2002, Infoway issued new shares to
third parties and Satyam Computer Services, including two public offerings.
After these transactions, Satyam Computer Services' ownership reduced from
56.32% as of March 31, 2000 to 52.55% as of March 31, 2001 and 52.51% as of
March 31, 2002 respectively. In the year ended March 31, 2000 Infoway issued
6,499,425 shares to third parties at amounts per share in excess of Satyam's
average per share carrying value.

In the year ended March 31, 2001 Infoway issued 268,500 shares to shareholders
of IndiaWorld, 551,180 shares to shareholders of CricInfo and 113,797 shares to
shareholders of IndiaPlaza at amounts per share in excess of Satyam's average
per share carrying value. During year ended March 31, 2002 Infoway issued 19,073
shares to the shareholders of Kheladi.com (all of which are described in Note 3)
at amounts per share in excess of Satyam's average per share carrying value.
With respect to these transactions, the resulting gain of US$101,839 thousand,
US$24,599 thousands and US$375 thousand, net of taxes, during the years ended
March 31, 2000, 2001and 2002 respectively arising from the change in interest
has been recorded as additional paid in capital.

5. TRW Inc.

In June 2000, Satyam Computer Services signed a non-binding framework agreement
to form a non-exclusive joint venture with TRW Inc. ("TRW") to be managed by
Satyam Computer Services and to issue warrants for a consideration of US$5
million to TRW that are convertible into equity shares of Satyam Computer
Services in the eighteenth month after issuance. The warrants were
non-forfeitable as of the date of grant.

On August 22, 2000, Satyam Computer Services issued 63,896 warrants (each
warrant exercisable to purchase five equity shares) to ESL Inc., an affiliate of
TRW in exchange of Rs.71.6 (US$1.6) per share totaling to US$500 thousands in
cash representing 10.0% of the total consideration to acquire the underlying
equity shares in accordance with applicable Indian regulations. These warrants
are convertible into 319,480 equity shares of Satyam Computer Services for
Rs.644.4 (US$14.1) per share totaling US$4.5 million during the period from
January 22, 2002 to February 21, 2002. The upfront payment made by ESL Inc., for
these warrants, plus the aggregate exercise price for the 319,480 equity shares
underlying these warrants, will equaled US$5.0 million. The excess of the fair
value of the warrants, as determined at the date of grant, over the
consideration of warrants paid by ESL Inc., amounted to US$1,157 thousand. It is
being amortized ratably over the period, as described below with respect to the
joint venture agreement between Satyam Computer Services and TRW (that is five
years and three months period), starting from the date of signing of the joint
venture agreement (that is September 26, 2000) to December 31, 2005. The
amortization is classified as a reduction of the revenues recognized under the
agreements. However, if the amortization exceeds the amount of revenue
recognized in any period, the excess amortization is recorded as an expense. The
fair value of the warrants has been determined by reference to the prevailing
market price of Satyam Computer Services equity shares on the Indian exchanges
using the Black Scholes model and the following assumptions: volatility of 90.0%
and a risk free interest rate of 10.672%. These warrants for 319,480 equity
shares expired unexercised on February 21, 2002.

Satyam Computer Services has amortized the excess of the fair value of the
warrants over the consideration of the warrants paid ratably in the method
aforementioned. The amortization classified as a deduction of the revenues
amounted to US$ Nil, US$113 thousands and US$221 thousands for the years ended
March 31, 2000, 2001 and 2002 respectively.

On September 26, 2000, the joint venture agreement was signed with equity
participation in the ratio of 76:24 between Satyam Computer Services and TRW,
respectively. After December 31, 2003, TRW has the option to require Satyam
Computer Services to purchase its 24.0% interest ("put option"). The buyout
price of TRW's interest in the joint venture depends on the aggregate amount of
revenue, which TRW will provide to the joint venture from June 1, 2000 to
December 31, 2005. TRW has targeted to outsource to the joint venture at least
US$200 million of revenues from information systems and engineering work over
the five years and seven months period. If the amount of revenues outsourced by
TRW to the joint venture by December 31, 2003 does not meet specified minimum
levels, Satyam Computer Services has the right to buy out TRW's 24.0% interest
in the joint venture for no consideration or lowest nominal consideration.
Satyam Computer Services views that the fair value of the put option is the
amount that Satyam Computer Services would have to pay over and above the fair
value of the 24.0% interest in the joint venture owned by TRW. Satyam Computer
Services records the put option at fair value at each balance sheet date, with
the initial fair value of the put option included as part of the consideration
for its 76.0% interest in the joint venture. The difference between the fair
values of the put option at each valuation date is charged to selling, general
and administration expenses in the statement of operations. Based on the terms
of the agreement the value of put option was US$2,572 thousands and US$12,495
thousands as of March 31, 2001 and 2002 respectively.

                                      F-17
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

If TRW exercises its option to sell the shares to Satyam Computer Services after
December 31, 2003, the purchase price of TRW's 24.0% stake will be determined by
the higher of an independent valuation of the 24.0% interest and a formula based
on the amount of revenues provided to the joint venture by TRW. In the event
that certain minimum cumulative revenues are achieved the price will be equal to
the higher of the amount computed above or an amount not to exceed US$40
million. Satyam Computer Services may, at its own discretion, use either cash or
its equity shares valued at the then prevailing market price as consideration
for TRW's stake. The total amount payable to TRW if it divests its stake cannot
exceed two percent of Satyam Computer Services total market capitalization on
December 31, 2003. If TRW divests its stake, the terms of the joint venture's
supply agreement with TRW will continue until December 31, 2007, if TRW is
satisfied with the joint venture's performance of the supply agreement and TRW
is required to use its best attempts to provide the same levels of business to
the joint venture from January 1, 2006 through December 31, 2007, as it had
provided to the joint venture during the preceding two years.

If Satyam Computer Services undergoes a change in control or bankruptcy, TRW may
terminate the joint venture agreement on or before December 31, 2003 and require
Satyam Computer Services to purchase its shares in the joint venture and all of
Satyam Computer Services securities issued to TRW or its affiliates in
connection with the joint venture agreement at a price equal to US$1 million
plus the total consideration TRW has invested in the shares of the joint venture
(but excluding the initial amount paid for its 24.0% interest) and Satyam
Computer Services securities, net of any amount received by TRW for any sale of
such shares or securities.

In addition, TRW will receive an amount in cash or Satyam Computer Services
equity shares, at its discretion, equal to 33.0% of the excess of actual
revenues received by the joint venture from TRW over targeted revenues, subject
to the ceiling of US$25 million if such targeted revenues are exceeded by 5.0%
or more by December 31, 2005. However, such additional amount together with the
buyout of TRW's 24.0% interest cannot exceed 2.0% of Satyam Computer Services'
total market capitalization as of December 31, 2003. No accrual has been made
for such contingent payment as it is not yet probable that the actual revenues
will exceed the targeted revenues.

TRW will also receive royalties from revenues related to services provided by
the venture to third parties referred to the venture by TRW Such royalties will
be computed at a rate of 5.0% of the first US$25 million of revenues and 8.0%
thereafter. However as of the balance sheet date no such revenues have been
recognized by the joint venture.

6. Sale of shares in Infoway to the Government of Singapore Investment
   Corporation Pte. Ltd.

In May 2000, Satyam Computer Services entered into an agreement for sale of
347,200 equity shares of Infoway at a price of US$144 per share, representing
1.6% of Infoway's outstanding equity shares to the Government of Singapore
Investment Corporation Pte. Ltd. ("GSIC") for a consideration of US$50 million
(before transaction costs). The transaction was consummated and proceeds were
received in June 2000. GSIC had a put option to sell the shares back to Satyam
Computer Services if Infoway did not complete an initial public offering on a
recognized stock exchange in India by September 2001.

Under the terms of this put option, Satyam Computer Services was required, in
the event Infoway fails to fulfill its obligations, to repurchase these equity
shares at a price equal to the Indian Rupee equivalent to the average NASDAQ
closing price during the three days before the exercise of the put option,
discounted by 41.0%. Satyam Computer Services accounted for the put option at
fair value. However, since the exercise price of the put option equaled the
estimated fair value of the shares to be reacquired at the date of exercise,
Satyam Computer Services believed that the fair value of the put option was de
minimus.

In the year ended March 31, 2001, in respect of this transaction Satyam Computer
Services had not recognized US$ 35,156 thousands in the statement of operations
because of the put option held by GSIC. The US$35,156 thousands represented an
amount equal to the excess of sale proceeds received from GSIC over the carrying
value of investments in Infoway in the books of Satyam Computer Services, net of
taxes. It had been classified as liability and presented as "Excess of cash
received over the carrying value of investment in Infoway, net of taxes" in the
balance sheet as of March 31, 2001.

Infoway did not complete an initial public offering on a recognized stock
exchange in India by September 2001, and the put option held by GSIC expired
unexercised on October 15, 2001. Satyam Computer Services has recognized gain of
US$45,594 thousands on the sale of shares in Infoway to GSIC in the statement of
operations for the year ended March 31, 2002.

                                      F-18
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

7.  Premises, Equipment and Depreciation

Premises and equipment at cost less accumulated depreciation consist of:

                                                        (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                          --------------------------------------
                                                     2001                 2002
--------------------------------------------------------------------------------

Freehold land                                    $  7,323             $  7,559
Leasehold land                                         74                1,666
Premises                                           18,989               18,220
Computers including servers                        50,465               73,347
System software                                    11,255               11,640
Office equipment                                   59,652               68,929
Furniture and fixtures                             25,133               25,780
Vehicles                                            2,677                2,968
Leasehold improvements                              2,056                2,235
Assets under construction                          24,449               10,859
--------------------------------------------------------------------------------
Total                                             202,073              223,203
Less: Accumulated depreciation                    (68,842)             (99,696)
--------------------------------------------------------------------------------
Premises and equipment, net                      $133,231             $123,507
================================================================================

Satyam has established the estimated useful lives of assets for depreciation
purposes as follows:

              Premises                              28 years
              Computers including servers          2-5 years
              System Software                        3 years
              Office equipment                       5 years
              Furniture and fixtures                 5 years
              Vehicles                               5 years

Depreciation expense amounted to US$20,170 thousand, US$29,637 thousands and
US$37,486 thousands for the years ended March 31, 2000, 2001 and 2002
respectively.

                                      F-19
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

8.  Goodwill and Other Intangible Assets

Goodwill and other intangible assets consist of:

                                                        (US$ in thousands)
------------------------------------------------------------------------------
                                                               As of March 31
                                              --------------------------------
                                                       2001              2002
------------------------------------------------------------------------------
Goodwill
  Acquisition of minority interest                 $ 21,957           $21,066
  Acquisition of IndiaWorld                         106,833                 -
  Acquisition of IndiaPlaza                           9,490                 -
  Others                                                 59               830
License fees and others                                 852             4,532
------------------------------------------------------------------------------
Total                                               139,191            26,428
Less: Accumulated amortization                      (29,196)          (11,731)
------------------------------------------------------------------------------
Goodwill and other intangible assets, net          $109,995           $14,697
==============================================================================

Goodwill represents the excess of amount paid towards purchase price and
non-refundable deposit over the fair value of assets acquired, and is primarily
related to the IndiaWorld and IndiaPlaza acquisitions by Infoway and the
acquisition of the minority interest in Satyam Enterprise Solutions Limited by
Satyam Computer Services. Satyam evaluates the recoverability of its intangible
assets including goodwill as current events or circumstances warrant to
determine whether adjustments are needed to their carrying values. In the year
ended March 31, 2002, Satyam recorded an impairment charge of US$81,115
thousands relating to goodwill acquired in the IndiaWorld, India Plaza and
Eduempire acquisitions by Infoway as a result of an ongoing impairment
assessment of goodwill recorded in connection with various acquisitions.

Since the operations of those entities have been completely integrated into the
operations of Infoway. Satyam assessed the recoverability of goodwill arising
out of the India World and India Plaza acquisitions at the enterprise level of
Infoway. The impairment charge was calculated as the difference between the
market value of Infoway and its net assets.

The assessment was performed due to significant decline in Infoway's stock price
for a sustained period, Infoway's market capitalization relative to its net book
value, significant under performance relative to expected historical or
projected future operating results, significant negative industry and economic
trends and the overall decline in market conditions which indicate that this
decline in the market value of Infoway's stock price is other than temporary.
The shortfall in the market capitalization has indicated an impairment of
goodwill. Thus the entire carrying value of goodwill as at September 30 2001,
pertaining to India World of US$73,110 thousand, India Plaza of US$7,955
thousands and Eduempire of US$50 thousands has been charged to the statement of
operations for the year ended March 31, 2002.

Amortization of goodwill and other intangible assets amounted to US$5,098
thousand, US$24,856 thousands and US$17,717 thousands for the years ended March
31, 2000, 2001 and 2002 respectively.

                                      F-20
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

9.  Investments

Investments of Satyam consist of available-for-sale securities ("AFS") and other
non-marketable securities.

                                                    (US$ in thousands)
--------------------------------------------------------------------------------
                                                             As of March 31
                                          --------------------------------------
                                                      2001             2002
--------------------------------------------------------------------------------
Available-for-sale securities
Cost                                                $  274           $  263
Gross unrealized holding gains                           5                3
Gross unrealized holding losses                        (69)             (72)
--------------------------------------------------------------------------------
AFS - Fair Value                                    $  210           $  194

Other investments, at cost                          $2,498           $3,229
--------------------------------------------------------------------------------
Investments - Non current                           $2,708           $3,423
================================================================================

Aggregate proceeds from the sale of available-for-sale securities amounted to
US$13 thousands, US$3 thousands and US$2,263 thousands (purchased during the
year ended March 31, 2002 for US$2,263 thousands) for the years ended March 31,
2000, 2001 and 2002 respectively.

10. Investment in associated companies

Satyam Computer Services holds 50.0% stake in three joint venture companies,
Satyam GE Software Services Private Limited, Satyam Venture Engineering Services
Private Limited and CA Satyam ASP Private Ltd.

On December 29, 2000, Satyam Computer Services entered an agreement with
Computer Associates International, Inc. ("CA") to form an equally held joint
venture company CA Satyam ASP Private Ltd. ("CA Satyam"). The joint venture was
formed in January 2001 at Mumbai, India. As per the agreement, both Satyam
Computer Services and CA are to invest US$1,500 thousands each in the joint
venture. During the year ended March 31, 2002 Satyam Computer Services invested
US$500 thousands in CA Satyam.

In January 2002, Satyam Computer Services has initiated the process of transfer
of its 50% shareholding in Satyam GE Software Services Private Limited ("Satyam
GE") to GE Pacific (Mauritius) Limited, Mauritius ("GEPL") in accordance with
the shareholders' agreement for a consideration of approximately US$4,000
thousands. The transfer is subject to fulfillment of terms and conditions
specified in the agreement and obtaining necessary approvals from appropriate
authorities. Satyam Computer Services continues to have the ability to exercise
significant influence over the operating and financial policies of Satyam GE and
hence has accounted for its 50% interest in Satyam GE using the equity method
for the year ended March 31, 2002. The resulting carrying amount of the
investment in Satyam GE of US$2,999 thousands as of March 31, 2002 after
recognition of income for the year then ended does not exceed the expected
selling price of US$4,000 thousands.

Infoway holds 40% interest in Refco-Sify Securities India Private Limited
("Refco-Sify"). Refco-Sify is engaged in Internet based trading and research
services. Infoway has accounted for its 40% interest in Refco-Sify by the equity
method. During the year ended March 31, 2002 Refco-Sify issued additional shares
to existing shareholders in proportion to their holdings. Infoway subscribed to
its share of the issue for a consideration of US$925 thousands.

Infoway holds a 27% interest in Placements.com Limited ("Placements.com").
Placements.com is engaged in establishing and developing a portal on the
internet for jobs and to carry on the business as a manpower recruitment agency.
Infoway has accounted for its 27% interest in Placements.com by the equity
method.

On July 29, 2000, Infoway acquired 25% of the outstanding stock of Cricinfo
Limited ("Cricinfo") a private Company incorporated in England and Wales, for
US$37.5 million by issue of 2,204,720 ADSs (represented by 551,180 equity shares
of Infoway). Cricinfo operates Cricinfo.com, a website dedicated to the cricket
sport. Infoway has accounted for its interest in Cricinfo by the equity method.
The difference between the cost of the investment and the amount of underlying
equity in net assets of Cricinfo resulted in goodwill of US$33,479 thousands,
which is being amortized over a period of 5 years.

Satyam evaluates the recoverability of goodwill relating to the investment in
associated companies as current events or circumstances warrant to determine
whether adjustments are needed to their carrying values. In the year ended

                                      F-21
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

March 2002, Satyam recorded a impairment charge of US$21,399 thousands relating
to goodwill on the Cricinfo acquisition by Infoway as a result of an ongoing
impairment assessment of goodwill recorded in connection with various
acquisitions.

The main factors in the valuation of the Cricinfo acquisition were share in
revenues for Infoway, leadership and synergistic benefits accruing to Infoway
and enterprise value of Cricinfo. Infoway had made a revenue growth assumption
for Cricinfo at the time of acquisition. Due to the change in market realities,
management believes those revenue growth estimates would require significant
downward revision. The anticipated leadership and synergistic benefits have also
largely not realized. The current fair value of Cricinfo as an independent
entity is negligible due to its mounting cash losses coupled with the adverse
current market conditions. The impairment was based on discounted cash flow
method considering historical results adjusted to reflect management's best
estimate of future market and operating conditions.

Management believes that the carrying value of goodwill, which forms part of the
investment in Cricinfo is impaired. It also believes that considering the
current industry scenario and lack of investor confidence, the impairment is
other-than temporary. Hence, out of the carrying value of goodwill as at
September 30, 2001 of US$24,458 thousands, US$21,399 thousands has been charged
to the statement of operations for the year ended March 31, 2002. The management
believes that balance goodwill of US$3,059 thousands is attributable to the
future discounted cash flows from Infoway's share in revenue.

On October 5, 2001, Infoway entered into an agreement to subscribe for unsecured
convertible notes to be issued by Cricinfo in an aggregate amount of up to
GBP1,000 thousands (US$1,479 thousands) to meet Cricinfo's short to medium term
working capital requirements. These notes are redeemable on October 5, 2004. The
subscription will be in tranches of such amounts and on such dates as agreed to
in writing from time to time by Infoway and Cricinfo. The terms of the note
instrument provide for the payment of interest on the principal amount at the
rate of 8% per annum. In addition, Infoway shall be entitled, at any time upon
5-business days notice to Cricinfo, to convert the notes into Cricinfo shares
based on a predetermined conversion formula. Infoway will not be obligated to
subscribe for notes if it is not satisfied that Cricinfo has met certain agreed
upon performance measures. On March 31, 2002 Infoway entered into an arrangement
to subscribe to a further issue of convertible notes in an aggregate amount of
upto GBP500 thousands (US$713 thousands) by Cricinfo that would be subject to
the same terms as discussed above.

As of March 31, 2002 Infoway had purchased convertible notes with an aggregate
principle amount of GBP1,088 thousands (US$1,527 thousands). The above agreement
does not give Infoway a majority voting interest or a controlling financial
interest in Cricinfo over the period of convertible notes. Further, the
management currently does not intend to convert the notes into equity.
Therefore, the investment of Infoway in Cricinfo continues to be accounted for
as an equity investment.

The carrying values of investments in various associated companies of Satyam are
as follows:

                                                         (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of  March 31
                                                  ------------------------------
                                                           2001             2002
--------------------------------------------------------------------------------

Satyam GE                                               $ 1,699          $ 2,999
Satyam Venture                                              140              957
CA Satyam                                                     -              486
Cricinfo                                                 29,759            3,824
Placements.com                                              196               13
Refco-Sify                                                2,195            2,456
--------------------------------------------------------------------------------
Total                                                   $33,989          $10,735
================================================================================

                                      F-22
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

11. Borrowings

Short-term debts

Short-term debts comprise of:

                                                         (US$ in thousands)
--------------------------------------------------------------------------------
                                                              As of March 31
                                             -----------------------------------
                                                           2001             2002
--------------------------------------------------------------------------------

    Cash credit facilities                               $5,224                -
    Other short-term debts                                2,134           $1,764
--------------------------------------------------------------------------------
    Short-term debts                                     $7,358           $1,764
================================================================================

Short-term debts as of March 31, 2001 is secured by a first charge on the
premises and equipment of Satyam Computer Services. The weighted-average
interest rate on these borrowings was 12.35% and 9.14% for the years ended March
31, 2001 and 2002 respectively.

Long-term debts

Long-term debts outstanding comprise of:
(US$ in thousands)
------------------------------------------------------------------------------------------------------------
                                                                                    As of March 31
                                                                         -----------------------------------
                                                                                           2001        2002
------------------------------------------------------------------------------------------------------------
Secured debts, representing obligation principally to banks and financial
    institutions
    - Foreign currency term loans (dollar denominated),                                $  3,730           -
       with floating rate - LIBOR+ (175 to 350bps)
    - Rupee term loans, with floating rate -MLR + (150 to 200 bps)                       14,728           -
    - Rupee term loans, with fixed rate - 12.5% to 18.5%                                  9,605           -
    - Rupee loans of Satyam Associate Trust, maturing serially through fiscal 2004-      13,196     $ 4,155
       13.0% to 14.25%
    Others                                                                                1,583       1,344
    Total Debt                                                                           42,842       5,499
    Less: Current portion of long-term debts                                            (33,217)     (2,787)
------------------------------------------------------------------------------------------------------------
     Long-term debts, net of current portion                                           $  9,625     $ 2,712
============================================================================================================
MLR= Minimum lending rate prevailing in India (as of March 31, 2001 - 12.50% and
 as of March 31, 2002 -12.50%) bps = Basis Points

Term loans are secured by a pari-passu charge on premises and equipment and
other loans classified as secured debts are secured by a pari-passu charge on
current assets. These are also generally guaranteed personally by Satyam
Computer Services Chairman and Managing Director.

Aggregate maturities of long-term debts subsequent to March 31, 2002, are
US$2,787 thousands in fiscal 2003, US$2,570 thousands in fiscal 2004, US$139
thousands in fiscal 2005 and US$3 thousands in fiscal 2006.

Unused lines of credit

Unused lines of credit comprise of:

                                                       (US$ in thousands)
--------------------------------------------------------------------------------
                                                               As of March 31
                                                          ----------------------
                                                             2001          2002
--------------------------------------------------------------------------------
    Cash credit and short term debts                      $12,920       $ 7,168
    Long term debts                                         1,067             -
    Non-fund facilities                                     6,201         4,820
--------------------------------------------------------------------------------
Total Unused lines of credits                             $20,188       $11,988
================================================================================

                                      F-23
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

12.      Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash and cash
equivalents, trade and other receivables, amounts due to or from related
parties, accounts payable and other liabilities approximate their respective
fair values due to their short maturity. The approximate fair value of long-term
debts, as determined by using current interest rates was US$42,779 thousands and
US$5,520 thousands as of March 31, 2001 and 2002 respectively as compared to the
carrying amounts of US$42,842 thousands and US$5,499 thousands as of March 31,
2001 and 2002 respectively.

13.  Employee Benefits

The Gratuity Plan

The following table sets forth the funded status of the Gratuity Plan of Satyam,
and the amounts recognized in Satyam's consolidated balance sheets.
(US$ in thousands)
----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year ended March 31
                                                                        ----------------------------------------------
                                                                                 2000           2001              2002
----------------------------------------------------------------------------------------------------------------------
Change in projected benefit obligation
  Projected benefit obligation at beginning of the year                        $ 349        $   572           $ 1,179
  Service cost                                                                   197            323               609
  Interest cost                                                                   61             60               124
  Actuarial loss (gain)                                                          (22)           279               (41)
  Benefits paid                                                                   (3)            (5)              (12)
  Effect of exchange rate changes                                                (10)           (50)              (63)
  Projected benefit obligation at end of the year                                572          1,179             1,796
----------------------------------------------------------------------------------------------------------------------
  Change in plan assets
  Fair value of plan assets at beginning of the year                              16             25                39
  Actual return on plan assets                                                     2              3                 6
  Employer contribution                                                           18             18                46
  Benefits paid from plan assets                                                 (11)            (7)              (19)
  Fair value of plan assets at end of the year                                    25             39                72
----------------------------------------------------------------------------------------------------------------------
  Funded status of the plans                                                    (547)        (1,140)           (1,724)
  Unrecognized transition obligation                                              50             35                22
  Unrecognized net actuarial loss (gain)                                         (27)           251               211
  Amount Recognized during the year                                                -              -               (11)
----------------------------------------------------------------------------------------------------------------------
  Accrued benefit cost                                                         $(524)       $  (854)          $(1,502)
=====================================================================================================================

  The components of net gratuity costs are reflected below:
  Service cost                                                                 $ 197        $   323           $   609
  Interest cost                                                                   61             60               124
  Expected returns on plan assets                                                 (2)            (3)                5
  Amortization                                                                    13             12                11
  Amount Recognized during the year                                                -              -                11
----------------------------------------------------------------------------------------------------------------------
  Net gratuity costs                                                           $ 269        $   392           $   760
=====================================================================================================================
  Principal actuarial assumptions:
  Discount rate                                                                 11.0%          11.0%             10.0%
  Long-term rate of compensation increase                                       10.0%          10.0%              9.0%
  Long-term rate of return on plan assets                                       11.0%          11.0%              9.0%
----------------------------------------------------------------------------------------------------------------------
F-24
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Provident Fund

Satyam's contribution towards the Provident Fund amounted to US$1,176 thousands,
US$1,839 thousands and US$2,201 thousands for the years ended March 31, 2000,
2001 and 2002 respectively.

Superannuation Plan

Satyam Computer Services contribution towards the Superannuation Plan maintained
by LIC amounted to US$15 thousands, US$26 thousands and US$35 thousands for the
years ended March 31, 2000, 2001 and 2002 respectively.

401(k) Plan

Satyam's matching contribution under 401(k) Plan amounted to US$176 thousands,
US$376 thousands and US$345 thousands for the years ended March 31, 2000, 2001
and 2002 respectively.

14.  Income Taxes

The provision for income taxes consists of:
(US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                                                         ----------------------------------------------
                                                                                    2000            2001           2002
-----------------------------------------------------------------------------------------------------------------------
Foreign taxes
  Current                                                                       $  1,119        $  3,437       $  4,596
  Deferred                                                                           145             530         (3,709)
  Domestic taxes
  Current                                                                            239          10,984          2,627
  Deferred                                                                           116         (10,814)        13,720
-----------------------------------------------------------------------------------------------------------------------
  Aggregate taxes                                                               $  1,619        $  4,137       $ 17,234
=======================================================================================================================
A reconciliation between the provision for income taxes to the amount computed
by applying the statutory income tax rate to income before provision for income
taxes is summarized below:
(US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                                                        -----------------------------------------------
                                                                                    2000            2001           2002
-----------------------------------------------------------------------------------------------------------------------
Net loss before taxes ........................                                $ (8,241)       $(44,080)      $ (4,879)
  Enacted tax rates in India ...................                                   38.50%          39.55%         35.70%
-----------------------------------------------------------------------------------------------------------------------
  Computed tax expense / (benefit) .............                                $ (3,173)       $(17,434)      $ (1,742)
  Tax effect due to non-taxable export income ..                                 (11,079)        (28,040)       (37,688)
  Difference arising from different tax rate in  other tax jurisdictions             679           1,241          1,119
  Difference arising from different tax rate on gain on sale of
  investments                                                                          -               -         (5,839)
  Stock compensation (non-deductible) ..........                                   6,518          18,235          3,854
  Goodwill (non-deductible) ....................                                   1,942           9,759         35,026
  Permanent Differences ........................                                  (1,284)          2,574         (5,859)
  Changes in valuation allowance, including losses of subsidiaries                 7,275          15,963         23,775
  Effect of tax rate change ....................                                      13               7           (246)
  Others                                                                             636           1,584          3,888
-----------------------------------------------------------------------------------------------------------------------
  Income taxes .................................                                   1,527           3,889         16,288
  Tax for earlier years ........................                                      92             248            946
=======================================================================================================================
  Income taxes recognized in the statement of operations                        $  1,619        $  4,137       $ 17,234
=======================================================================================================================
F-25
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

The current provisions for income taxes, net of payments, were US$6,707
thousands and US$6,770 thousands as of March 31, 2001 and 2002 respectively. The
provision for foreign taxes is due to income taxes payable in overseas tax
jurisdictions by its offsite and onsite centers, principally in the United
States. Satyam Computer Services benefits from certain significant tax
incentives provided to software entities under Indian tax laws. These incentives
presently include: (i) an exemption from payment of Indian corporate income
taxes for a period of ten consecutive years of operations of software
development facilities designated as "Software Technology Parks" ("STP units");
and (ii) a tax deduction for profits from exporting computer software. The
benefits of these tax incentives have historically resulted in an effective tax
rate for Satyam Computer Services well below statutory rates. Further, most of
Satyam Computer Services operations are from STP units which are entitled to a
tax holiday of ten years from the date of commencement of operations. STP units
registered after March 31, 2001 are not entitled to the above exemption. In case
of Satyam Computer Services for various registered STP units these exemptions
expire starting from fiscal 2006 through fiscal 2010. However, Satyam Computer
Services earns certain other income and domestic income, which are taxable
irrespective of the tax holiday as stated above. Satyam Computer Services
subsidiaries are subject to income taxes of the countries in which they operate.

Significant components of activities that gave rise to deferred tax assets and
liabilities included in the financial statements are as follows:

                                                             (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                           ---------------------
                                                               2001        2002
--------------------------------------------------------------------------------

Deferred tax assets:
Operating loss carryforwards                               $ 22,620    $ 35,139
Provision for accounts receivable and advances                  902      13,430
Premises and equipment                                           18       2,666
Gain on sale of shares of Infoway to GSIC                    10,438          --
Others                                                        3,553       3,071
--------------------------------------------------------------------------------
Gross deferred tax assets                                    37,531      54,306
Less: Valuation allowance                                   (24,756)    (49,515)
--------------------------------------------------------------------------------
Total deferred tax assets                                    12,775       4,791

Deferred tax liabilities:
Premises and equipment                                       (2,379)     (3,081)
Provision for accounts receivable and advances                   --      (1,165)
Investments in associated companies and gain on dilution
of interest in a subsidiary                                 (34,316)    (33,358)
Others                                                          (82)       (243)
--------------------------------------------------------------------------------
Total deferred tax liabilities                              (36,777)    (37,847)

--------------------------------------------------------------------------------
Net deferred tax liabilities                               $(24,002)   $(33,056)
================================================================================

No deferred income taxes have been provided on undistributed earnings of foreign
subsidiaries due to the losses incurred by them since their inception. These
losses aggregated to approximately US$30,064 thousands and US$ 36,552 thousands
as of March 31, 2001 and 2002 respectively.

No deferred taxation provision has been recognized for the taxes arising on
income of Satyam Computer Services due to the tax benefit available to it in the
form of a deduction from taxable income for 10 years, except to the extent of
timing differences which reverse after the tax holiday period or unless they
reverse under foreign taxes.

                                      F-26
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Operating loss carryforwards for tax purposes of Satyam Computer Services and
its consolidated subsidiaries amount to approximately US$22,620 thousands and
US$35,139 thousands as of March 31, 2001 and 2002 respectively and are available
as an offset against future taxable income of such entities. These carryforwards
expire at various dates primarily over 8 to 20 years. Realization is dependent
on such subsidiaries generating sufficient taxable income prior to expiration of
the loss carryforwards. A valuation allowance is established attributable to
deferred tax assets and loss carryforwards in subsidiaries where, based on
available evidence, it is more likely than not that they will not be realized.

Net deferred tax liabilities included in the consolidated balance sheets are as
follows:

                                                            (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of March 31
                                                       -------------------------
                                                               2001        2002
--------------------------------------------------------------------------------

Current assets - deferred income taxes                     $    966    $  3,151
Non-current assets - other assets*                            1,371       1,640
Current liabilities - accrued expenses and other
liabilities*                                                      -      (1,165)
Long-term liabilities - Deferred income taxes               (36,777)    (36,682)
Deferred taxes on gain of sale of shares in Infoway
to GSIC - Excess of cash received over carrying value
of investment in Infoway, net of taxes                       10,438           -
--------------------------------------------------------------------------------
Net deferred tax liabilities                               $(24,002)   $(33,056)
================================================================================

 * - Included in "other assets" and "accrued expenses and other liabilities"
respectively.

15.  Earnings Per Share

Basic earnings per share is computed on the basis of the weighted average number
of shares outstanding (weighted average number of shares issued less
unallocated, unvested or unexercised shares held by the Satyam Associate Trust).
Allocated but unvested or unexercised shares not included in the calculation of
weighted-average shares outstanding for basic earnings per share were 9,454,140
and 1,924,890 as at March 31, 2001 and 2002 respectively. Diluted earnings per
share is computed on the basis of the weighted average number of shares
outstanding plus the effect of outstanding stock options using the "treasury
stock" method. For the years ended March 31, 2000 and 2001, outstanding stock
options are excluded due to their antidilutive effect as a result operations
during these periods.

In addition to the above, the unallocated shares held by Satyam Associate Trust,
which are by definition unvested, have been excluded from all earnings per share
calculations. Such shares amounted to 1,715,930 and 1,558,930 as of March 31,
2001 and 2002 respectively.

The components of basic and diluted earnings per share were as follows:

                                            (US$ in thousands except share data)
--------------------------------------------------------------------------------
                                                            Year ended March 31
                                             -----------------------------------
                                                  2000         2001        2002
--------------------------------------------------------------------------------

Net income / (loss)                          $  (6,940)   $ (27,912)   $  25,892

Average outstanding shares (in thousands)*     264,720      269,943      305,751
Dilutive effect of:
 Associate Stock Options                             -            -        1,362
Share and share equivalents (in thousands)*    264,720      269,943      307,113

Earnings / (loss) per share
Basic and diluted                            $   (0.03)   $   (0.10)   $    0.08
--------------------------------------------------------------------------------
*  - on an adjusted basis

                                      F-27
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

16.  Stock-based Compensation Plans

Stock-based compensation plan of Satyam Computer Services

History of the plan

In May 1998, Satyam Computer Services established its Associate Stock Option
Plan (the "ASOP"). Satyam Computer Services subsequently established an
associate welfare trust called the Satyam Associate Trust (the "SC-Trust"), to
administer the ASOP and issued warrants to purchase 13,000,000 shares of Satyam
Computer Services. In turn, the SC-Trust periodically grants warrants to
eligible associates to purchase equity shares held by or reserved for the
issuance to the SC-Trust. The warrants may vest immediately or may vest over a
period ranging from two to three years, depending on the associate's length of
service and performance. Upon vesting, associates have 30 days in which to
exercise these warrants.

All the SC-Trust's trustees are nominated by Satyam Computer Services. The
SC-Trust issues warrants solely at the discretion of Satyam Computer Services
and cannot earn any other income. The shares purchased by the SC-Trust, as
described below, have been pledged against all SC-Trust liabilities. Hence, the
SC-Trust has been consolidated in the financial statements.

At the Annual General Meeting in May 1999, shareholders approved a two-for-one
stock split in the form of a dividend, available to all shareholders of record
as of August 31, 1999. All holders of SC-Trust warrants were given the choice of
converting their underlying Satyam Computer Services warrants to Satyam Computer
Services shares ahead of their scheduled vesting dates. Upon payment of the
balance of the exercise price, the underlying Satyam Computer Services warrants
would be converted into shares and remain in the custody of the SC-Trust until
the original vesting period expired. The `bonus' share, at the effective date of
the stock split, immediately vested to the associates who availed themselves of
this plan. Warrants for 62,500 shares were converted into Satyam Computer
Services shares in this manner, and Satyam Computer Services recognized US$137
thousands as compensation expense associated with this transaction.

In order to ensure all its associates received the benefits of the Satyam
Computer Services stock split in December 1999, the SC-Trust exercised all its
warrants to purchase Satyam Computer Services shares prior to the split using
the proceeds obtained from bank loans amounting to US$13,226 thousand. Prior to
August 31, 1999, the exercise price of the remaining SC-Trust warrants was
Rupees ("Rs.") 450 per warrant. Subsequent to August 31, 1999, each warrant
entitles the holder to purchase ten shares (adjusted for stock splits) of Satyam
Computer Services at a price of Rs.450 per warrant plus an interest component,
associated with the loan which the SC-Trust assumed, for conversion of the
warrants it held. The interest component is computed based on fixed vesting
period and a fixed interest rate. This stock bonus has been treated as an equity
restructuring pursuant to EITF 90-9. Correspondingly no additional compensation
cost has been recognized as a result of the conversion of warrants held by the
SC-Trust.

In April 2000, Satyam Computer Services established its Associate Stock Option
Plan B (the "ASOP B") and reserved warrants for 13,000,000 equity shares to be
issued to eligible associates with the intention to issue the warrants at the
market price of the underlying equity shares on the date of the grant. These
warrants vest over a period ranging from two to four years, starting with 20.0%
in second year, 30.0% in the third year and 50.0% in the fourth year. Upon
vesting, associates have 5 years to exercise these warrants. No equity shares
have been issued by Satyam Computer Services to the SC-Trust under the ASOP plan
B as was issued under the ASOP.

In May 2000, Satyam Computer Services established its Associate Stock Option
Plan (ADS) (the "ASOP (ADS)") to be administered by the Administrator of the
ASOP (ADS) which is a committee appointed by the Board of Directors of Satyam
Computer Services and reserved 2,574,665 ADSs (5,149,330 shares) to be issued to
eligible associates with the intention to issue the warrants at a price per
option which is not less than 90% of the value of one ADS as reported on the New
York Stock Exchange ("NYSE"), the fair market value on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the day of
grant as decided by the Administrator of the ASOP(ADS) . These warrants vest
over a period ranging from one to ten years from the date of the grant. The time
available to exercise the warrants upon vesting is as decided by the
Administrator of the ASOP (ADS). No equity shares underlying the ASOP (ADS) have
been issued by Satyam Computer Services to the SC-Trust similar to ASOP B plan.

                                      F-28
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Warrant grants

During the year ended March 31, 2000, the SC-Trust issued immediately vesting
warrants for 74,000 shares and warrants for 2,911,200 shares with longer vesting
periods to the associates. As of March 31, 2000, the Trust held warrants for
7,536,100 shares allocated to associates. At this date, warrants for 4,232,300
shares remained unallocated to associates. Unallocated warrants are not
considered outstanding for purposes of computing earnings per share.

During the year ended March 31, 2001, the SC-Trust issued immediately vesting
warrants for 716,020 (net of 4,600 forfeited) shares and warrants for 1,795,750
(net of 1,200,740 forfeited) shares with longer vesting periods to the
associates under the ASOP plan. Further, during the same period, under the ASOP
B plan, Satyam Computer Services issued warrants for 5,759,209 (net of 291,200
warrants forfeited) shares to the associates.

During the year ended March 31, 2002, the SC-Trust issued immediately vesting
warrants for 702,010 (net of 60,000 forfeited) shares and warrants for 80,050
(net of 49,620 forfeited) shares with longer vesting periods to the associates
under the ASOP plan. Further, during the same period, under the ASOP B plan,
Satyam Computer Services issued warrants for 4,438,119 (net of 598,563 warrants
forfeited) shares to the associates and warrants for 1,169,425 ADSs representing
2,338,850 equity shares to associates under the ASOP ADS plan.

Satyam Computer Services recognized deferred stock based compensation of
US$23,265 thousand, US$38,034 thousands and US$1,203 thousands for the years
ended March 31, 2000, 2001 and 2002 respectively. Satyam Computer Services
amortized and charged to income US$16,457 thousand, US$44,219 thousands and
US$10,479 thousands for the years ended March 31, 2000, 2001 and 2002
respectively.

Pursuant to APB 25, deferred stock compensation has been computed as of grant
date based on the difference between the exercise price of the warrants and the
fair value of underlying shares of Satyam Computer Services. Deferred stock
compensation is amortized on a straight-line basis over the vesting period of
the related warrants. The weighted-average grant-date fair value of options
granted during the years 2000, 2001 and 2002 was US$7.02, US$9.49 and US$4.21
respectively.

Changes in number of shares representing stock options outstanding for each of
the plans were as follows:
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP - Plan                                Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the year    5,910,200       $   1.24      7,536,100    $   1.26      9,454,140    $   1.24
Granted                                 2,985,200           1.36      3,717,110    $   1.27        891,680    $   1.29
Exercised                              (1,231,600)          1.22       (598,330)   $   1.05     (7,686,250)   $   1.17
Cancelled                                (126,500)          1.03       (521,500)   $   1.08       (109,620)   $   1.40
Lapsed                                     (1,200)          1.08       (679,240)   $   1.59       (625,060)   $   1.28
-------------------------------------------------------------------------------------------------------------------------
Balance at the end of the year          7,536,100       $   1.26      9,454,140    $   1.24      1,924,890    $   1.28
=========================================================================================================================
F-29
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP-B Plan                                Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the year           -             -               -            -     5,759,209      $ 7.17
  Granted                                        -             -       6,050,409    $    7.32     5,036,682        4.41
  Exercised                                      -             -               -            -             -           -
  Cancelled                                      -             -        (291,200)   $   10.38      (598,563)     $ 7.87
  Lapsed                                         -             -               -            -             -           -
-------------------------------------------------------------------------------------------------------------------------
  Balance at the end of the year                 -             -       5,759,209    $    7.17    10,197,328      $ 5.60
=========================================================================================================================
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Year  ended March 31
                                       ----------------------------------------------------------------------------------
                                                            2000                       2001                        2002
-------------------------------------------------------------------------------------------------------------------------
                                         Number of       Weighted     Number of     Weighted     Number of      Weighted
                                           shares        Average       shares       Average       shares        Average
              ASOP-ADS Plan                              Exercise                   Exercise                    Exercise
                                                           Price                      Price                       Price
-------------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the year           -             -               -            -             -           -
  Granted                                        -             -               -            -     2,338,850      $ 4.97
  Exercised                                      -             -               -            -             -           -
  Cancelled                                      -             -               -            -             -           -
  Lapsed                                         -             -               -            -             -           -
-------------------------------------------------------------------------------------------------------------------------
  Balance at the end of the year                 -             -               -            -     2,338,850      $ 4.97
=========================================================================================================================
Information about number of shares representing stock options outstanding:
-------------------------------------------------------------------------------------------------------------------------
                                                         Outstanding                             Exercisable
                                        ---------------------------------------------------------------------------------
    Period        Range of Exercise        Weighted        Weighted       Number of        Weighted       Number of
                  Price (per share)        Average         Average          shares         Average          shares
                                           Exercise       remaining      arising out       Exercise      arising out
                                          Price (per     contractual      of options      Price (per      of options
                                            share)           Life                           share)
-------------------------------------------------------------------------------------------------------------------------
Fiscal        Rs. 45.0    US$ 0.9       Rs.134.54       1.88 years      15,213,349       Rs.49.69         720,620
  2001          Rs.655.6    US$13.6       US$   2.8                                        US$  1.0
-------------------------------------------------------------------------------------------------------------------------
  Fiscal        Rs. 45.0    US$ 0.9       Rs.239.86       1.63 year       14,461,067       Rs.57.23         762,010
  2002          Rs.278.8    US$ 5.6       US$  4.91                                        US$  1.2
-------------------------------------------------------------------------------------------------------------------------
The US$ numbers in the above tables have been translated using the closing
exchange rate as of March 31, 2002, 1US$= Rs48.83

                                      F-30
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Stock-based compensation plan of Infoway

In fiscal 1999, Infoway established the Employee Stock Offer Plan (`ESOP'),
which provides for the issuance of 825,000 warrants to eligible employees. The
warrants were issued to an employee welfare trust (the `Trust') at Re 1 each on
September 28, 1999. The Trust holds the warrants and transfers them to eligible
employees over a period of three years. The warrants, which are to be
transferred to eligible employees at Re 1 each, entitles the holder to purchase
one equity share at an exercise price determined by the Compensation Committee.
The warrants and the equity shares received upon the exercise of warrants are
subject to progressive vesting over a three-year period from the date of issue
of warrants to employees. Deferred compensation is recorded in the event that
the exercise price of the warrant is determined to be less than the fair market
value of the underlying shares on the date of the grant. Deferred compensation
is amortized over the vesting period of the warrants. The warrants allotted and
the underlying equity shares are not subject to any repurchase obligations by
Infoway.

Infoway recognized deferred stock based compensation of US$3,209 thousand,
US$2,225 thousands and US$1,485 thousands for the years ended March 31, 2000,
2001 and 2002 respectively. Infoway amortized and charged to income US$474
thousands, US$1,899 thousands and US$315 thousands for the years ended March 31,
2000, 2001 and 2002 respectively.
Stock options outstanding are as follows:
------------------------------------------------------------------------------------------------------------------------
                                                                                                  Year  ended March 31

                                        --------------------------------------------------------------------------------
                                                 2000                      2001                         2002
------------------------------------------------------------------------------------------------------------------------
                                        Number      Weighted     Number of      Weighted     Number of      Weighted
                                        of shares    Average       shares       Average        shares       Average
                                                    Exercise                    Exercise                    Exercise
                                                      Price                      Price                       Price

------------------------------------------------------------------------------------------------------------------------
Balance at the beginning of the year        5,000    $  1.43       312,460       $ 47.88       565,020       $ 53.68
   Granted                                   313,160      47.88       342,800         57.77       276,360          3.56
   Exercised                                       -          -          (200)         7.17             -             -
   Cancelled                                  (5,700)      7.17       (90,040)        49.33      (257,540)        51.28
   Lapsed                                          -          -             -             -             -             -
------------------------------------------------------------------------------------------------------------------------
   Balance at the end of the year            312,460    $ 47.88       565,020       $ 53.68       583,840       $ 48.84
========================================================================================================================
Information about stock options outstanding:
--------------------------------------------------------------------------------------------------------------------------
                                                         Outstanding                              Exercisable
  Period    Range of Exercise Price --------------------------------------------------------------------------------------
                  (per share)             Weighted         Weighted         Number of       Weighted        Number of
                                          Average          Average           shares         Average          shares
                                       Exercise Price     remaining        arising out   Exercise Price    arising out
                                        (per share)    contractual Life    of options     (per share)      of options
-------------------------------------------------------------------------------------------------------------------------
2002    Rs.169.0-     US$3.46-        Rs205.0         2.22 years        322,380          Rs338.0         31,650
             Rs376.0      US$7.70         US$4.19                                            US$6.92

            Rs.724.0-    US$14.82-        Rs916.0         1.09 years         61,120          Rs946.0         21,620
             Rs973.0     US$19.92        US$18.75                                           US$19.37

          Rs.1,879.0     US$38.48-      Rs3,303.0         1.16 years        166,820        Rs3,312.0         32,603
          -Rs3,809.0     US$78.00        US$67.64                                           US$67.82

          Rs.5,892.0    US$120.66-      Rs6,304.0         0.85 years         33,520        Rs6,304.0         16,760
          -Rs8,603.0    US$176.18       US$129.10                                          US$129.10
-------------------------------------------------------------------------------------------------------------------------
The US$ numbers in the above table have been translated using the closing
exchange rate as at March 31, 2002, 1 US$ = Rs.48.83

                                      F-31
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Stock-based compensation plan of VisionCompass Inc.

In October 1999, VisionCompass Inc. ("VCI") Board of Directors adopted the 1999
Stock Option Plan (the "VCI-Plan"), which provides for the issuance of Incentive
Stock Options (ISOs) and nonqualified options to eligible individuals
responsible for the management, growth and financial success of VCI. As of March
31, 2000, there are 25,000,000 shares reserved for issuance under the VCI-Plan.
The option price is determined by the Board of Directors at the time the option
is granted, and, in the case of ISO's, in no event is less than the fair market
value of the VCI's shares at the date of grant, as determined by the Board. The
shares acquired through the exercise of options carries certain restrictions, as
specified in the VCI-Plan. Options generally vest over a four-year period and
expire ten years from the date of grant.

During the year ended March 31, 2000, 650,600 stock options with a weighted
average fair value of US$0.10 were granted with an exercise price of US$0.10 per
share. No options were exercised and 500 options were forfeited during this
period. As of March 31, 2000, no outstanding options are exercisable, and the
outstanding options have a weighted average remaining contractual life of 9.7
years.

During the year ended March 31, 2001, 652,600 stock options with a weighted
average fair value of US$0.10 were granted with an exercise price of US$0.10 per
share. No options were exercised and 383,300 options were forfeited during this
period. As of March 31, 2001, 130,025 outstanding options are exercisable, and
the outstanding options have a weighted average remaining contractual life of
9.27 years.

During the year ended March 31, 2002, no stock options were granted or exercised
and 849,400 options were forfeited. As of March 31, 2002, 17,500 outstanding
options are exercisable, and the outstanding options have a weighted-average
remaining contractual life of 8.53 years.

Additional Disclosure

Had compensation cost been recognized based on the fair value at the date of
grant in accordance with SFAS 123, the pro-forma amounts of Satyam's net
income/(loss) and earnings/(loss) per share would have been as follows for the
years ended March 31, 2000, 2001 and 2002 respectively.

                                      (US$ in thousands except per share data)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                       -----------------------------------------
                                            2000            2001            2002
--------------------------------------------------------------------------------

Net Income (loss)
        - As reported                    $(6,940)       $(27,912)       $25,892
        - Pro forma                         (351)        (29,933)          (276)
Earnings (loss) Per Share:
Basic and diluted
        - As reported                    $ (0.03)       $  (0.10)       $  0.08
        - Pro forma                            -           (0.11)         (0.01)
--------------------------------------------------------------------------------

Note: The pro forma disclosures shown above are not representative of the
effects on net income and earnings per share in future years.

The fair value of Satyam Computer Services' stock options used to compute pro
forma net income/(loss) and earnings/(loss) per share disclosures is the
estimated present value at grant date using the Black-Scholes option-pricing
model.

The following assumptions were used:
-----------------------------------------------------------------------------
                                                          Year ended March 31
                                    -----------------------------------------
                                          2000            2001           2002
-----------------------------------------------------------------------------

Dividend yield                            0.65%           0.51%          0.52%
Expected volatility                      90.00%          73.00%         75.00%
Risk-free interest rate                   9.87%          10.40%         10.32%
Expected term                             1.99            2.09           3.47
-----------------------------------------------------------------------------

                                      F-32
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

17.  Segmental Reporting

Satyam has adopted SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information" which requires disclosure of financial and descriptive
information about Satyam's reportable operating segments. The operating segments
reported below are the segments of Satyam for which separate financial
information is available and for which operating profit/loss amounts are
evaluated regularly by executive management in deciding how to allocate
resources and in assessing performance. Management evaluates performance based
on stand-alone revenues and net income for the companies in Satyam. Satyam's
reportable operating segments consist of the following three business groups:

..    IT services, providing a comprehensive range of services, including
     software development, packaged software integration, system maintenance and
     engineering design services. Satyam Computer Services provides its
     customers the ability to meet all of their information technology needs
     from one service provider. Satyam Computer Services' 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 Computer Services also assists its customers in making
     their existing computing systems accessible over the Internet.

..    Internet Services, providing consumer Internet access services, including
     dial-up Internet access, e-mail and web page hosting services. Infoway's
     corporate network and technology services include dial-up and dedicated
     Internet access, private network services, business-to-business electronic
     commerce and website development and hosting services. Infoway also
     operates an on-line portal, Sify.com (formerly satyamonline.com), and
     related content sites specifically tailored to Indian interests worldwide
     for news, personal finance, movies, music and automobiles.

..    Software Products, product development and creation of propriety software.

                                      F-33
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

Satyam's operating segment information for the years ended March 31, 2000, 2001
and 2002 were as follows:

Business Segments
(US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                                             IT Services       Internet        Software      Elimination    Consolidated
                                                               Services        Products                        totals
------------------------------------------------------------------------------------------------------------------------
For the year ended March 31, 2000
 Revenue - External customers                $   149,257      $  15,198               -               -     $   164,455
 Revenue - Inter-segment                           5,768            208               -      $   (5,976)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   155,025      $  15,406               -      $   (5,976)       $164,455
========================================================================================================================
 Operating income / (loss)                   $    18,356      $ (10,630)       $(10,802)     $    2,447     $      (629)
 Net income / (loss)                               9,787         (5,713)        (11,014)              -          (6,940)
 Segment assets                                  183,283        243,551           1,758         (16,033)        412,559
 Depreciation and amortization                    19,616          5,600              52               -          25,268
 Capital expenditures for long-lived assets       22,389         20,003             517               -          42,909
------------------------------------------------------------------------------------------------------------------------

 For the year ended March 31, 2001
 Revenue - External customers                $   273,467      $  36,840               -               -     $   310,307
 Revenue - Inter-segment                           3,547          2,148             213          (5,908)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   277,014      $  38,988        $    213      $   (5,908)    $   310,307
========================================================================================================================
 Operating income / (loss)                   $    24,230      $ (56,994)       $(13,878)              -     $   (46,642)
 Net income / (loss)                              14,765        (28,804)        (13,873)              -         (27,912)
 Segment assets                                  257,143        246,766           2,243      $  (25,053)        481,099
 Depreciation and amortization                    24,374         29,695             424               -          54,493
 Capital expenditures for long-lived assets       42,296         41,934             926               -          85,156
------------------------------------------------------------------------------------------------------------------------

 For the year ended March 31, 2002
 Revenue - External customers                $   377,321      $  36,585        $    585               -     $   414,491
 Revenue - Inter-segment                             618          2,806             284          (3,708)              -
------------------------------------------------------------------------------------------------------------------------
 Total Revenues                              $   377,939      $  39,391        $    869      $   (3,708)    $   414,491
========================================================================================================================
 Operating income / (loss)                   $    68,030      $(128,913)       $ (2,630)              -     $   (63,513)
 Net income / (loss)                             109,230        (80,708)         (2,630)              -          25,892
 Segment assets                                  463,934         83,047             754         (32,233)        515,502
 Depreciation, amortization and                   29,319        106,614             385               -         136,318
 impairment of goodwill
 Capital expenditures for long-lived assets       30,265            400          (1,001)              -          29,664
------------------------------------------------------------------------------------------------------------------------
The capital expenditures for long-lived assets in the above table represent the
additions to premises and equipment (fixed assets) of each segment.

Geographic Information

The revenues that are attributable to countries based on location of customers
and long-lived assets are as follows:
(US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                         Year ended March 31, 2000      Year ended March 31, 2001       Year ended March 31, 2002
------------------------------------------------------------------------------------------------------------------------
                        Revenues from    Long-lived     Revenues from   Long-lived     Revenues from    Long-lived
                          external         assets         external        assets         external        assets
                          customers                       customers                      customers
------------------------------------------------------------------------------------------------------------------------
United States             $123,262       $  7,585        $224,315       $  3,715        $298,458        $  4,280
 Europe                       8,493             68          20,593            127          39,202             657
 India                       16,473        134,959          31,467        238,958          32,089         132,428
 Japan                       10,364            344           7,327            262           9,152             348
 Rest of the World            5,863            194          26,605            164          35,590             491
------------------------------------------------------------------------------------------------------------------------
 Total                     $164,455       $143,150        $310,307       $243,226        $414,491        $138,204
========================================================================================================================
The long-lived assets in the above table represent premises and equipment and
intangible assets of each segment. Transfers between reportable business or
geographic segments are made either at cost or at arms-length prices.

                                      F-34
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

18.   Concentration of Credit Risk

Accounts receivable balances are typically unsecured and are derived from
revenues earned from customers primarily located in the United States. Satyam
monitors the creditworthiness of its customers to which it grants credit terms
in the normal course of business. During the year ended March 31, 2000, revenues
generated from the top two customers accounted for 14.2% and 11.9% of the total
revenues, respectively. During the year ended March 31, 2001, revenues generated
from the top two customers accounted for 15.76% and 8.11% of the total revenues,
respectively. During year ended March 31, 2002, revenues generated from the top
two customers accounted for 18.26% and 6.93% of the total revenues,
respectively. Total revenue from Satyam's top ten customers accounted for 51.9%,
46.34% and 48.95% of the total revenues during the years ended March 31, 2000,
2001 and 2002 respectively.

19.   Related Party Transactions

Related party transactions comprise of
(US$ in thousands)
------------------------------------------------------------------------------------------------------------------------
                                                                                                    Year ended March 31
                                                                                        2000         2001          2002
------------------------------------------------------------------------------------------------------------------------
Infrastructure and other services provided by Satyam during the year to
     Satyam GE                                                                          $539        $  461        $  142
     Satyam Venture                                                                        -         1,031           928
     Cricinfo                                                                              -             -            30
     Refco-SIFY                                                                            -           492           973
     Placements.com                                                                        -             -            75
------------------------------------------------------------------------------------------------------------------------
     Total                                                                              $539        $1,984        $2,148
========================================================================================================================

 Software services provided to Satyam during the year by
     Satyam GE                                                                          $182             -             -
     Satyam Venture                                                                        -        $  165             -
------------------------------------------------------------------------------------------------------------------------
     Total                                                                              $182        $  165             -
========================================================================================================================

 Interest received by Satyam during the year from
     Cricinfo                                                                              -             -        $   47
------------------------------------------------------------------------------------------------------------------------
     Total                                                                                               -        $   47
========================================================================================================================
The balances receivable from and payable to related parties are as follows:
(US$ in thousands)
-----------------------------------------------------------------------------------------------------------------------
                                                                                                      As of  March 31
                                                                                                  2001           2002
-----------------------------------------------------------------------------------------------------------------------
Advance towards investment in associated companies
     Refco-SIFY                                                                                       -        $  925
-----------------------------------------------------------------------------------------------------------------------
     Total                                                                                            -        $  925
=======================================================================================================================

 Amount due from/(to) associated companies
     Satyam GE                                                                                   $  631        $  189
     Satyam Venture                                                                                 896           267
     CA Satyam                                                                                        -          (287)
     Cricinfo                                                                                         -            31
     Refco-SIFY                                                                                       -            27
     Placements.com                                                                                   -            53
-----------------------------------------------------------------------------------------------------------------------
     Total                                                                                       $1,527        $  280
=======================================================================================================================
F-35
Satyam Computer Services Limited
Notes to the Consoldiated Financial Statements

20.   Contingencies and Commitments

a)    Bank guarantees

The bank guarantees outstanding are US$1,012 thousands and US$1,638 thousands as
of March 31, 2001 and 2002 respectively. Bank guarantees are generally provided
to government agencies, primarily to the Telegraph Authorities as security for
compliance with and performance of terms and conditions contained in the
Internet Service Provider license granted to Satyam and Videsh Sanchar Nigam
Limited, towards the supply and installation of an electronic commerce platform
respectively. Satyam also provides guarantees to Excise and Customs authorities
for the purposes of maintaining a bonded warehouse. These guarantees may be
revoked by the governmental agencies if they suffer any losses or damage through
the breach of any of the covenants contained in the agreements.

b)    Capital commitments

Capital commitments comprise of:
(US$ in thousands)
-------------------------------------------------------------------------------------------------------------
                                                                                             As of  March 31
                                                                                -----------------------------
                                                                                         2001           2002

-------------------------------------------------------------------------------------------------------------
Contractual commitments for capital expenditure                                       $ 8,565         $3,601
 Commitment towards investment in equity capital under joint venture                     2,645          1,000
-------------------------------------------------------------------------------------------------------------
 Total                                                                                 $11,210         $4,601
=============================================================================================================
Contractual commitments for capital expenditures are relating to acquisition of
premises, equipment and new network infrastructure.

c)    Operating lease

Satyam has certain operating leases for office premises and guesthouses. Most of
the operating leases provide for increased rent through increases in general
price levels. Rental expense for operating leases amounted to US$3,971 thousand,
US$7,626 thousands and US$9,243 thousands for the year ended March 31, 2000,
2001 and 2002 respectively.

Future minimum annual lease commitments, including those leases for which
renewal options may be exercised as of March 31, 2002 are US$201 thousands in
fiscal 2003, US$200 thousands in fiscal 2004, US$189 thousands in fiscal 2005,
US$188 thousands in fiscal 2006, US$123 thousands in fiscal 2007 and US$156
thousands thereafter.

                                      F-36
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

21.      Shareholders' Equity and Dividends

a)       Issuance of common stock

In May 2001, Satyam Computer Services listed its American Depository Shares
("ADS") for trading on the New York Stock Exchange ("NYSE" ticker symbol "SAY").
Satyam Computer Services issued 16,675,000 ADS (representing 33,350,000 equity
shares of Rs. 2 each fully paid up) at a price of US$9.71 per ADS, including ADS
issued on exercise of 15% Greenshoe option by the Underwriters. Each ADS
represents two equity shares of Rs 2 each, fully paid up.

b)       Dividends

Final dividends proposed by the Board of Directors are payable when formally
declared by the shareholders, who have the right to decrease but not increase
the amount of the dividend recommended by the Board of Directors. Interim
dividends are declared by the Board of Directors without the need for
shareholders' approval. With respect to equity shares issued by Satyam Computer
Services during a particular fiscal year, cash dividends declared and paid for
such fiscal year generally will be prorated from the date of issuance to the end
of such fiscal year. Satyam Computer Services accrues dividends payable and pays
them after obtaining shareholders' approval.

Dividends payable to equity shareholders are based on the net income available
for distribution as reported in Satyam Computer Services unconsolidated
financial statements prepared in accordance with Indian GAAP. As such, dividends
are declared and paid in Indian Rupees. The net income in accordance with U.S.
GAAP may, in certain years, either not be fully available or will be
additionally available for distribution to equity shareholders. Under Indian
GAAP the net income available for distribution to equity shareholders was
US$29,954 thousands, US$103,797 thousands and US$92,029 thousands for the years
ended March 31, 2000, 2001 and 2002 respectively.

On June 29, 2001, shareholders authorized payment of a cash dividend of US$0.009
per share amounting to US$2,918 thousands to shareholders of record on June 25,
2001. The dividend was paid on July 10, 2001. On October 24, 2001, the Board of
Directors of Satyam Computer Services authorized payment of a cash dividend of
US$0.01 per share amounting to US$3,514 thousands to shareholders of record on
November 9, 2001. The dividend was paid on October 29, 2001.

Under the Indian Companies Act, dividends may be paid out of the profits of a
company in the year in which the dividend is declared or out of the
undistributed profits of previous fiscal years. Before declaring a dividend
greater than 10.0% of the par value of its equity shares, a company is required
to transfer to its reserves a minimum percentage of its profits for that year,
ranging from 2.5% to 10.0%, depending on the dividend percentage to be declared
in such year. Dividends declared, distributed or paid by an Indian corporation
are subject to a dividend tax of 10.2%, including the presently applicable
surcharge, of the total amount of the dividend declared, distributed or paid.
This tax is not paid by shareholders nor is it a withholding requirement, but
rather it is a direct tax payable by the corporation.

22.      Balance sheet and income statement schedules

a)       Cash and Cash Equivalents

The cash and cash equivalents consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                 As of March 31
                                                    ----------------------------
                                                           2001           2002
--------------------------------------------------------------------------------

  Cash and bank balances                                $37,130       $ 57,400
  Cash equivalents                                       28,938        186,054
--------------------------------------------------------------------------------
  Cash and cash equivalents                             $66,068       $243,454
================================================================================

Cash equivalents include deposits of US$261 thousands and US$448 thousands as of
March 31, 2001 and 2002, respectively, placed in "No-charge-no-lien" accounts as
security towards performance guarantees issued by Satyam's bankers on Satyam's
behalf. Cash and Cash equivalents also include a sum of US$ Nil and US$2,048
thousands as of March 31, 2001 and 2002 respectively, under lien with Satyam's
bankers against guarantees issued by the bank on behalf of Satyam. Satyam cannot
utilize these amounts until the guarantees are discharged or revoked.

                                      F-37
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

b)       Accounts Receivable

Accounts receivable consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                          2001           2002
--------------------------------------------------------------------------------

  Customers (trade)                                    $95,444        $97,564
  Related parties                                          650            140
  Less: allowance for doubtful debts                    (3,530)        (9,495)
--------------------------------------------------------------------------------
  Accounts receivable                                  $92,564        $88,209
================================================================================

The allowance for doubtful debts is established at amounts considered to be
appropriate based primarily upon Satyam's past credit loss experience and an
evaluation of potential losses on the outstanding receivable balances.

c)       Inventory

Inventory consists of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                         2001            2002
--------------------------------------------------------------------------------

  CD-ROMs                                              $   153        $    82
  Communication hardware                                 2,010            459
  Application software                                     126             96
  Others                                                    70             96
  Less: Valuation Allowance                                 (9)            (8)
--------------------------------------------------------------------------------
  Inventory                                            $ 2,350        $   725
================================================================================

d)       Prepaid Expenses and Other Receivables

Prepaid expenses and other receivables consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                As of March 31
                                                       -------------------------
                                                         2001            2002
--------------------------------------------------------------------------------

  Prepaid expenses                                     $ 5,922        $ 4,208
  Advance for expenses                                  13,089          6,064
  Loans and advance to employees                         2,493          2,238
  Other advances and receivables                         1,052            929
--------------------------------------------------------------------------------
  Prepaid expenses and other receivables               $22,556        $13,439
================================================================================

Other advances and receivables includes the current portion of the restricted
cash in the form of deposits placed with banks to obtain bank guarantees
amounted to US$15 thousands and US$ Nil as of March 31, 2001 and 2002
respectively. Prepaid expenses principally include the unexpired portion of
annual rentals paid to the Department of Telecommunications, Ministry of
Communications, and the Government of India for use of leased telecommunication
lines, Satellite link charges, and insurance premiums.

                                      F-38
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

e)       Other Assets

Other assets consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                  As of March 31
                                            ------------------------------------
                                                             2001         2002
--------------------------------------------------------------------------------

    Rent and maintenance deposits                         $ 3,570      $ 3,899
    Telephone and other deposits                            2,190        1,335
    Loans and advances to employees due after one year      1,918          673
    Deferred taxes on income                                1,371        1,640
    Others                                                  3,906        4,151
    Less: Allowance for doubtful deposits                    (959)      (1,396)
--------------------------------------------------------------------------------
    Other Assets                                          $11,996      $10,302
================================================================================

Others include the non-current portion of the restricted cash in the form of
deposits placed with banks to obtain bank guarantees amounted to US$140
thousands and US$158 thousands as of March 31, 2001 and 2002 respectively.
Telephone and other deposits are primarily attributable to deposits with
government organizations principally to obtain leased telephone lines and
electricity supplies and advance payments to vendors for the supply of goods and
rendering of services.

f)       Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of:

                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                                  As of March 31
                                             -----------------------------------
                                                            2001          2002
--------------------------------------------------------------------------------

    Accrued expenses                                     $20,142       $24,148
    Unclaimed dividend                                       335           424
    Provision for taxation                                 6,707         6,770
    Provision for gratuity                                   854         1,502
    Deferred taxes on income                                   -         1,165
    Others                                                 5,870         5,731
--------------------------------------------------------------------------------
    Accrued expenses and other current liabilities       $33,908       $39,740
================================================================================

g)       Other Income

Other income consists of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                         ---------------------------------------
                                              2000          2001           2002
--------------------------------------------------------------------------------

    Gain on foreign exchange transactions   $1,072        $5,816        $10,813
    Others                                     399           990          1,355
--------------------------------------------------------------------------------
    Other income                            $1,471        $6,806        $12,168
================================================================================

h)       Other expenses

Other expenses consist of:
                                                              (US$ in thousands)
--------------------------------------------------------------------------------
                                                             Year ended March 31
                                     -------------------------------------------
                                              2000          2001           2002
--------------------------------------------------------------------------------

    (Profit)/loss on sale of equipment        $ 72          $ 43          $ (59)
    Miscellaneous expenses                     346           301            137
--------------------------------------------------------------------------------
    Other expenses                            $418          $344          $  78
================================================================================

                                      F-39
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements

23.      Executive employment arrangements

Infoway has entered into Executive Employment Agreements (`the agreements') with
a few executive employees which provide for certain payment in connection with
termination of employment after a change of control or for other reasons (which
are defined in the agreements). The agreements were entered on February 20, 2002
and expire after three years. The aggregate terminal benefits payable to the
employees under such agreement amounts to US$333 thousand.

Further, the senior executives had been provided loans totaling to US$819
thousands in fiscal 2001 repayable with interest on December 31, 2002. In
consideration of the executives agreeing to continue in the employment of
Infoway, Infoway agreed to pay the executives additional compensation sufficient
to repay the loan and interest. The additional compensation is reduced by the
value, as on the date of such additional compensation, of specified market
liquid stock options granted to the executives before December 31,2000 and
vested until that date. Such additional cash compensation together with interest
is being accrued pro-rata and is amortized over the remaining service period of
approximately 10 months. In addition due to the modification in the terms of the
stock options these options are accounted in accordance with EITF 00-23 as a
variable plan. No compensation charge with respect to the variable plan is
recognized as the options are under water.

24. Legal proceedings

On November 5, 2001, a securities class action lawsuit was filed in the United
States District Court for the Southern District of New York on behalf of all
persons who acquired Infoway's ADSs between October 20, 1999 and December 6,
2000. Infoway, certain of the executive officers of Infoway, and certain
underwriters involved in Infoway's initial public offering of ADSs are named as
defendants in the complaint. This complaint alleges that certain of the
underwriters of the initial public offering violated the federal securities laws
by failing to disclose that they had solicited and received undisclosed
commissions from, and entered into undisclosed arrangements with, certain
investors who purchased ADSs in the initial public offering, and had entered
into undisclosed arrangements with certain investors whereby the underwriters
allocated shares in the initial public offering to those investors in exchange
for their agreement to purchase Infoway's ADSs in the after-market at
pre-determined prices. The complaint also alleges that the defendants violated
the federal securities laws by issuing a registration statement in connection
with the initial public offering that contained material misstatements and/or
omissions because it did not disclose that these allegedly undisclosed
arrangements had occurred. The complaint seeks damages on behalf of all those
who purchased or otherwise acquired Infoway's ADSs during the period covered by
the complaint. The deadline for defendants to respond to the complaint has not
yet expired. Infoway believes it has meritorious defenses and intend to defend
this action vigorously. However, Infoway could be forced to incur material
expenses in the litigation, and in the event there is an adverse outcome,
Infoway's business could be harmed.

Infoway's subsidiary IndiaWorld Communications is involved in a pending
litigation relating to the IndiaWorld trademark in Federal Court in San Diego,
California with a third party located in the United States. IndiaWorld
Communications commenced the lawsuit alleging, among other things, that the
third party fraudulently registered and used the IndiaWorld trademark, and
committed copyright infringement and misappropriation of content of IndiaWorld
Communications' website. The third party filed a counterclaim against Infoway
and IndiaWorld Communications alleging, among other things, that the activities
of IndiaWorld Communications infringe a United States trademark for the term
"Indiaworld" and associated logos and trade marks purportedly owned by this
third party, and that the third party has an ownership interest in the
underlying assets of IndiaWorld Communications. On August 9, 2001, the Court
granted Infoway's motion to dismiss Infoway from this case because the Court
found that it did not have personal jurisdiction over Infoway. IndiaWorld
Communications is still involved in the case. Infoway has been advised by the
prior owners of IndiaWorld Communications that no infringement or
misappropriation has taken place. Infoway's contract with the prior owners of
IndiaWorld Communications includes an indemnity for past infringement or
misappropriation. Infoway and IndiaWorld Communications have also been contacted
by a party that alleges, among other things, that he is entitled to an equity
ownership in IndiaWorld Communications. Infoway believes that this claim is also
covered by the contractual indemnity provided by the prior owners of IndiaWorld
Communications. Nonetheless, any dispute such as those described above creates
uncertainty as to the possible outcome, including whether or not the indemnity
will be effective in protecting Infoway, and also could divert management time
and attention away from business. An adverse outcome that is not indemnified
could be material.

The charges for international gateways and other services presently being
provided by VSNL are the subject of a dispute pending before the TRAI and the
Telecom Disputes Settlement and Appellate Tribunal between VSNL and private
Internet service providers, including our company. VSNL has priced these
services at levels, which Infoway believes are inconsistent with the terms and
conditions on which VSNL has secured the bandwidth for its international
gateways. The Telecom Disputes Settlement and Appellate Tribunal has remanded
the matter back to TRAI for denovo consideration. The matter is pending before
TRAI. This is a pending matter and no decision has been announced. Adverse
resolution of this dispute could have a material impact on Infoway's business.
Infoway is party to additional legal actions arising in the ordinary course of
business. Based on information available to Infoway as of March 31, 2002,
Infoway believes that it has adequate legal defenses or insurance coverage for
these actions and that the ultimate outcome of these actions will not have a
material adverse effect on Infoway. Based on opinion received from legal
counsel, management believes that an adverse outcome in respect of the above is
not anticipated.

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