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<TITLE>SATYAM COMPUTER SERVICES LTD.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, DC 20549</B>
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<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934</B></TD>
</TR>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B>

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    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the fiscal year ended March&nbsp;31, 2007</B>
</B>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OR</B>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>Date of event requiring this shell company report </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Commission file number 001-15190</B>

</DIV>
<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact Name of Registrant as Specified in Its Charter)</DIV>


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    <TD align="center" valign="top"><B>N/A</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Republic of India</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Translation of Registrant&#146;s Name Into English)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Jurisdiction of Incorporation or Organization)</TD>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Satyam Technology Center<BR>
Bahadurpallay Village<BR>
Qutbullapur Mandal, R.R. District &#151; 500855<BR>
Hyderabad, Andhra Pradesh<BR>
India<BR>
(91)&nbsp;40 3063 3535<BR>
(Address and Telephone Number of Principal Executive Offices)

</DIV>

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</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(b) of the Act:<BR>
</DIV>


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    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title of Each Class
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of Each Exchange on Which Registered</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">American Depositary Shares,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">The New York Stock Exchange</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">each represented by two equity shares<B>,</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">par value Rs. 2.0 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(Title of Class)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(g) of the Act:<BR>
None<BR>
(Title of Class)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act<BR>
None<BR>
(Title of Class)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;667,196,009 equity shares, including 130,209,472 underlying equity shares for 65,104,736
ADSs, were issued and outstanding as of March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
</DIV>
<DIV align="center" style="font-size: 10pt">Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No <FONT face="Wingdings">&#111;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934. Yes <FONT face="Wingdings">&#111;</FONT>
 No <FONT face="Wingdings">&#254;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note &#150; Checking the box above will not relieve any registrant required to file reports
pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under
those Sections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. Yes
<FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated
filer&#148; in Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>
<DIV align="center" style="font-size: 10pt">Large accelerated filer <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer <FONT face="Wingdings">&#111;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>
<DIV align="center" style="font-size: 10pt">Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Item&nbsp;18 <FONT face="Wingdings">&#254;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this report is an annual report, indicate by check mark if the registrant is a shell
company (as defined in Rule&nbsp;12b-2 of the Exchange Act). Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>


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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS<BR>
SATYAM COMPUTER SERVICES LIMITED</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#101">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">4</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#102">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">4</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#103">ITEM 3. KEY INFORMATION</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">4</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#104">ITEM 4. INFORMATION ON THE COMPANY</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">22</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#105">ITEM 4A. UNRESOLVED STAFF COMMENTS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">36</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#106">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">36</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#107">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">60</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#108">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">69</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#109">ITEM 8. FINANCIAL INFORMATION</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">70</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#110">ITEM 9. THE OFFER AND LISTING</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">70</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#111">ITEM 10. ADDITIONAL INFORMATION</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">72</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#112">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">89</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#113">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">90</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#114">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">90</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#115">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">90</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#116">ITEM 15. CONTROLS AND PROCEDURES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">90</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#117">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">91</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#118">ITEM 16B. CODE OF ETHICS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">91</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#119">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">91</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#120">ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">92</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#121">ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">92</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#122">ITEM 17. FINANCIAL STATEMENTS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">92</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#123">ITEM 18. FINANCIAL STATEMENTS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">93</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#124">ITEM 19. EXHIBITS</A></DIV></TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="right">93</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv4w5.htm">EX-4.5 ASSOCIATE STOCK OPTIONS PLAN - RSUs.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv8w1.htm">EX-8.1 LIST OF SIGNIFICANT SUBSIDIARIES</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv12w1.htm">EX-12.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv12w2.htm">EX-12.2  CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANE OXLEY ACT OF 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv13w1.htm">EX-13.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv13w2.htm">EX-13.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92991exv15w1.htm">EX-15.1 CONSENT OF PRICE WATERHOUSE, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.</A></FONT></TD></TR>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unless otherwise stated in this Annual Report on Form 20-F, or &#147;Annual Report,&#148; or unless the
context otherwise requires, references in this Annual Report to &#147;we,&#148; &#147;our,&#148; &#147;us,&#148; &#147;Satyam,&#148;
&#147;Satyam Computer Services&#148; and &#147;our company&#148; are to Satyam Computer Services Limited and its
consolidated subsidiaries and other consolidated entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In this Annual Report, references to &#147;US&#148; or the &#147;United States&#148; are to the United States of
America, its territories and its possessions. References to &#147;India&#148; are to the Republic of India.
References to &#147;$,&#148; &#147;Dollars&#148; or &#147;U.S. dollars&#148; are to the legal currency of the United States, and
references to &#147;Rs.,&#148; &#147;rupees&#148; or &#147;Indian rupees&#148; are to the legal currency of India. References to
a particular &#147;fiscal&#148; year are to our fiscal year ended March&nbsp;31 of such year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&nbsp;30, 2007 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&nbsp;30, 2007 was Rs. 43.10 per
$1.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Information contained in our websites, including our corporate website, www.satyam.com, is not part
of this Annual Report.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have included statements in this Annual Report which contain words or phrases such as
&#147;may,&#148; &#147;will, &#148; &#147;will likely result,&#148; &#147;believe,&#148; &#147;expect,&#148; &#147;will continue,&#148; &#147;anticipate,&#148;
&#147;estimate,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;contemplate,&#148; &#147;seek to,&#148; &#147;future,&#148; &#147;objective,&#148; &#147;goal,&#148; &#147;project,&#148;
&#147;should&#148; and similar expressions or variations of such expressions, that are &#147;forward-looking
statements.&#148; 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 &#147;Item&nbsp;3. Key Information&#151;Risk
Factors.&#148; &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148; and elsewhere in this Annual
Report. You are cautioned not to place undue reliance on these forward-looking statements, which
reflect management&#146;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 periodic reports and other
documents filed with the United States Securities and Exchange Commission, or SEC, from time to
time. Our filings with the SEC are available on its website, www.sec.gov.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 &#147;Risk Factors&#148; section.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are not required to update any of the forward-looking statements after the date of this Annual
Report to conform such statements to actual results or to reflect events or circumstances that
occur after the date the statement is made or to account for unanticipated events.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PART I
</DIV>

<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. KEY INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Selected Financial Data</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">You should read the following selected consolidated historical financial data in conjunction with
our financial statements and the related notes and &#147;Item&nbsp;5. Operating and Financial Review and
Prospects&#148; included elsewhere in this Annual Report. The statement of operations data for the five
years ended March&nbsp;31, 2007 and the balance sheet data as of March&nbsp;31,2007, 2006, 2005, 2004, and
2003 are derived from our consolidated audited financial statements including the notes, which have
been prepared and presented in accordance with U.S. GAAP. As of December&nbsp;9, 2002, we ceased to hold
a controlling interest in Sify Limited, or Sify, and subsequently changed the method of accounting
for our interest in Sify from the consolidated accounting method to the equity method. On May&nbsp;12,
2005, we acquired a 75% interest in Citisoft Plc and on October&nbsp;1, 2005, we acquired 100% of the
shares of Knowledge Dynamics Pte Ltd. On November&nbsp;9, 2005, we sold our entire 31.6% stake in Sify
as a result of which Sify ceased to be our associate company. Further during June&nbsp;2006 we acquired
the balance 25% interest in Citisoft Plc. As a result of the above, financial data as of March&nbsp;31,
2007 and for the year ended March&nbsp;31, 2007 are not comparable to financial data as of and for the
years ended March&nbsp;31, 2006, 2005, 2004 and 2003.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(dollars in millions, except per share and per ADS data, or as stated otherwise)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Statement of operations data</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">459.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">1,461.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">566.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">459.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(937.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(689.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(506.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(343.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(275.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and
administrative expenses
<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(232.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(124.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(116.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment of goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment of other
non-marketable investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversal of put option charge</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(232.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(124.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale of shares in
associated companies/ other
investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(dollars in millions, except per share and per ADS data, or as stated otherwise)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain/(loss) on foreign
exchange transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income/(expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income/(loss) before income
taxes, minority interest and
equity in earnings/ (loss)&nbsp;of
associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before equity in
earnings/(losses) of
associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/ (losses)
of associated companies, net
of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">111.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">82.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year Ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(dollars in millions,
except per share and per ADS data, or as stated otherwise)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Earnings (loss)&nbsp;per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average equity
shares used in computing
earnings per shares (in
millions):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">652.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">626.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">623.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">666.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">662.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">634.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average equity
shares used in computing
earnings per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">320.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">313.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">333.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">323.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividend per equity share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash dividend per ADS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Inclusive of stock-based compensation expense of
$12.8&nbsp;million,
$Nil, $0.8&nbsp;million, $0.9&nbsp;million and $1.6&nbsp;million
in fiscal 2007, 2006, 2005, 2004 and 2003 respectively.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Inclusive of stock-based compensation expenses of $2.9
million, $0.8&nbsp;million, $1.1&nbsp;million, $0.8&nbsp;million and $2.9&nbsp;million
during the years ended March&nbsp;31, 2007, 2006, 2005, 2004 and
2003 respectively.</TD>
</TR>

</TABLE>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As at March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(dollars in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance sheet data</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">292.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">86.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">62.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">767.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">411.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">259.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,624.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,181.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">884.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">561.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total long-term debt, excluding current
portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock of subsidiary<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,371.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">994.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">767.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">633.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital stock<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">587.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">481.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">449.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">421.6</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD width="1%">&nbsp;</TD>
    <TD align="left">In fiscal 2007, 50% of preferred stock of subsidiary has become mandatorily
redeemable at the target date of May&nbsp;21, 2007 and the balance 50% got converted into equity
shares of Nipuna based on the terms of the existing subscription agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Includes common stock and additional paid-in capital but excludes shares held by
Satyam Associate Trust or SC Trust</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The following factors</I><B><I>, </I></B><I>together with the other information contained in this Annual Report and
other reports and documents submitted to, or filed with, the SEC, could affect our results. If any
of the following risks actually occur, our company could be seriously harmed, and the market price
of our ADSs could decline.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Overall Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our revenues and profitability are difficult to predict and can vary significantly from period to
period which could cause our share price to decline significantly.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our revenues and profitability have grown rapidly in recent years and may fluctuate
significantly in the future from period to period. Therefore, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and should not be relied
upon as an indication of our future performance. The quarterly fluctuation of revenues is primarily
because we derive our revenues 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 several
people for only 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. Furthermore,
increasing wage pressures, employee attrition, pressure on billing rates, the time and expense
needed to train and productively utilize new employees and changes in the proportion of services
rendered offshore can affect our profitability in any period. There are also a number of factors,
other than our performance, that are not within our control that could cause fluctuations in our
operating results from period to period. These include (i)&nbsp;the duration of tax holidays or tax
exemptions and the availability of other Government of India or GoI incentives; (ii)&nbsp;currency
fluctuations, particularly when the rupee appreciates in value against the U.S. dollar, since the
majority of our revenues are in U.S. dollars and a significant part of our costs are in rupees; and
(iii)&nbsp;other general economic and political factors. 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. If this were to occur,
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the share price of our equity shares and our ADSs would likely decline significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Any inability to manage our rapid growth could disrupt our business and reduce our profitability.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have
experienced significant growth in recent periods. In fiscal 2007, our total revenues
increased by 33.3% as compared to fiscal 2006, and in fiscal 2006, our total revenues increased by
38.1% as compared to fiscal 2005. As of March&nbsp;31, 2007, we had 39,018 employees, whom we refer to
as associates, worldwide as compared to 28,624 associates as of March&nbsp;31, 2006. In addition, we are
continuing our geographical expansion. We have offshore facilities in India and overseas facilities
located in Australia, Canada, China, Hungary, Japan, Malaysia, Singapore, United Arab Emirates,
United Kingdom and United States. In addition, we have sales and marketing offices located in
Canada, Germany, Italy, the Netherlands, Spain, Sweden, United Kingdom and United States and sales
and marketing offices located in the rest of the world. We have
incurred $81.5&nbsp;million of capital expenditures in fiscal
2007 and in fiscal 2008 we expect to incur capital expenditure of approximately $100.0&nbsp;million to finance
the construction of new facilities and the expansion of our existing facilities in our offshore
centers and to establish offsite centers outside of India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We expect our growth to place significant demands on our management and other resources and to
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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>recruiting and retaining sufficiently skilled technical, marketing and management personnel</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>providing adequate training and supervision to maintain our high quality standards;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>preserving our culture and values and our entrepreneurial environment; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developing and improving our internal administrative infrastructure, particularly our
financial, operational, communications and other internal systems</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our inability to manage our growth effectively could disrupt our business and reduce our
profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The current economic environment, pricing pressure and rising wages in India have negatively
impacted our revenues and operating results.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Spending
on information technology, or IT, in most parts of the world has been increasing after a two-year decreasing
trend due to a challenging global economic environment. We do experience pricing pressures from our
customers, which can negatively impact our operating results. If economic growth slows, our
utilization and billing rates for our associates could be adversely affected which may result in
lower gross and operating profits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Wage costs in India, including in the IT services industry, have historically been significantly
lower than wage costs in the United States and Europe for comparably skilled professionals, which
has been one of our competitive advantages. However, large companies are establishing offshore
operations in India, resulting in wage pressures for Indian companies, which may prevent us from
sustaining this competitive advantage and may negatively affect our profit margins. Wages in India
are increasing at a faster rate than in the United States, which could result in increased cost of
IT professionals, particularly project managers and other mid-level professionals. We may need to
increase the levels of our employee compensation more rapidly than in the past to remain
competitive with other employers, or seek to recruit in other low labor cost jurisdictions to keep
our wage costs low. Compensation increases may result in a material adverse effect on our financial
performance.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our business will suffer if we fail to anticipate and develop new services and enhance existing
services in order to keep pace with rapid changes in technology and the industries on which we
focus.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The IT services market is characterized by rapid technological change, evolving industry standards,
changing customer preferences and new product and service introductions. Our future success will
depend on our ability to anticipate these advances and develop new product and service offerings to
meet customer needs and complement our offerings of end-to-end IT services. For example, we have
invested significant resources in research and development efforts, such as in our enterprise
business solution laboratory and grid computing laboratory, in order to continually develop
capabilities to provide new services to our customers. Should we fail to develop such capabilities
on a timely basis to keep pace with the rapidly changing IT market or if the services or
technologies that we develop are not successful in the marketplace, our business and profitability
will suffer and it is unlikely that we would be able to recover our research and development costs.
Moreover, products, services or technologies that are developed by our competitors may render our
services non-competitive or obsolete.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our revenues are highly dependent on customers primarily located in the United States and customers
concentrated in certain industries, and economic slowdowns or factors that affect the economic
health of the United States and our customers&#146; industries may affect our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2007, fiscal 2006 and fiscal 2005, approximately 63.2%, 64.9%, and 68.3% respectively, of
our total revenues were derived from the United States. For the same periods, we earned 27.0%,
28.6%, and 29.2% of our IT revenues from the manufacturing industry and 17.5%, 18.5%, and 17.8% of
our IT revenues from the banking and finance industry respectively.
If the growth in the United States does not continue, our customers may reduce or postpone their
technology spending significantly, which may in turn lower the demand for our services and
negatively affect our revenues and profitability. Further, any significant decrease in the growth
of the manufacturing or banking and finance industries, or significant consolidation in these
industries, or other industry segments on which we focus, may reduce the demand for our services
and negatively affect our revenues and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Recently, some countries and organizations have expressed concerns about a perceived
association between offshore outsourcing and the loss of jobs. In the United States, in particular,
there has been increasing political and media attention on these issues following the growth of
offshore outsourcing. Any changes in existing laws or the enactment of new legislation restricting
offshore outsourcing may adversely impact our ability to do business in the United States, which is
the largest market for our services. In the recent past, some U.S. states have proposed legislation
restricting government agencies from outsourcing their back office processes and IT solutions work
to companies outside the United States or have enacted laws that limit or to discourage such
outsourcing. Such laws restrict our ability to do business with U.S. government- related entities.
It is also possible that U.S. private sector companies working with these governmental entities may
be restricted from outsourcing projects related to government contracts or may face disincentives
if they outsource certain projects. Any of these events could adversely affect our revenues and
profitability. Similarly, legislation came into effect in the United Kingdom in April&nbsp;2006
requiring offshore outsourcing providers in certain circumstances to compensate U.K. employees
for loss of jobs arising from the offshore migration of business processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We face intense competition in the IT services and BPO markets which could prevent us from
attracting and retaining customers and could reduce our revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The markets for IT services and business process outsourcing, or BPO, are rapidly evolving and
highly competitive, and we expect that competition will continue to intensify. We face
competition in India and elsewhere from a number of companies, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>divisions of large multinational technology firms such as Hewlett-Packard and IBM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM Global Services; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy Services Limited and Wipro Limited</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also compete with software firms such as Oracle and SAP, service groups of computer equipment
companies, in-house IT
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">departments of large corporations, programming companies and temporary staffing firms. Nipuna
Services Limited or Nipuna, our majority-owned subsidiary, through which we provide BPO services, faces competition from firms
like Infosys BPO Limited formerly known as Progeon Limited and Wipro BPO, formerly known as Wipro
Spectramind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, we have agreed not to compete with Nipuna as part of the investor rights and
securities subscription agreements which we have entered into with Nipuna&#146;s two other investors.
Pursuant to these agreements, we and our affiliates are restricted from engaging in activities that
are or could directly or indirectly be competitive with the business of Nipuna. Such activities
include among others providing BPO services, soliciting existing or prospective customers of Nipuna
to obtain the services offered by Nipuna from other service providers and investing in companies
engaged in the same or similar business as Nipuna. These non-compete restrictions apply until the
investors redeem all of their preference shares in Nipuna or their equity interest in Nipuna upto 5%.
As a consequence, we currently offer and plan to continue to offer BPO services only through
Nipuna. We cannot assure you that these non-compete restrictions will not adversely affect our
ability to attract and retain customers in this competitive market or that they will not adversely
affect our revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 than we have and
generate greater revenues than we do, and we cannot
assure you that we will be able to compete 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&#146; responsiveness to customer needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our revenues are highly dependent upon a small number of customers.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We derive a significant portion of our revenues from a limited number of corporate customers.
In fiscal 2007, fiscal 2006 and fiscal 2005, our largest customer together with its affiliates,
accounted for 6.3% 8.8%, and 10.8% respectively, of our total revenues. In fiscal 2007, fiscal 2006
and fiscal 2005, our second largest customer accounted for 4.4%, 5.1% and 7.4% respectively, of our
total revenues. In fiscal 2007, fiscal 2006 and fiscal 2005, our five largest customers accounted
for 21.0%, 24.2% and 29.2% 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are a number of factors other than our performance that could cause the loss of a
customer and that may not be predictable. In certain cases, we have significantly reduced the
services provided to a customer when the customer either changed its outsourcing strategy by moving
more work in-house or replaced its existing software with packaged software supported by the
licensor. Some customers could also potentially develop competing offshore IT centers in India and
as a result, work that may otherwise be outsourced to us may instead be performed in-house. Reduced
technology spending in response to a challenging economic or competitive environment may also
result in lower revenues or loss of a customer. If we lose one of our major customers or one of our
major customers significantly reduces its volume of business with us, our revenues and
profitability could be reduced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our fixed-price contracts expose us to additional risks, many of which are beyond our control,
which may reduce the profitability of these contracts.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a core element of our business strategy, we offer a portion of our services on a fixed-price
basis, along-with a time-and-materials basis. In fiscal 2007, fiscal 2006 and fiscal 2005, we
derived 39.0%, 35.1%, and 34.2% respectively, of our 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. We
may also have to pay damages to our customers for completion delays. Many of these project risks
may be beyond our control. Our failure to accurately estimate the resources and time required for a
project, future 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.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>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.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. Any failure to meet a customer&#146;s expectations could result in a
cancellation or non-renewal of a contract. Additionally, our contracts with customers are typically
limited to a specific project and not any future work. Our multi-year contracts will be due for
renewal from time to time, and we cannot assure you that our customers will choose to renew such
contracts for a similar or longer duration, on terms as favorable as their current terms or at all.
Other than our performance, there are also a number of factors 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 to one of our competitors, or replace their existing
software with packaged software supported by licensors, any of which could reduce our revenue and
profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>A number of our customer contracts are conditioned upon our performance, which, if unsatisfactory,
could result in less revenue than previously anticipated.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have not yet offered any performance-based or variable pricing terms to our customers,
however we continue to consider the viability of introducing performance-based or variable-pricing
contracts. Should we use value-based pricing terms, it will become more difficult for us to predict
the revenues we will receive from our customer contracts, as such contracts would likely contain a
higher number of contingent terms for payment of our fees by our customers. Our failure to meet
contract goals or a customer&#146;s expectations in such performance-based contracts may result in lower
revenues, and a less profitable or an unprofitable engagement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Some of our multi-year customer contracts contain certain provisions which, if triggered, could
result in lower future revenues and profitability under the contract.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Some of our multi-year customer contracts contain benchmarking provisions, most favored customer
clause and/or provisions restricting personnel from working on projects of our customers&#146;
competitors. Benchmarking provisions allow a customer in certain circumstances to request a
benchmark study prepared by an agreed upon third-party comparing our pricing, performance and
efficiency gains for delivered contract services with that of an agreed list of other service
providers for comparable services. Based on the results of the benchmarking study and depending on
the reasons for any unfavorable variance, we may be required to make improvements in the services
we provide or to reduce the pricing for services to be performed under the balance term of the
contract, which may result in lower future revenues and profitability under the contract.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most favored customer clauses generally provide that if, during the term of the contract, we were
to offer similar services to any other customers on terms and conditions more favorable than those
provided in such contract, we would be obligated to offer equally favorable terms and conditions to
the customer. As pricing pressures increase, some customers may demand price reductions or other
pricing incentives. Any pricing reduction agreed to in a subsequent contract may require us to
offer equally favorable terms to other customers with whom we have a most favored contract under
the remaining term of contracts with those customers which may result in lower future revenues and
profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The contracts containing benchmarking provisions/most favored customer/and other similar clauses
impact new projects or future services on existing projects and do not impact the terms of
previously delivered projects/services. The most favored customer clause provides that the Company
will offer the best pricing to a new customer if they are identified as a most favored customer. If
an existing customer is granted a most favored customer status, the revised terms would apply to
the services rendered to such customer after the grant of the most favored customer status. This
clause is triggered if a similar contract is negotiated at a lower rate with a new / existing
customer having similar volume, skill set, services offered, geography and domain. The reduction in
the rates for a most favored customer would be applicable only from the time the Company offers a
lower rate to any other customer who enters into a contract similar in nature to the most favored
customer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Historically no delivery / price adjustments have been required to be made on account of any of
these clauses and we do not anticipate that these clauses will have a material future effect on our
financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A number of our customer contracts provide that, during the term of the contract and for a certain
period thereafter ranging from six to
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">twelve months, we may not provide similar services to any of their competitors using the same
personnel. This restriction may hamper our ability to compete for and provide services to customers
in the same industry, which may result in lower future revenues and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>We may be unable to attract skilled professionals in the competitive labor market.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our ability to execute projects and to obtain new customers depends largely 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 that 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 2007, fiscal 2006 and fiscal 2005, we experienced associate attrition in the
IT services segment at a rate of 15.7%, 19.2%, and 16.5% respectively. Any increase in our
attrition rates, particularly the attrition rate of experienced software engineers, project
managers and project leaders, could 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 retrain our technical associates to keep pace with continuing
changes in evolving technologies and changing customer preferences. Should we be unable to
successfully recruit, retain, redeploy or retrain our technical associates, we may become less
attractive to potential customers and may fail to satisfy the demands of existing customers, which
would result in a decrease in revenues and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We dedicate significant resources to develop international operations which may be more difficult
to manage and operate.</I></B><BR>
In addition to our offshore IT centers in India, we have established IT centers in Australia,
Canada, China, Hungary, Japan, Malaysia, Singapore, United Arab Emirates, United Kingdom and United
States and plan to open additional international facilities. Because of our limited experience in
managing and operating facilities outside of India, we are subject to additional risks related to
our international expansion strategy, including risks related to complying with a wide variety of
national and local laws, restrictions on the import and export of certain technologies and multiple
and possibly overlapping tax structures. In addition, we may face competition in other countries
from companies that may have more experience with local conditions or with international operations
generally. We may also face difficulties integrating new facilities in different countries into our
existing operations, as well as integrating employees that we hire in different countries into our
existing corporate culture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are investing substantial cash assets in new facilities and physical infrastructure and our
profitability could be reduced if our business does not grow proportionately.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, we had contractual commitments of approximately $38.2&nbsp;million for capital
expenditures, and we estimate spending a further $100.0&nbsp;million in fiscal 2008. We may encounter
cost overruns or project delays in connection with new facilities. These expansions will
significantly increase our fixed costs. If we are unable to grow our business and revenues
proportionately, our profitability will be reduced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Restrictions on immigration may affect our ability to compete for and provide services to customers
in the United States and in other countries, which could hamper our growth and cause our revenues
to decline.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The vast majority of our associates are Indian nationals. Most of our projects require a portion of
the work to be completed at the customer&#146;s location which is typically outside India. The ability
of our associates to work in the United States, Europe and in other countries outside India depends
on the ability to obtain the necessary visas and work permits. As of March&nbsp;31, 2007, the majority
of our associates located outside India was in the United States and held either H-1B visas or L-1
visas, allowing the employee to remain in the United States during the term of the work permit only
temporarily. Although there is no limit to new L-1 visas, there is a limit to the aggregate number
of new H-1B visas that the U.S. Citizenship and Immigration Services, or CIS, may approve in any
government fiscal year. The 2005 Appropriations Bill further precludes foreign companies
from obtaining L-1 visas for employees with specialized knowledge: (1)&nbsp;if such employees will be
stationed primarily at the worksite of another company in the U.S. and the employee will not be
controlled and supervised by his employer, or (2)&nbsp;if the placement is essentially an arrangement to
provide labor for hire rather than in connection with the employee&#146;s specialized knowledge. The CIS
has also issued new guidelines to more closely verify the qualifying criteria to restrict the
liberal usage of L1visas. Immigration laws in the United States may also require us to meet certain
levels of compensation and to comply with other legal requirements including labor certifications
as a condition to obtaining or
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">maintaining work visas for our associates working on H1B in the United States. The CIS announced on
April&nbsp;3, 2007 that it had received sufficient applications to fill up all 65,000 visas that were
available for the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Immigration laws in the United States and in other countries are subject to legislative change, as
well as to variations in standards of application and enforcement due
to political forces and labor
and economic conditions. It is difficult to predict the political and economic events that could
affect immigration laws, or the restrictive impact they could have on obtaining or monitoring work
visas for our employees. Our reliance on work visas for a significant number of associates makes us
particularly vulnerable to such changes and variations as it affects our ability to staff projects
with associates who are not citizens of the country where the work is to be performed. As a result,
we may not be able to obtain a sufficient number of visas for our associates or may encounter
delays or additional costs in obtaining or maintaining the condition of such visas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may engage in acquisitions, strategic investments, strategic partnerships or alliances or other
ventures that may or may not be successful.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We may acquire or make strategic investments in complementary businesses, technologies,
services or products, or enter into strategic partnerships or alliances with third parties in order
to enhance our business. It is possible that we may not be able to identify suitable acquisitions
targets and candidates for strategic investments or partnerships, or if we do identify such targets
or candidates, we may not be able to complete those transactions on terms commercially acceptable
to us, or at all. The inability to identify suitable acquisition targets or investments or the
inability to complete such transactions may affect our competitiveness and our growth prospects. As
of the date of this document, we have no agreements or understanding to enter into any material
acquisition, investment, partnership, joint venture or alliance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If we acquire a company, we could have difficulty in assimilating that company&#146;s personnel,
operations, technology and software. In addition, the key personnel of the acquired company may
decide not to work for us. In some cases, we could have difficulty in integrating the acquired
products, services or technologies into our operations. These difficulties could disrupt our
ongoing business, distract our management and employees and increase our expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We may make strategic investments in early-stage technology start-up companies in order to gain
experience in or exploit niche technologies. However, our investments may not be successful. The
lack of profitability of any of our investments could have a material adverse effect on our
operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>System failure could disrupt our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To deliver our services to our customers, we must maintain a high speed network of satellite, fiber
optic and land lines and an active voice and data communications 24 hours a day between our main
offices in Hyderabad, our other IT centers in India and globally and the offices of our customers
worldwide. Any systems failure or a significant lapse in our ability to transmit voice and data
through satellite and telephone communications could result in lost customers and curtailed
operations which would reduce our revenue and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be liable to our customers for damages caused by disclosure of confidential information or
system failure.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are often required to collect and store sensitive or confidential customer and consumer
data. Many of our customer agreements do not limit our potential liability for breaches of
confidentiality. If any person, including any of our employees, penetrates our network security or
misappropriates sensitive data, we could be subject to significant liability from our customers or
from our customers&#146; clients for breaching contractual confidentiality provisions or privacy laws.
Unauthorized disclosure of sensitive or confidential customer and consumer data, whether through
breach of our computer systems, system failure or otherwise, could damage our reputation and cause
us to lose customers. Many of our contracts involve projects that are critical to the operations of
our customers&#146; businesses and provide benefits which may be difficult to quantify. Any failure in a
customer&#146;s system or breaches of security could result in a claim for substantial damages against
us, regardless of our alleged responsibility for such failure. Generally, we attempt to limit our
contractual liability for consequential damages in rendering our services; however these
limitations on liability may be unenforceable in some cases, or may be insufficient to protect us
from liability for damages. In respect of some of our contracts, we
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">sub-contract a part of the work to certain sub-contractors. We are liable to our customers for any
breach or non-performance by our sub-contractors under the sub-contracts. We maintain general
liability insurance coverage, including coverage for errors and omissions; however this coverage
may not continue to be available on reasonable terms and may be unavailable in sufficient amounts
to cover one or more large claims. Further, an insurer might disclaim coverage as to any future
claim. A successful assertion of one or more large claims against us that exceeds our available
insurance coverage or results in changes in our insurance policies, including premium increases or
the imposition of a large deductible or co-insurance requirement, could adversely affect our
operating results and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our success depends in large part upon our management team and key personnel and our ability to
attract and retain them.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are highly dependent on the senior members of our management team. Our future performance
will be affected by any disruptions in the continued service of these persons. We do not maintain
key man life insurance for any of the senior members of our management team or other key personnel,
except for our chief executive officer. Competition for senior management in our industry is
intense, and we may not be able to retain such senior management personnel or attract and retain
new senior management personnel in the future. The loss of any member of our senior management team
or other key personnel may have a material adverse effect on our business, results of operations
and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our insiders are significant shareholders, are able to influence the election of our board and
may have interests which conflict with those of our shareholders or holders of our ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our executive officers and directors, together with members of their immediate families,
beneficially owned, in the aggregate approximately 0.39% of our outstanding equity shares as of
March&nbsp;31, 2007. In addition, two of our executive directors control SRSR Holdings Private Limited,
which holds approximately 8.38% of our outstanding equity shares as of March&nbsp;31, 2007. As a
result, acting together, this group has the ability to exercise influence over most matters
requiring our shareholders&#146; approval, including the election and removal of directors and
significant corporate transactions. These insider shareholders may exercise influence even if they
are opposed by our other shareholders. Without the consent of these insider shareholders, we could
be delayed or prevented from entering into transactions (including the acquisition of our company
by third parties) that may be viewed as beneficial to us and our shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our financial results are impacted by the financial results of entities that we do not control.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, we have a significant non-controlling interests in Satyam Venture Engineering
Services Private Limited, or Satyam Venture, and CA Satyam ASP Private Limited, or CA Satyam, that
are accounted for under U.S. GAAP using the equity method of accounting. Under this method, we are
obligated to report as &#147;Equity in earnings (losses)&nbsp;of associated companies, net of taxes&#148; a
pro-rata portion of the financial results of any such company in our statement of operations even
though we do not control such company but have the ability to exercise certain influence over their
operating and financial policies. Thus, our reported results of operations can be higher or lower
depending on the results of Satyam Venture and CA Satyam or other companies in which we may make
similar investments even though we may have only a limited ability to influence their activities.
We may also be required to record additional impairment charges in their carrying value if we deem
the investment to be impaired due to adverse events, many of which are outside of our control, on
their business, results of operations and financial condition in future periods. Currently, we make
estimates in the preparation of financial statements including assessing goodwill for impairment.
Changes in such estimates resulting from events, many of which are outside of our control, may
result in the impairment of goodwill which would negatively impact our net income. Such impact on
net income may result in a reduction of the market value of our shares.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The value of our interest in our subsidiaries may decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna, our subsidiary, has experienced losses during each year since its inception and it is
likely that it will continue to experience such losses in the future. Our recently acquired
subsidiaries, Citisoft and Knowledge Dynamics have also experienced losses since our acquisition
and they may also incur losses that might have an adverse effect on our operating results in future
periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stock-based compensation expenses may significantly reduce our net income.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although we have suspended, except in certain cases, new grants of stock options under ASOP &#150; B and
ASOP &#150; ADS as of April&nbsp;1, 2005, our reported net income 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, some of which have outstanding obligations to grant options in future,
employees are typically granted warrants or options to purchase equity shares at a substantial
discount to the current market value. Effective April&nbsp;1, 2006, we adopted the fair value
recognition provisions of Statement of Financial Accounting Standards
or SFAS No.&nbsp;123 (revised
2004), &#147;Share-Based Payment&#148; or SFAS 123R. We adopted SFAS 123R using the modified prospective
transition method, which required the application of the accounting standard as of April&nbsp;1, 2006,
the first day of our fiscal year 2007. Under this transition method, stock-based compensation
expensed for the year ended March&nbsp;31, 2007 includes
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compensation expense for all stock-based
compensation awards granted prior to, but not yet vested as of April&nbsp;1, 2006, based on the
grant-date fair value estimated in accordance with the original provisions of SFAS No.&nbsp;123,
&#147;Accounting for Stock-Based Compensation&#148; or SFAS 123 and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stock-based compensation expenses
for all stock-based compensation awards granted after April&nbsp;1, 2006 is based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified
prospective transition method, our consolidated financial statements for the prior periods have not
been restated to reflect, and do not include, the impact of SFAS 123R. Depending on the grant date
fair value and future grants are made, amortization of deferred stock-based compensation may
contribute to reducing our operating income and net income. Our subsidiaries also have stock option
schemes which may generate stock-based compensation expenses and
which have and in the past reduced, and may in the future reduce our operating
income and net income.</TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compliance with new and changing corporate governance and public disclosure requirements adds
uncertainty to our compliance policies and increases our costs of compliance.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Changing laws, regulations and standards relating to accounting, corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002, the SEC, regulations, the New York Stock Exchange or NYSE, rules, the Securities and
Exchange Board of India, or SEBI, rules, and Indian stock market listing regulations are creating
uncertainty for companies like ours. These new or changed laws, regulations and standards may lack
specificity and are subject to varying interpretations. Their application in practice may evolve
over time, as new guidance is provided by regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher costs of compliance as a result of
ongoing revisions to such corporate governance standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In
particular, our efforts to continue to comply with Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 and
the related regulations regarding our required assessment of our internal controls over financial
reporting and our external auditors&#146; audit of that assessment requires the commitment of
significant financial and managerial resources. We consistently assess the adequacy of our internal
controls over financial reporting, remediate any control deficiencies that may be identified, and
validate through testing that our controls are functioning as documented. While currently we do not
have any material weaknesses there can be no assurance that future tests will not result in our
independent auditors being unable to issue unqualified attestation reports on management&#146;s
assessment on the operating effectiveness of our internal controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additionally, under revised corporate governance standards adopted by the Bombay Stock
Exchange Ltd, or BSE, and the National Stock Exchange of India Limited, or NSE, which we
collectively refer to as the Indian Stock Exchanges, we have been required to comply with
additional standards from December&nbsp;31, 2005. These standards include a certification by our chief
executive officer and chief financial officer that they have evaluated the effectiveness of our
internal control systems and that they have disclosed to our auditors and our audit committee any
deficiencies in the design or operation of our internal controls of which they may become aware, as
well as any steps taken or proposed to resolve the deficiencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are committed to maintaining high standards of corporate governance and public disclosure,
and our efforts to comply with evolving laws, regulations and standards in this regard have
resulted in, and are likely to continue to result in, increased general and
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">administrative expenses and a diversion of management time and attention from revenue-generating
activities to compliance activities. In addition, the new laws, regulations and standards regarding
corporate governance may make it more difficult for us to obtain director and officer liability
insurance. Further, our board members, chief executive officer and chief financial officer could
face an increased risk of personal liability in connection with their performance of duties. As a
result, we may face difficulties attracting and retaining qualified board members and executive
officers, which could harm our business. If we fail to comply with new or changed laws, regulations
or standards of corporate governance, our business and reputation may be harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>As a foreign private issuer, we are subject to different U.S. securities laws and rules than a
domestic issuer, which may, among other things, limit the information available to holders of our
securities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a foreign private issuer, we are subject to requirements under the Securities Act of 1933, as
amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the
Exchange Act, which are different from the requirements applicable to domestic U.S. issuers. For
example, our officers, directors and principal shareholders are exempt from the reporting and
&#147;short-swing&#148; profit recovery provisions of Section&nbsp;16 of the Exchange Act and the rules there
under with respect to their purchases and sales of our equity shares and/or ADSs. The periodic
disclosure required of foreign private issuers is more limited than the periodic disclosure
required of domestic U.S. issuers and therefore there may be less publicly available information
about us than is regularly published by or about U.S. public companies in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Terrorist attacks, such as the attacks of September&nbsp;11, 2001 in the United States, and other acts
of violence or war, such as the continuing conflict in Iraq, have the potential to have a direct
impact on our customers. To the extent that such attacks affect or involve the United States, our
business may be significantly impacted, as the majority of our revenues are derived from customers
located in the United States. In addition, such attacks may make travel more difficult, may make it
more difficult to obtain work visas for many of our associates who are required to work in the
United States, and may effectively curtail our ability to deliver our services to our customers.
Such obstacles to operate our business may increase our expenses and negatively affect the results
of our operations. Many of our customers visit several IT services firms, including their offshore
facilities, prior to reaching a decision on vendor selection. Terrorist threats, attacks or war
could make travel to our facilities more difficult for our customers and may delay, postpone or
cancel decisions to use our services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Investments in Indian Companies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, GoI policies, including
taxation policies, as well as political, social and economic developments affecting India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The GoI has recently taken actions to curtail or eliminate tax benefits that we have historically
benefited from.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The statutory corporate income tax rate in India is currently 30.0%. This tax rate is presently
subject to a 10.0% surcharge. The amount of tax and surcharge payable is further subject to a 2.0%
education cess, resulting in an effective tax rate of 33.66%. We benefit from tax incentives
provided to software entities such as an exemption from payment of Indian corporate income taxes
until the earlier of fiscal 2009 or 10 consecutive years of operations for software development
facilities designated as &#147;Software Technology Parks,&#148; or STP units. The benefits of this tax
incentive have historically resulted in our effective tax rate being well below statutory rates.
The exemption for our STP units was reduced from 100.0% to 90.0% for fiscal 2003. The exemption
for two of our STP units in Hyderabad and one of our STP units in Bangalore and one each in Hyderabad,
Chennai, Pune and Bhubaneswar expired at the end of fiscal 2005, fiscal 2006 and fiscal 2007
respectively and the exemption for the balance STP units will expire in fiscal 2008 and fiscal
2009. We also earn certain other foreign income and domestic income, which is taxable irrespective
of the above tax exemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When our tax holidays expire or terminate, our tax expense will materially increase, reducing our
profitability. We cannot assure you as to what action the present or future governments of India
will take regarding tax incentives for the IT industry.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Foreign investment restrictions under Indian law may adversely impact the value of our ADSs,
including, for example, restrictions that limit your ability to reconvert equity shares into ADSs,
which may cause our equity shares to trade at a discount or premium to the market price of our
ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our equity shares are listed and traded on the Indian Stock Exchanges, and they may trade on these
stock exchanges at a discount or premium to the ADSs traded on the NYSE, in part because of
restrictions on foreign ownership of the underlying shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our ADSs are freely convertible into our equity shares under the deposit agreement governing their
issuance, or the Deposit Agreement. The Reserve Bank of India, or RBI, prescribes fungibility
regulations permitting, subject to compliance with certain terms and conditions, the recon version
of equity shares to ADSs provided that such equity shares are purchased from an Indian Stock
Exchange through stock brokers and the actual number of ADSs outstanding after such recon version
is not greater than the original number of ADSs outstanding. If you elect to surrender your ADSs
and receive equity shares, you will only be able to trade those equity shares on an Indian Stock
Exchange and, under present law, it is unlikely you will be permitted to reconvert those equity
shares to ADSs. Additionally, investors who exchange ADSs for the underlying equity shares and are
not holders of record will be required to declare to us details of the holder of record, and the
holder of record will be required to disclose the details of the beneficial owner. Any investor who
fails to comply with this requirement may be liable for a fine of up to Rs.1,000 for each day such
failure continues. Such restrictions on fungibility of the underlying equity shares to ADSs may
cause our equity shares to trade at a discount or premium to the ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The sale of equity shares underlying the ADSs by a person not resident in India to a resident
of India does not require the prior approval of the RBI, provided such sales are effected through
the Indian Stock Exchanges. Any sale of such underlying equity shares by a person not resident in
India to a resident of India outside of the Indian Stock Exchanges can, however, be completed
without prior RBI approval, provided such equity shares are transferred based on a pricing formula
established by the Indian foreign exchange laws which set a maximum price requirement for sale of
such equity shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Regional conflicts or natural disasters in South Asia and elsewhere could adversely affect the
Indian economy, disrupt our operations and cause our business to suffer.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 there have been
military confrontations between India and Pakistan that have occurred in the region of Kashmir and
along the India-Pakistan border. There has also been a recent increase in the incidence of
terrorist attacks in India, including bombings at Delhi and Mumbai. Military activity or terrorist
attacks in the future could influence the Indian economy by disrupting communications and making
travel more difficult and such political tensions could create a perception that investments in
Indian companies involve higher degrees of risk. This, in turn, could have a material adverse
effect on the market for securities of Indian companies, including our equity shares and our ADSs,
and on the market for our services. In addition, as an international company, our offshore and
onsite operations may be impacted by natural disasters such as earthquakes, tsunamis, floods,
disease and health epidemics. In December&nbsp;2004, certain parts of India were severely affected by a
tsunami triggered by an earthquake in the Indian Ocean, and in October&nbsp;2005, certain parts of
northern India, Pakistan and Afghanistan were severely devastated by a major earthquake. Though our
operations were not affected by these disasters, we cannot guarantee that in the future our
operations will not be affected by the effect such natural disasters may have on the economies of
India and other countries in the region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Political instability could seriously harm business and economic conditions in India generally and
our business in particular.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the past decade, the GoI 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. The general elections in 2004 for the lower house of the Indian Parliament
resulted in no party winning an absolute majority and a coalition government has been formed. We
cannot assure you that these liberalization policies will continue in the future. Government
corruption scandals and protests against privatization could slow down the pace of liberalization
and deregulation. 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&#146;s
economic liberalization and deregulation policies could disrupt business and economic conditions in
India generally and our business in particular.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Currency exchange rate fluctuations may affect the value of our ADSs and our financial condition.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our functional currency is the Indian rupee, although we transact a major portion of our
business in U.S. dollars and several other currencies and accordingly face foreign currency
exposure through our sales in the United States and elsewhere and purchases from overseas suppliers
in U.S. dollars and other currencies. Historically, we have held a substantial majority of our cash
funds in rupees. Accordingly, changes in exchange rates may have a material adverse effect on our
revenues, other income, cost of services sold, gross margin and net income, which may in turn have
a negative impact on our business, operating results and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The exchange rate between the rupee and the U.S. dollar has changed substantially in recent years
and may fluctuate substantially in the future. In fiscal 2007, fiscal 2006, and fiscal 2005, our
U.S. dollar-denominated revenues represented 74.7%, 77.6%, and 81.8% 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, if any.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have sought to reduce the effect of exchange rate fluctuations on our operating results by
entering into foreign exchange forward and options contracts to cover a portion of outstanding
accounts receivable of Satyam Computer Services. As of March&nbsp;31, 2007 and 2006, we had outstanding
forward and options contracts in the amount of $ 452.6&nbsp;million, and $216.0&nbsp;million respectively.
We may not be able to purchase contracts adequate to insulate ourselves from foreign exchange
currency risks. Additionally, the policies of the RBI may change from time to time which may limit
our ability to hedge our foreign currency exposures adequately.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Fluctuations in the exchange rate between the rupee and the U.S. dollar will also affect the
U.S. dollar conversion by our 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 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 our 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our ability to acquire companies organized outside India as part of our growth strategy depends on
the approval of the GoI and/or the RBI and failure to obtain this approval could negatively impact
our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have developed a growth strategy based on, among other things, expanding our presence in
existing and new markets and selectively pursuing joint venture and acquisition opportunities.
Foreign exchange laws in India presently permit Indian companies to acquire or invest in foreign
companies without any prior governmental approval if the transaction amount does not exceed 200.0%
of the net worth of the foreign company as of the date of its most recent audited balance sheet. If
consideration for the transaction is paid out of the proceeds of an American Depositary Receipt, or
ADR, or Global Depositary Receipt, or GDR, sale, Indian exchange control laws do not impose any
investment limits. Acquisitions in excess of the 200% net worth threshold require prior RBI
approval. It is possible that any required approval from the RBI may not be obtained. Our failure
to obtain approvals for acquisitions of companies organized outside India may restrict our
international growth, which could negatively affect our business and prospects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to protect our intellectual property rights, or if we infringe on the intellectual
property rights of others, our business may be harmed.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The laws of India do not protect intellectual property rights to the same extent as the laws in the
United States. Further, the global nature of our business makes it difficult for us to control the
ultimate destination of our products and services. The misappropriation or duplication of our
intellectual property could curtail our operations or reduce our profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">by or assigned to our customers, and we do not retain an interest in such software and
deliverables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have registered &#147;Satyam&#148; and other related marks in India and the United States under certain
classes and have applied for the registration of such marks in other jurisdictions where we
carry on business. 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 confidential and
proprietary information. We cannot assure you that the steps taken by us in this regard will be
adequate to prevent misappropriation of confidential and proprietary information or that we will be
able to detect unauthorized use and take appropriate steps to enforce our intellectual property
rights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 reasonable commercial terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 the management&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Indian laws limit our ability to raise capital outside India and may limit the ability of others to
acquire us, which could prevent us from operating our business or entering into a transaction that
is in the best interests of our shareholders.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Presently, Indian technology companies such as ours are able to raise capital outside of India
without the prior approval of any Indian governmental authority through an ADR or GDR issuance or
an issuance of convertible debt securities, subject with respect to convertible debt issuances to a
limit of $500&nbsp;million in any fiscal year. Changes to Indian foreign exchange laws may create
restrictions on our capital raising abilities. For example, a limit on the foreign equity ownership
of Indian technology companies may constrain our ability to seek and obtain additional equity
investment by foreign investors. In addition, these restrictions, if applied to us, may prevent us
from entering into certain transactions, such as an acquisition by a non-Indian company, which
might otherwise be beneficial for us and the holders of our equity shares and ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Conditions in the Indian securities market may affect the price or liquidity of our equity shares
and our ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. The high and low prices of our shares on the BSE
from fiscal 2003 until the
latest practicable date are set forth in the table below.
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Fiscal Year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Rs.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>$ Equivalent</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Rs.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>$ Equivalent</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">221.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008(Through April
20, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;20, 2007<B>, </B>the closing price of our shares on the BSE was Rs.476.20. For comparison
purposes, these prices have been adjusted to give effect to our October&nbsp;10, 2006 two-for-one stock
split (in the form of stock dividend). The prices of our shares have been translated into U.S.
dollars based on the noon-buying rate as certified by the Federal Reserve Bank of New York on the
last date of each period presented.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. Moreover, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>It may be difficult for you to enforce any judgment obtained in the United States against us or our
affiliates.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are incorporated under the laws of the Republic of India. 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>effect service of process upon us outside India or these persons outside the
jurisdiction of their residence; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have been advised by our Indian counsel, 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, may 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 was founded on a claim which breached the laws of India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>You may be subject to Indian taxes arising out of capital gains on the sale of the underlying
equity shares.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Generally, capital gains, whether short-term or long-term, arising from 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
NSE on the date the Depositary advises the custodian to exchange receipts 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 our Depositary to
the custodian. With effect from October&nbsp;1, 2004, any gains realized on the sale of listed equity
shares held for more than 12&nbsp;months to an Indian resident, or a non-resident investor in India,
will not be subject to Indian capital gains tax if the securities transaction tax has been paid on
the transaction. Investors are advised to consult their own tax advisors and to consider carefully
the potential tax consequences of an investment in our ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>There may be less company information available in Indian securities markets than securities
markets in other countries.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. 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.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Related to our ADSs and our Trading Market</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Historically, our ADSs have traded at a significant premium to the trading prices of our underlying
equity shares, a situation which may not continue.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Historically, our ADSs have traded on the NYSE at a substantial premium to the trading prices of
our underlying equity shares on the Indian Stock Exchanges. We believe that this price premium has
resulted from the relatively small portion of our market capitalization represented by ADSs,
restrictions imposed by Indian law on the conversion of equity shares into ADSs, and an apparent
preference for some investors to trade U.S. dollar-denominated
securities. Over time, some
of the restrictions on the issuance of the ADSs imposed by Indian law have been relaxed and we
expect that other restrictions may be relaxed in the future. As a result, the historical premium
enjoyed by ADSs as compared to equity shares may be reduced or eliminated due to our sponsored ADS
offering or similar transactions in the future, a change in Indian law permitting further
conversion of equity shares into ADSs or changes in investor preferences.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>You may be restricted in your ability to exercise preemptive rights under Indian law and thereby
may suffer future dilution of your ownership position.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. You may be unable to
exercise preemptive rights for equity shares underlying ADSs unless a registration statement under
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 relating 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Holders of ADSs may be restricted in their ability to exercise voting rights.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At our request, our Depositary will mail to you any notice of shareholders&#146; meeting received from
us together with information explaining how to instruct our Depositary to exercise the voting
rights of the securities represented by ADSs. If our Depositary 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 our Depositary 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 our Depositary in a timely manner. Securities for which no voting instructions have
been received will not be voted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under Indian law, subject to the presence in person at a shareholder meeting of persons holding
equity shares representing a quorum, all resolutions proposed to be approved at that meeting are
voted on by a 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.&nbsp;50,000. Equity shares not represented in person at the meeting,
including equity shares underlying ADSs for which a holder has provided voting instructions to our
Depositary, are not counted in a vote by show of hands. As a result, only in the event that a
shareholder present at the meeting demands that a poll be taken will the votes of ADS holders be
counted. Securities for which no voting instructions have been received will not be voted on a
poll.<BR>
As a foreign private issuer, we are not subject to the SEC&#146;s proxy rules, which regulate the form
and content of solicitations by U.S.-based issuers of proxies from their shareholders. To-date, our
practice has been to provide advance notice to our ADS holders of all shareholder meetings and to
solicit their vote on such matters through our Depositary, and we expect to continue this practice.
The form of notice and proxy statement that we have been using does not include all of the
information that would be provided under the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SEC&#146;s proxy rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>An active or liquid trading market for our ADSs is not assured.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 NYSE and this may cause our share 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 our Depositary at any time, there is no public market for our equity
shares in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The future sales of securities by our company or existing shareholders may harm the price of our
ADSs or our equity shares.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 March&nbsp;31, 2007, we had an aggregate of equity shares
outstanding of 664,900,129 (excluding 2,295,880 equity shares held by the Satyam Associate Trust),
which includes underlying equity shares of 130,209,472 represented by 65,104,736 ADSs. In addition,
as of March&nbsp;31, 2007 we had outstanding options to purchase approximately 7,986,700 of our equity
shares. 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.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. INFORMATION ON THE COMPANY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Business Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We were incorporated under the laws of the Republic of India in June&nbsp;1987. Our principal executive
office is located at Satyam Technology Center, Bahadurpallay Village, Qutbullapur Mandal, R.R.
District &#150; 500855, Hyderabad, Andhra Pradesh, India. Our telephone number at this address is (91)
40-3063-3535. Our website address is <I>www.satyam.com </I>and information contained on our website does
not constitute a part of this Annual Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are a global IT solutions provider, offering a comprehensive range of IT services to our
customers including, application development and maintenance services, consulting and enterprise
business solutions, extended engineering solutions and infrastructure management services. We also
offer BPO services through our majority-owned subsidiary company, Nipuna. We began providing IT
services to businesses in 1988 and were the fourth largest Indian IT software and services
company, based on the amount of export revenues generated during fiscal 2006. Our revenues grew to
$1,461.4&nbsp;million in fiscal 2007 from $566.4&nbsp;million in fiscal 2004, representing a compound annual
growth rate, or CAGR of 37.2%. For the same period, our net income grew from $111.9&nbsp;million to $298.4
million. The number of our employees, whom we refer to as associates, grew from 14,456 as of March
31, 2004 to 39,018 as of March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide services to customers from various industries including manufacturing, banking and
financial services, insurance, telecommunications, infrastructure media and entertainment and
semiconductors or TIMES, healthcare, retail and transportation. We believe we have the ability to
develop large, long-term customer relationships, by demonstrating an understanding of our
customers&#146; business requirements through our industry expertise and by continually providing high
quality services in a cost effective manner. As of March&nbsp;31,
2007, we had 558 active customers,
including 163 Fortune Global 500 or Fortune U.S. 500 companies and 57 companies that generated more
than $5.0&nbsp;million in annual revenues in fiscal 2007. 86.7% of our revenues for fiscal 2007 and 90.6%
of our revenues for fiscal 2006 were from repeat business given by our existing customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In June&nbsp;2002, we established our majority-owned BPO subsidiary, Nipuna, which offers back-office
transaction processing services, customer care services and product support and technical help desk
services in the areas of finance and accounting, human resources, claims administration and
document management. Nipuna has added services such as research, analytics and animation to its
portfolio of service offerings. As of March&nbsp;31, 2007, Nipuna had 2,916 associates and 33 customers,
of which 13 are Fortune Global 500 and Fortune U.S. 500 companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;12, 2005, we acquired a 75.0% interest in Citisoft Plc or Citisoft, a specialist business
and systems consulting firm that has focused on the investment management industry since 1986.
Citisoft is a UK-based firm, with operating presences in London, Boston and New York. On June&nbsp;29,
2006, we exercised the call option and acquired the remaining 25.0% equity interest in Citisoft,
making Citisoft our wholly-owned subsidiary from that date. The operating results of Citisoft are
evaluated by the management under IT services segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics Pte Ltd, Singapore, (&#147;Knowledge Dynamics&#148;), a leading Data Warehousing and
Business Intelligence Solutions provider. The transaction was consummated on October&nbsp;1, 2005, the
date of transfer of shares to Satyam Computer Services and Satyam Computer Services has
consolidated Knowledge Dynamics Pte Ltd, Singapore, from October&nbsp;1, 2005. The acquisition has been
accounted for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing our
entire investment of 31.61% of the outstanding equity shares of Sify. The sale transaction was
consummated on November&nbsp;9, 2005 at a sale price of $5.60 per equity share aggregating to $62.3
million. We accounted for our share of equity in earnings/(losses) of Sify under equity method of
accounting upto November&nbsp;9, 2005. The excess of sale proceeds (net of transaction costs) over the
carrying value of investment in Sify as on the date of sale amounting to $43.6&nbsp;million has been
recognized as gain in the statement of income during the year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock
split (in the form of stock dividend) which was effective on October&nbsp;10, 2006. Consequently,
Satyam capitalized an amount of $17.7&nbsp;million from its retained
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">earnings to common stock. All references to number of shares, per share amounts, stock option
data, and market prices of Satyam Computer Services&#146; equity shares have been retroactively
restated to reflect the stock split unless otherwise noted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;20, 2006, a Share Purchase, Redemption and Amendment Agreement (&#147;SPRA Agreement&#148;) was
entered into between Satyam, the investors and Nipuna. Out of the total preference shares, 50% of
the preference shares ($ 10&nbsp;million) would be redeemed for $ 13.6&nbsp;million at the target date on
May&nbsp;21, 2007 and the balance 50% would get converted into equity shares of Nipuna based on the
terms of the existing subscription agreement. Since 50% of the
preference shares are mandatorily
redeemable. We have reclassified 50% of the preference shares as a current liability measured
at fair value and accrued redemption premium amounting to $3.6&nbsp;million up to March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The
investors gave Nipuna a notice of conversion of preference shares and in January&nbsp;2007
preference shares amounting to $10&nbsp;million have been converted into 6,422,267 equity shares of
Nipuna. Due to the issue of shares by Nipuna, Satyam Computer Services&#146; ownership interest in
Nipuna was reduced from 100.0% as at March&nbsp;31, 2006 to 74.0% as at March&nbsp;31, 2007. The shares
issued to the investors are at amounts per share higher than Satyam Computer Services&#146; average cost
per share. With respect to this transaction, the resulting gain of US$7.9&nbsp;million, net of taxes
during the year ended March&nbsp;31, 2007 has been recorded as an increase in additional paid in
capital. Since the losses applicable to the minority interest in Nipuna exceeded the minority
interest in the equity capital of Nipuna, such excess and further losses have been charged in
Satyam&#146;s consolidated statement of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During 2007, we have also established the following schemes &#147;Associate Stock Option Plan -
Restricted Stock Units (ASOP &#150; RSUs)&#148; and &#147;Associate
Stock Option Plan &#151; RSUs (ADS)&#148;. See &#147;Item 6.
Directors, Senior Management and Employees&nbsp;&#151;&nbsp;Employee
Benefit Plans&#148;&nbsp;&#151;&nbsp;for more information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We filed a request for arbitration with the London Court of International
Arbitration, or LCIA, naming Venture Global Engineering LLC, USA, VGE, as respondent. The
Arbitration concerned a dispute between us and VGE in connection with their
joint venture, Satyam Venture Engineering Services Private Limited. The LCIA Arbitrator
issued his Final Award on April&nbsp;3, 2006 in our favour. We have
filed a petition to recognize and enforce the award in the United States District
Court in Michigan. VGE has separately filed a declaratory judgment action seeking to refuse
enforcement of the Award in the United States District Court in
Illinois. Our management believes that
this will not have an adverse effect upon our results of operations, financial condition and
cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Industry Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Global IT Services Overview</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Global IT
services spending has been estimated to have totalled $444&nbsp;billion in fiscal 2005. The global IT services spending remained strong in fiscal
2006 with the aggregate total of $470&nbsp;billion which increased by 5.9% with respect to 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe the growth of global IT services spending is driven by the following factors and trends:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;I<B><I>ncreased importance of IT to businesses. </I></B>In today&#146;s increasingly competitive business
environment, companies have become dependent on information technology not only to conduct
day-to-day operations, but also as a strategic tool to enable them to re-engineer business
processes, restructure organizations and react quickly to competitive, regulatory and technological
changes. As information systems continually become more complex with the use of multiple
applications and rapidly changing technologies, companies are increasingly turning to external IT
service providers to develop and implement new technologies and integrate them with existing
applications in which they may have already made considerable investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;I<B><I>mpact of the Internet and other new technologies on business. </I></B>Businesses are increasingly using
the Internet to interact with new and existing customers and create new revenue opportunities.
Businesses conducted electronically over the Internet extend beyond Internet-based applications to
include packaged software tools, such as customer and supply chain management software, that need
to be integrated with a company&#146;s enterprise systems. These initiatives are often large and
difficult to manage in-house and need to keep pace with constantly evolving business processes and
technological innovations leading to demand for IT services companies.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Managing and upgrading existing systems. </I></B>Managing and upgrading existing systems has become
critical given the importance of IT and related systems to new business initiatives. Internal IT
departments often do not have the appropriate resources or breadth of skills necessary to manage or
upgrade existing systems. As a result, companies are increasingly looking to external service
providers to design, integrate, implement and maintain their applications based on new
technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Increasing trend towards offshore outsourcing. </I></B>The increasing complexities and costs of IT
services, together with an increasing need for highly skilled technology professionals and
tightening IT budgets for companies, are driving demand for professional IT services companies who
are able to provide a cost effective, high quality, comprehensive range of services. The offshore
delivery model is enabling companies to increasingly outsource complex assignments and generate not
only cost savings in IT services but also greater efficiencies in their business processes. In
addition, companies are increasingly using the &#147;utility computing&#148; or &#147;pay for what you use&#148;, model
for infrastructure, data- warehousing and IT system usage, which is further fueling growth in
infrastructure, network outsourcing and network management services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Indian IT Services Industry Overview</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As organizations realize the cost effectiveness of off shoring their outsourced services, they are
increasingly making off shoring a part of their business strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">India is considered to be the most favored destination for offshore IT service delivery. According
to the National Association of Software and Services Companies, or NASSCOM strategic review 2007,
the export revenue generated from the software and service industry (IT-BPO) in India was
approximately $17.7&nbsp;billion in fiscal 2005. In fiscal 2006, the export revenue increased by 33.3%
to $23.6&nbsp;billion. The projected export revenue for 2007 is approximately $31&nbsp;billion and which
is likely to increase to $60&nbsp;billion by the end of 2010. The key factors that are expected to
contribute to this growth are:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>High quality delivery record. </I></B>Indian companies have developed high quality delivery processes. A
2004 NASSCOM survey of international quality standards of the top 275 Indian IT services companies
reported that 195 companies had acquired International Standards Organization, or ISO, 9000 quality
certification. According to NASSCOM, during 2004, 74 Indian companies received a level five
assessment under SEI-CMM, developed by the Carnegie Mellon University. Level five is the highest
level attainable under the SEI-CMM standards, which assess an organization&#146;s quality management
system and systems engineering processes and methodologies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;L<B><I>arge supply of English-speaking IT professionals. </I></B>We believe that India ranks second only to the
United States as the country with the largest population of English-speaking IT professionals.
According to the NASSCOM strategic review 2007, educational institutes in India will produce
approximately 500,000 technically trained graduates (Engineering degree/Diploma/MCA)
by the end of 2007. Given the shortage
of technical labor in the United States and other developed economies, the availability of
technically skilled personnel is proving to be a competitive advantage for Indian IT service
companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Significant cost advantage. </I></B>We believe that the cost of employing IT professionals in India is
significantly lower than in developed countries such as the United States. The use of high quality,
low cost resources provides a significant opportunity for companies to realize cost savings by offshoring IT services to India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Trends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Indian IT services industry has been witnessing changes in customer demands and we believe that
service providers who are best able to adapt to these changes will succeed in the long run. Some
key emerging industry trends are described below:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Enhanced expectations. </I></B>Increasingly, companies are expecting more value from their IT service
providers than just the traditional cost advantages derived by offshoring the delivery of IT
services. Companies increasingly prefer service providers that can provide strategic advice related
to designing and increasing efficiencies of business processes and also assist in implementing
their recommendations. Also, service providers with strong industry expertise are favored over
those who can only provide strong technical skills.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Large, multi-year, end-to-end contracts. </I></B>Companies are increasingly looking for IT service
providers that can provide end-to-end solutions over a long period of time. In addition, companies,
which have a presence across various geographies, need IT support on a
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">global scale and often seek a single service provider that can offer a comprehensive range of
services on a long-term basis across the world, and understand and integrate a wide spectrum of
emerging technologies with existing systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Relationships with customers&#146; key senior management. </I></B>As outsourcing contracts increasingly gain
strategic importance to businesses, customers&#146; senior management teams have become more involved in
outsourcing contract negotiation and monitoring. As a result, IT service providers need to ensure
that their senior account managers develop strong and lasting working relationships with customers&#146;
senior management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Performance measurement. </I></B>Companies are increasingly demanding transparency in performance
measurement. IT service providers with their own well developed benchmarks, frameworks and models
to measure performance or demonstrate potential benefits are likely to have significant advantage
over their competitors who offer more generic IT services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Competitive Strengths</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that we are strongly placed to consolidate our market position as a leading IT
service provider due to our competitive strengths which include:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Comprehensive range of services combined with specialized industry expertise. </I></B>Our comprehensive
range of end-to-end technology-based services encompasses application development and maintenance
services, consulting and enterprise business solutions, extended engineering solutions,
infrastructure management services and BPO services. Our comprehensive range of services enables us
to broaden our dialogue with potential customers, deepen our relationships with existing customers
and diversify our revenue base. Our services are built on a foundation of a rich understanding of
the industries in which our customers operate and the underlying technologies that drive those
industries. Our industry-focused business units such as manufacturing, banking and financial
services, insurance, TIMES, healthcare, retail and transportation, allow us to understand the
strategic issues facing our customers. At the Gartner Global Sourcing Summit 2004, we were adjudged
the winner of the &#147;Risk Management Award&#148;, a prestigious award that recognizes effectiveness in
managing risk and were also declared a joint winner of the &#147;Solution Delivery Award&#148; which
recognizes creativity in enhancing customers&#146; business competitiveness. The voting for these awards
was done solely by the business executives attending the summit. Our dedicated technology
competency centers, which we refer to as &#147;centers of excellence,&#148; track trends in key technologies,
which facilitates creation of solutions based on these technologies. Our centers of excellence work
closely with the industry-focused business units in areas such as business intelligence, data
warehousing, customer relationship management, product life cycle management and supply chain
management to ensure that our services fulfill our customers&#146; business objectives and IT
requirements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Flexible, highly evolved delivery model. </I></B>We provide our services through 29 offsite centers in
locations in Australia<B>, </B>Brazil, Canada, China<B>, </B>Germany, Hungary, Japan, Korea, Malaysia, Singapore,
South Africa, Thailand, United Arab Emirates<B>, </B>the United Kingdom and United States and our onsite
teams operating at our customers&#146; premises. Over the past decade, we have made substantial
investments in our infrastructure, processes and systems allowing us to evolve our global delivery
model to effectively integrate offshore, offsite, near shore and onsite services and perform a
greater volume of work at our offshore development centers. This delivery model seeks to provide
customers with seamless solutions in reduced timeframes, enabling them to achieve operating
efficiencies and realize significant cost savings. It also enables us to deliver the most
appropriate mix of resources and services on a 24/7 basis. Furthermore, our robust delivery model
is flexible, so that it can be adapted to respond to customer objectives relating to critical
issues such as scalability and security. We continue to evolve our delivery model and believe that
our customer-oriented approach and ongoing refinements represent an important competitive
advantage.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Established leadership position in consulting and enterprise business solutions. </I></B>Our consulting
and enterprise business solutions help customers optimize their operating costs, enhance the
efficiency of their business processes and improve their overall competitiveness. These solutions
span the development, implementation, integration and maintenance of various enterprise-wide
applications. Our solutions are enhanced by our strategic alliances with more than 60 leading
technology providers such as SAP and Oracle. Our highly evolved delivery model, coupled with our
industry expertise and center of excellence-driven technology competencies, allows us to provide
customers with a value proposition in consulting and enterprise solutions. Over the past few years,
we have made strategic investments to augment our capabilities in this area which is reflected in
the growing revenues from this business. During fiscal 2007 and fiscal 2006 39.7% and 39.2%
respectively, of our revenues, was generated from consulting and enterprise business solutions.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B> <B><I>Strong relationships with blue chip customers. </I></B>We have long-standing relationships with large
multinational corporations built on our successful execution of prior engagements. We believe we
have significantly more Fortune Global 500 or Fortune U.S. 500 corporations as customers, relative
to scale of revenue, as compared to other leading Indian IT services companies. As of March&nbsp;31,
2007, we had 558 active customers, including 163 Fortune Global 500 or Fortune U.S. 500 companies.
Our track record of delivering comprehensive solutions based on demonstrated industry and
technology expertise has helped in forging strong relationships with our major customers and
gaining increased business from them. We have a history of high customer retention and derive a
significant proportion of our revenue from repeat business. During fiscal 2007 and fiscal 2006,
86.7% and 90.6%, respectively, of our revenues, was generated from existing customers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><B>&#149;</B></B><B><I>Track record of high quality execution</I></B><I>. </I>We are committed to achieving operational excellence in
our processes, people and infrastructure. Our quality assurance programs form an integral part of
our project management methodology and seek to ensure that we consistently deliver high quality
services to our customers. For instance, we have a company-wide quality management system, which
satisfies the ISO 9001:2000 TickIT standard. We have been assessed at CMMI Level 5, the highest
level possible, and have implemented the Six Sigma processes for application development and
maintenance. We have also achieved domain specific certifications like AS9100/EN9100 for ES group &#150;
Aerospace domain, PCMM Level 5 Assessment for Pune Location, S15000/ISO20000 certification for N&#038;S
across India and BS15000 Global Certification for IMS business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have a large pool of highly skilled, well-trained technical associates spanning 60
nationalities. As of March&nbsp;31, 2007, we employed 36,997 technical associates in the IT services
area. Each new technical associate participates in an intensive 12&nbsp;week initial training program
and a minimum of 40 hours training each year on development and leadership. We continue to develop
our infrastructure to make it more resilient. For instance, we have implemented ISO 27001, the
internationally recognized global upgrade from BS7799 standard, which delivers a high level of
information security to protect our customers&#146; intellectual property. We have also established a
comprehensive disaster recovery and business continuity model to ensure uninterrupted service
availability from our global delivery network. We constantly benchmark our processes, people and
infrastructure against globally recognized standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Culture of innovation. </I></B>We have a history of innovation that is facilitated by our
entrepreneurial culture and our management&#146;s willingness to make strategic investments in growth
markets. We believe we were one of the pioneers in the delivery of India-based IT services. For
example, we believe that we were among the earliest Indian IT service companies to set up in 1992 a
dedicated satellite link between a customer&#146;s facilities and our India operations. Our technology
laboratories continue to develop and bring to market new solutions based on new technologies. For
instance, we are one of the few companies in India to offer utility and grid computing services to
customers. We have also been innovative in our internal organization and have introduced industry
leading practices in hiring, resource planning and knowledge sharing. These accomplishments and
initiatives have further enhanced our brand and reputation in the marketplace.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Growth Strategy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our goal is to be a leading global provider of comprehensive IT solutions and services. We
intend to accomplish our goal by:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Building on our long-standing customer relationships to cross-sell our comprehensive range of
services. </I></B>Our goal is to build long-term sustainable business relationships with our customers to
generate consistent revenues. We plan to continue to expand the scope and range of services
provided to our existing customers by continuing to build our expertise in major industries and
extending our capabilities into new and emerging technologies. For example, we intend to capitalize
on the BPO services offered by Nipuna by cross-selling these services to our existing customers,
which will enable us to secure a higher share of our customers&#146; spending. To further strengthen our
relationships and broaden the scope and range of services we provide to existing customers, our
senior corporate executives have specific account management and relationship responsibilities. We
have successfully established strong relationships with our customers&#146; chief information officers
and are continuing to strengthen our relationships with other key members of our customers&#146;
management teams. These strong relationships have helped us to better understand our customers&#146;
business needs and enabled us to provide effective solutions to meet these needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Continuing to focus on enterprise-wide business solutions and high quality value-added services.</I></B>
To better serve our customers in key industry segments, we intend to continue to focus on providing
end-to-end enterprise-wide business solutions and increasing our share of value-added services,
such as data warehousing and business intelligence, application portfolio management, process and
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">quality consulting, business performance management, industry and regulatory specific solutions and
grid computing solutions. To continue to differentiate our services and achieve recognition as a
leading global provider of comprehensive IT services, we intend to continually invest in research
and development and broaden our range of solution offerings as new technologies become available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Expanding our presence in existing markets and penetrating new geographic markets. </I></B>We plan to
expand our presence in our existing markets and establish a presence in new geographic markets
throughout North America, Europe, Latin America, and the Asia-Pacific region. We intend to
accomplish this by increasing our brand visibility and leveraging our global development centers to
extend our services to customers located in these geographies. We also plan to continue to hire
local associates to staff and manage our global development centers and to strengthen our sales and
marketing functions to facilitate building strong relationships. We believe that the use of locally
hired technical associates and managers working from our global development centers will enable us
to increase our market share in the local markets and compete effectively by combining local
expertise with our global delivery capabilities. We expect that a wider geographical presence will
also facilitate revenue generation in multiple currencies, reduce our exposure to volatility in a
particular currency, and help hedge against margin erosion due to currency fluctuations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Continuing to enhance our industry expertise. </I></B>We aim to have an in-depth understanding of
targeted industries including manufacturing, banking and financial services, insurance, TIMES,
healthcare, retail and transportation, which will help us identify and understand customer needs
and proactively design and offer customized IT solutions to address those needs. By focusing on
targeted industries, we believe we can develop industry-specific solutions and services that can be
leveraged effectively to deliver services within the same industry, thereby lowering our cost of
delivering those services. We intend to enhance our business knowledge and competencies in the
various industries that we service by hiring additional specialists with deep industry knowledge
and expertise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;A<B><I>ttracting and retaining quality technical associates and augmenting their training. </I></B>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 performance-linked incentives. We also intend to continue to devote significant resources
to train our technical associates in a variety of software languages and computer platforms through
our Satyam Learning Center.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>&#149;</B>&nbsp;<B><I>Enhancing our capabilities through technology alliances and acquisitions. </I></B>We intend to
continue to explore the formation of new alliances as well as strengthen existing partnerships with
key technology vendors to enable us to leverage our partners&#146; strengths. We will also consider
acquisitions to gain access to specific technologies and exploit synergies with our existing
business. We regularly engage in discussions and negotiations in the ordinary course of our
business relating to potential investment, technology alliances and acquisitions that would achieve
these objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>IT Service Offerings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Application development and maintenance services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Application development</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We design, develop and implement customized IT solutions software for a variety of business
processes and requirements. Our solution implementations range from single-platform, single-site
systems to multi-platform, multiple-site systems. A project may involve the development of a new
application, customizing packaged software, enhancing the capabilities of existing software
applications, upgrading a legacy solution both to suit the newer technology environments and to
enhance the lifetime of such applications. Each development project typically involves the full
life-cycle of software development, including, definition, prototyping, architecting, designing,
piloting, programming, testing, installing and subsequent maintenance.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Application maintenance</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide maintenance services for large software systems, including modifications and
enhancements to the business functionality as well as providing production support to facilitate
around the clock availability of applications spread across multiple geographies encompassing
diverse technologies. We interact with the business users to map new functionalities and enhance
the application systems to cater to new set of business rules. We also assist customers in
migration or re-hosting to new technologies, such as Microsoft and Open systems, to extend the
useful life of existing systems. We perform most of the maintenance work at our offshore global
development centers using satellite links to our customers&#146; systems. In addition, we maintain a
small team on our customers&#146; premises to coordinate support functions. In certain instances, we
utilize our offsite and nearshore development centers to coordinate these support functions with
either no or minimal work at the customer&#146;s site.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Consulting and enterprise business solutions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Leveraging our alliances with independent software vendors such as Oracle, SAP and Informatica, we
offer an extensive portfolio of consulting and enterprise business solutions to enhance our
customers&#146; business competitiveness. We provide solutions and services in the areas of enterprise
resource planning, customer relationship management and supply chain management, data warehousing
and business intelligence, knowledge management, document management and enterprise application
integration to address the customer&#146;s needs and to integrate systems and processes across the
organization for optimized business performance. These solutions enable our customers to strengthen
relationships with their customers and business partners, create new revenue opportunities, enhance
operating efficiencies and improve communication.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Extended engineering solutions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide extended engineering solutions to industries such as the automotive, aerospace,
industrial equipment, consumer appliances and telecommunications, using computer aided design,
modeling and engineering tools. Our services include mechanical designing, embedded and electronic
designing, product and process analysis, product life-cycle management and range from handling
basic drawing changes to delivering complex designs. Our focus is to enable our customers to
realize significant cost benefits and to enable them to compete effectively in their product design
and development functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Infrastructure management services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To address our customers&#146; specific requests to provide infrastructure and technology support,
we provide solutions and services which range from routine maintenance of hardware and software to
complex security solutions. Our services include administration, infrastructure management,
migration, upgrades, configuration, backup, security management, performance management, operations
monitoring and consolidation services for a variety of operating systems and platforms, data, voice
and video networks and mail servers. We offer services which cover a range of hardware platforms
(IBM, HP and Sun) and environments (UNIX, AIX, Solaris, HP-UX and Windows). We have also built
alliances with over seven infrastructure and technology product vendors to enhance our
capabilities. We leverage our data center facility in Columbus, Ohio, in the United States to
provide various hosting services to our customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Delivery of IT Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We leverage our integrated global delivery model, which we refer to as the &#147;Right Sourcing
Model,&#148; to provide flexible service delivery alternatives to our customers through our offshore
centers located in India, offsite centers established in our major markets, nearshore centers
located geographically near our customers&#146; premises and through our onsite teams operating at our
customers&#146; premises. Our offshore, offsite and nearshore centers are linked to our customer&#146;s
onsite system through a high performance communication network, enabling us to provide integrated
services from each delivery location. Our global delivery model allows us the flexibility to
transition onsite IT services seamlessly to our offsite, nearshore or offshore centers, which
benefits our customers and provides us with greater returns.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Offshore centers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We typically assign a team of technical associates to visit a customer&#146;s premises to 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, approximately 20% of a project team is onsite but the ratio can vary based on
the nature and complexity of the project.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146;s IT department, manage the execution of the
project. When needed, such offshore centers have equipment specific to the customer, or have a
designated work area with its own security protocols. In such cases, the customer agrees to regular
periodic billing regardless of the work performed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Offsite centers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that a key success factor in meeting our customers&#146; needs is our physical proximity to
the customer. Accordingly, we have expanded and improved our offshore development model by
establishing offsite centers in our major markets. We have 29 offsite centers in locations in
Australia, Brazil, Canada, China, Germany, Hungary, Japan, Korea, Malaysia, Singapore, South
Africa, Thailand, United Arab Emirates, the United Kingdom and United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, many of our existing customers are expanding into new geographic markets and are
requiring us to serve them in these new locations. This trend has led us to increase the number of
offsite centers as a part of our &#147;Follow the Customer&#148; strategy. We believe that these offsite
centers, apart from serving our existing customers, also help us generate new business in these
geographic locations. 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&#146;s
specifications are not clearly defined and to market services tailored to meet the needs of
specific geographic markets. We staff our offsite centers with locally-hired managers, marketers
and technical associates which we believe enable us to compete more effectively with local IT
service providers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Nearshore centers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For some of our customers, especially in the United States, we have leveraged Canada as a
nearshore center because of its proximity to the customer and the advantages of providing services
from centers in the same time zone as the customer. Instead of using only our offshore and onsite
locations for the solution delivery, we utilize these nearshore centers to perform a variety of
life cycle activities. For example, for certain development projects, we have created prototypes of
the solution in these nearshore centers. Since the development of prototypes typically involve a
high level of interaction with the customer and our onsite teams, the nearshore centers facilitate
quick turnaround times.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We use our China development center as a nearshore center for the Asia-Pacific region to leverage
the language capability and also multi-byte data for Asian languages. Similarly, we intend to use
our Hungary development center for the European and North and South American markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Onsite teams</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Some customers require the presence of our project teams at their premises, particularly for
mission critical or higher involvement projects. The customer&#146;s team and our project team
collaborate to develop IT services that meet the customer&#146;s specifications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quality and Project Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Critical elements for the success of our global delivery model are well established
quality management systems and sophisticated project management techniques. As an integral part of
our processes, we have established a strict quality assurance and control program. We are certified
under the ISO 9001 TickIT standard. Each of our business units that qualify for an assessment on
the CMMI model have been assessed at CMMI Level 5 resulting in Satyam being a CMMI Level 5 company.
We have also achieved AS9100/EN9100 certification &#150; Quality Systems requirements for aerospace
suppliers, PCMM Level 5 Assessment for Pune Location. We have adopted Six Sigma as a way of
improving our processes and providing the highest levels of quality to our customers. Our
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">quality management system involves, among other things, a rigorous review of software development
processes, review and testing of work product and regular internal quality audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have been certified under ISO 27001 &#151; Information Security Management model. This model governs
our information security activities and helps us manage security, business continuity and disaster
recovery requirements of our customers. We are also certified for ISO20000 &#151; IT Service Management
standard for seamlessly providing IT Service to customers.
Maintaining a high level of customer satisfaction requires sophisticated project management
techniques to deliver services seamlessly across multiple locations and time zones. Further, to
keep pace with high growth and deliver value proposition to customers, we have implemented
an enterprise wide project management tool, Optima (Operational Projects Real Time Management).
Optima is based on cProjects, a new Enterprise Project Management solution from SAP. cProjects has
been customized to meet our specific needs and has been implemented across the organization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We market our services primarily to companies in the United States, Europe, the Middle East and the
Asia-Pacific region. We have a global customer base which, as of March&nbsp;31, 2007, consisted of 558
customers including 163 Fortune Global 500 and Fortune U.S. 500 companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we derive a significant proportion of our revenues from a limited number of customers,
our strategy is to seek new customers and at the same time secure additional engagements from
existing customers by providing high quality services and cross-selling new services. The strength
of our relationships has resulted in significant recurring revenue from existing customers. Our
business from existing customers in fiscal 2007, fiscal 2006 and fiscal 2005 accounted for 86.7%,
90.6% and 92.1% of IT services revenues, respectively. In fiscal 2007, fiscal 2006 and fiscal 2005,
our largest customer, together with its affiliates, accounted for 6.3%, 8.8% and 10.8%,
respectively, of our total revenues. In fiscal 2007, fiscal 2006 and fiscal 2005, our second
largest customer accounted for 4.4%, 5.1% and 7.4% respectively, of our total revenues. Our top
five customers accounted for 21.0%, 24.2% and 29.2% of our total revenues in fiscal 2007, fiscal 2006 and
fiscal 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a distribution of our customers by our revenues on a trailing 12-month basis
or for the fiscal indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Fiscal</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">No. of $1&#043; million customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">No. of $5&#043; million customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">No. of $10&#043; million customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our customers are from diverse industry segments, including from the manufacturing, banking and
finance, insurance, and telecom segments. The manufacturing segment accounts for the highest
contribution of our revenues followed by the banking and finance segment. We continue to witness
accelerated growth in the healthcare segment, while customers have been increasing in newer
segments such as retail, energy and utilities.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a distribution of our IT revenues across our industry segments for the three most
recent fiscal years:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Fiscal</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.6 </TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.2 </TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Banking and Finance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Insurance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TIMES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Healthcare</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retail</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transportation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0 </TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sales and Marketing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our sales operations comprise a Sales team, Account management team, Pre-Sales support team, and
our Strategic Deals Group. Sales associates work solely on acquiring new customers. The second
group consists of relationship managers who cross-sell services to existing customers and are
responsible for building long-term relationships with such customers. The Pre-Sales group supports
the business development efforts for prospects and existing accounts. Satyam has also invested in a
strategic deals group, which focuses on acquiring large strategic deals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In markets such as the United States and the United Kingdom, we have an industry-focused sales
operation, while in other markets we have regional heads who oversee the sales activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In order to create greater visibility and recognition of our Satyam brand, we continue to invest in
focused programs to enhance customer intimacy. These programs include holding annual customer
summits to facilitate customer interaction, organizing forums, and participating in and sponsoring
industry events to position Satyam as a thought leader.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, we employed 268 marketing and sales associates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>BPO Services and Nipuna</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna, our majority-owned subsidiary, offers BPO services including product support, technical
help desk, back-office transaction processing and customer care services in the areas of finance
and accounting, human resources, claims administration and document management. Nipuna has recently
added services such as research, analytics and animation to its portfolio of service offerings.
Nipuna also offers industry specific services to customers in the manufacturing, banking and
financial services, insurance, TIMES, healthcare, retail and transportation industries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna was established in fiscal 2002. To promote Nipuna&#146;s business, we entered into an agreement
with two investors, Olympus BPO Holdings Limited and Intel Capital Corporation Services Limited,
which restricts Satyam from engaging in activities that are or could directly or indirectly be
competitive with the business of Nipuna. Such activities include among others providing BPO,
soliciting existing or prospective customers of Nipuna to obtain the services offered by Nipuna
from other service providers and investing in companies engaged in the same or similar business as
Nipuna. These non-compete restrictions apply until the investors redeem all of their preference
shares in Nipuna or their equity interest in Nipuna up to 5%. See &#147;Item&nbsp;3. Key Information &#151;
Risk Factors &#151; Risks Related to Our Overall Operations &#151; We face intense competition in the IT
services and BPO markets which could prevent us from attracting and retaining customers and could
reduce our revenues.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, Nipuna had 33 customers including 13 Fortune Global 500 and Fortune U.S.
500 companies. For fiscal 2007, fiscal 2006 and fiscal 2005, Nipuna had revenues of $38.1&nbsp;million,
$20.0&nbsp;million and $10.0&nbsp;million respectively. Nipuna handles more than 64 business processes for
its customers, a majority of which are also customers of Satyam. Majority of Nipuna&#146;s customers are
Fortune Global 500 and Fortune U.S. 500 companies, who have offshored their critical business
processes to Nipuna.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The services offered by Nipuna include:
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Claims administration and transaction processing services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna offers transaction processing services such as data management and claims administration to
its customers. For example, Nipuna provides dental and medical claims administration support by
facilitating data entry of the claims received, for one of the largest insurance companies in the
United States. Its services have resulted in significant costs savings for the customer besides
providing the customer with increased flexibility to manage workload during the peak and off-peak
periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Customer care services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna provides customer care services to customers in different industries. For example, it
provides inbound and outbound support for dial-up and digital subscriber line or DSL customers of a
Fortune 100 communications services company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna also provides IT help desk support to its customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Engineering services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna handles assembly plant management for one of the world&#146;s largest engine manufacturers. It
also manages other processes such as quality compliance and management, engineering change
management, AIS documentation, new product introduction and warranty claims processing. Nipuna also
manages data entry of contact information for potential customers into a single database for one of
the world&#146;s largest automobile manufacturers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Strategic Alliances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have in the past entered into, and plan to continue to enter into, strategic alliances with
leading technology vendors and system integrators where both parties invest to develop innovative
solutions and build competencies. We have partnered with some of the leading names in key
application areas such as Enterprise Resource Planning (SAP &#038;
Oracle), Customer Relationship Management, Integration Middleware, Business Intelligence
(Business Objects and Informatica) and Infrastructure Management. Some of our other prominent
alliance partners include JDA, Dassault Matrix One, Documentum, Hummingbird and Hyperion. We
believe that our existing alliances with over 60 leading technology vendors spanning distinct parts
of our customers&#146; value chain have enhanced our ability to offer packaged solutions across a wide
array of technologies and platforms to our customers. We work closely with our alliance partners
who provide assistance in technology evaluation and selection, product support and product
enhancements. We also have alliances with education and research
institutions (Indian Institute of Science, Carnegie
Mellon University) to facilitate research and develop solutions to business problems. None of these
alliances are exclusive in nature and some of the alliance agreements need to be renewed each year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our joint venture with Venture Engineering Global LLC, Satyam Venture, is engaged in providing
engineering solutions, software development, and customization services specifically for the
automotive industries worldwide. See &#147;Item&nbsp;8 &#150; Financial information &#150; Legal Proceedings.&#148; See also
note 19(f) consolidated financial statements included in this Annual Report. In addition, our
joint venture with Computer Associates International, Inc., or CA Satyam, is engaged in the
business of hosting, delivering and administering selective applications consisting of software
products licensed by Computer Associates International, Inc. These two joint ventures are accounted
using equity method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We refer to our employees as &#147;associates.&#148; Our success depends in large part on our ability to
attract, develop, motivate and retain highly skilled technical associates. Besides competitive
salaries and incentive pay, we also offer extensive training, an entrepreneurial work environment
and opportunities to work overseas. Since May&nbsp;1998, we have offered stock options to our
associates. but, subject to certain exceptions, have decided to stop all stock based compensation
with effect from October&nbsp;1, 2004. As of March&nbsp;31, 2007, we had 39,018 associates including Nipuna&#146;s
2,916 associates representing a compound annual growth rate in the number of our associates of
40.5% since fiscal 2000. None of our associates are represented by a union. We believe that our
relationship with our associates is good.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our growth has been driven by our ability to attract top quality talent and effectively engage
them. We strongly believe in caring for
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">our associates&#146; welfare and were selected as one of the Top 3 Best Employers in India by
BT-TNS-Mercer in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Recruiting</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We recruit graduates from the engineering departments of India&#146;s leading universities, engineering
and technical colleges and management institutes. India has over 1,500 such institutions 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 rigorous selection process involving a series of tests
and interviews. We also hire professionals who have relevant prior experience from working in India
and outside India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Learning and Developmental Training</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We devote significant resources for training our associates. We established the Satyam Learning
Center &#038; Satyam School of Leadership, which promotes our culture of learning and serves as a
catalyst for us to sustain our technological, managerial and leadership edge. We require all
associates to undergo a minimum of 40 hours of learning per year. We have qualified full-time
faculty at our learning center that provides ongoing training to our associates at all levels,
through which we build competencies in emerging disciplines necessary to meet our customers&#146; needs.
Our training initiatives provide us with a pool of qualified associates which in turn provides us
the flexibility to ramp up resources to meet the demands of particular projects and to redeploy our
personnel across projects according to our business needs. Apart from technical oriented learning,
we also provide leadership training, language training and training on cultural sensitization. SLC
has launched the &#147;Satyam Learning World&#148; a new learning management system procured by SLC,
technology assisted learning hass gained significant momentum this year. Satyam Learning World
(SLW)&nbsp;is a unique and first of its kind Virtual Learning Environment (VLE)&nbsp;in India. Satyam School
of Leadership offers a plethora of learning initiatives for the leaders of organization. This is
aimed at broadening our leadership bandwidth and developing our associates into business leaders
for critical business areas such as program management and relationship management. These leaders
grow other leaders by teaching and contributing to learning in the organization Trainers for our
leadership training include professors from the Harvard Business School. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Retention</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. In fiscal 2007, 2006 and 2005, we experienced
associate attrition in IT services at a rate of 15.7% 19.2%, and 16.5% respectively, which included
involuntary attrition ranging from 3% to 5% as part of our systematic quality campaign.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our human resources policies and practices are oriented towards enhancing associate engagement
levels by proactively addressing the factors that impact retention. Several learning and
development opportunities are provided to ensure that associates not only upgrade their skills and
competencies but are also able to keep pace with cutting edge technologies and prepare themselves
to take up challenging roles. Through our comprehensive rewards and recognitions programs and
opportunities for job rotation across technologies, industries and locations, we ensure that our
associates are motivated and performance oriented.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our professionals who work onsite at customers&#146; premises in the United States on temporary and
extended assignments are typically required to obtain visas. H-1B visas are generally used for
deploying personnel to the United States for onsite work, and L-1 visas are typically used for
intra-company transfers of employees. 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. Our internal
processes enable us to anticipate the amount and type of visas we need for our associates and to
plan our resources in advance to meet our project needs.<BR>
<B>Competition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate in a highly competitive and rapidly changing market and compete primarily with:
</DIV>

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<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>divisions of large multinational technology firms such as Hewlett-Packard and IBM;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM
Global Services; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy
Services Limited and Wipro Limited.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also compete with software firms such as Oracle and SAP, service groups of computer equipment
companies, in-house IT departments of large corporations and programming companies and temporary
staffing firms. In addition, Nipuna faces competition from firms like Infosys BPO, formerly known
as Progeon Ltd. and Wipro BPO, formerly known as Wipro Spectramind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the future, we expect competition from firms establishing and building their offshore presence
and firms in countries with lower personnel costs than those prevailing in India. However, we
recognize that price advantage alone cannot be a sustainable competitive advantage. We believe that
the principal competitive factors in our business include our range of services offered, our level
of technical expertise and industry knowledge, our responsiveness to customers&#146; business needs and
the perceived value added. We believe we compete favorably with respect to these factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Communications Infrastructure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A key component of our IT services delivery model is our ability to connect the customer&#146;s system
with our offsite and offshore centers through a robust and high performance communications network.
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. SatyamNet provides flexibility
for the projects to operate from any of the development facilities inside Satyam providing for
seamless integration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have
dedicated telecommunication network based on Multi Protocol Label
Switching, or MPLS, technology and leased lines from reputed
service providers such as Orange Business Services (formally known as Equant Inc.) for global
connectivity, Sify Ltd for India domestic connections, VSNL, Bharti, Reliance and BSNL for
intra-city communications in India. This network permits data communication between our facilities
in India and our customers&#146; facilities abroad. In the United States, we have communication hubs in
Vienna, Virginia and Parsippany, New Jersey to connect to our customers&#146; sites. Our other network hubs
are Melbourne in Australia, London for the UK and rest of Europe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We monitor the network performance and continually upgrade SatyamNet to enhance and optimize
network efficiency across all operating locations. We currently have 109 Mbps commulative bandwidth
for International data communication and 161Mbps Internet bandwidth globally. In addition, we have
81 Mbps of bandwidth on India MPLS connecting various cities, with our intra-city links
being connected by multiple 10 Mbps lines totaling to 510Mbps across the country. We upgrade the
bandwidth based on our requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our network has surplus capacity available to service new customers in the immediate future and to
permit sudden bursts of data transfer and other contingent uses. We use voice over Internet
protocols (VoIP) for our voice communication. We have created a
resilient network through redundancy in the network and keep adequate stock of spares to ensure
high availability and reliability of our networks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SatyamNet has extensive security and virus protection capability built to conform to stringent
customer and international standards to protect Satyam from virus attacks and provide the necessary
security to customers&#146; data. We have created plans for business continuity and disaster recovery by
defining multiple sites across India and other development centers as backup centers for continuity
of work.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Facilities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our corporate headquarters, the Satyam Technology Center, is located in Hyderabad, India. We own
this facility, which provides a modern workspace for approximately 4,000 software associates in two
buildings covering an aggregate area of approximately 676,000&nbsp;square feet, which are linked to
our other facilities through SatyamNet. The Satyam Technology Center also has recreational
facilities and housing for up to 750 associates which covers an area
of approximately 285,000
square feet. This center also houses learning facilities covering an area of approximately 115,000
square feet to train 1440 associates.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We also have additional offshore software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad, Vizag and Pune in India with facilities aggregating approximately
2,408,000 square feet. We own some of the facilities while others are leased by us on a long-term
basis ranging from six to nine years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 and nearshore centers in major markets to establish a
local presence closer to our customers. We lease all of our offsite and nearshore centers for
durations ranging from two years to seven years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have incurred $81.5&nbsp;million in fiscal 2007 and in fiscal 2008 we expect capital expenditure of
approximately $100.0&nbsp;million to finance the construction of new facilities and the expansion of our
existing facilities in our offshore centers and to establish offsite centers outside of India.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Intellectual Property</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 registered &#147;Satyam&#148; and other related marks in India
and the United States under certain classes and have applied for the registration of such marks in
other jurisdictions where we carry on business. 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.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Seasonality</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business is not affected by seasonality.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Government Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Regulation of our business by the Indian government affects our business in several ways. We
benefit from certain tax incentives promulgated by the GoI, including a 10-year tax holiday from
Indian corporate income taxes for the operation of most of our Indian facilities and a partial
taxable income deduction for profits derived from exported IT services under Indian tax laws. As a
result of these incentives, our operations have been subject to relatively insignificant Indian tax
liabilities. We have also benefited from the liberalization and deregulation of the Indian economy
by the successive Indian governments since 1991. Further, there are restrictive parts of Indian law
that effect our business, including the fact that we are generally required to obtain approval from
the RBI and/or the Ministry of Finance of the GoI to acquire companies organized outside India, and
we are generally required, subject to some exceptions, to obtain approval from relevant government
authorities in India in order to raise capital outside India. Finally, the conversion of our equity
shares into ADSs is governed by guidelines issued by the RBI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please see &#147;Item&nbsp;10. Additional Information&#148;, as well as &#147;Item&nbsp;3. Key Information&#151;Risk
Factors&#148; for additional information on the effects of governmental regulation of our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our research and development efforts are focused on developing services required by our existing
customers, to attract new customers and developing competencies and leadership in our service
offerings. We have established close alliances with U.S. and Indian institutions such as Carnegie
Mellon University and Indian Institute of Technology, Madras to strengthen our technology
competencies. We have set up an enterprise business solution laboratory where latest versions of
products are evaluated, business solution scenarios are created and validated. We have set up a
grid computing laboratory which simulates a live grid environment for testing sample applications
on the grid. We have also established a data warehousing and business intelligence center which has
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">developed proprietary business intelligence architectural platform which enables us to build large
scale data warehousing and business intelligence solutions. We are also working with major
technology providers in the areas of technology architectures for .NET for solutions for various
industries. In the embedded systems space, we have created an environment to simulate various
operating conditions and validate the solutions we build. We have an applied research group which
focuses on creating IP in the areas of competition, communication, networking and information
processing algorithms. In addition to presenting papers at international conferences and publishing
in referenced journals, this group has over 16 United States patent applications in various stages
of registration. In fiscal 2007 and 2006, we spent 0.03% and 0.05% of our total revenues on R&#038;D
activities.
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4A. UNRESOLVED STAFF COMMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of the date of filing of this Annual Report, we do not have any unresolved written comments
from the Commission staff regarding our periodic reports under the Exchange Act.
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 &#147;Item
3. Key Information&#151;Risk Factors&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are a global IT solutions provider, offering a comprehensive range of IT services to our
customers, including application development and maintenance services, consulting and enterprise
business solutions extended engineering solutions, infrastructure management services. We also
offer BPO services through our majority-owned subsidiary, Nipuna. We are the fourth largest Indian
IT software and services company, based on the amount of export revenues generated during our
fiscal year ended March&nbsp;31, 2006. Our total revenues for fiscal 2007 were $1,461.4&nbsp;million and over
the past three fiscal years our revenues have grown at a compound annual growth rate of 37.2%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;12, 2005, we acquired a 75% interest in Citisoft Plc or Citisoft, a specialist business and
systems consulting firm that has focused on the investment management industry since 1986. Citisoft
is a UK-based firm, with operating presences in London, Boston and New York. On June&nbsp;29, 2006, we
exercised the call option and acquired the remaining 25% equity interest in Citisoft, making
Citisoft our wholly-owned subsidiary from that date. The operating results of Citisoft are
evaluated by the management under IT services segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2005, we completed a sponsored ADS offering of 15,000,000 ADSs representing 30,000,000
equity shares including the green-shoe option. The offering was priced at $21.5 per ADS. The net
proceeds after expenses of the offering were returned to all the selling shareholders. We did not
receive any proceeds of the offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;1, 2005, we acquired 100% of the shares of Knowledge Dynamics, a leading data
warehousing and business intelligence solutions provider. The operating results of Knowledge
dynamics are evaluated by the management under IT service segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing
our entire investment of 31.6% of the outstanding equity shares of Sify. The sale transaction was
consummated on November&nbsp;9, 2005 at a sale price of $5.60 per equity share aggregating to $62.3
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock
split (in the form of stock dividend) which was effective on October&nbsp;10, 2006. Consequently,
Satyam capitalized an amount of $17.7&nbsp;million from its retained earnings to common stock. All
references to number of shares, per share amounts, stock option data, and market prices of Satyam
Computer Services&#146; equity shares have been retroactively restated to reflect the stock split
unless otherwise noted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;20, 2006, a Share Purchase, Redemption and Amendment Agreement (&#147;SPRA Agreement&#148;) was
entered into between
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam,
the investors and Nipuna. Out of the total preference shares, 50% of the preference
shares ($ 10&nbsp;million) would be redeemed for $ 13.6&nbsp;million at the target date on May&nbsp;21, 2007 and
the balance 50% would get converted into equity shares of Nipuna based on the terms of the
existing subscription agreement. Since 50% of the preference shares are mandatorily redeemable,
Satyam has reclassified 50% of the preference shares as a current liability measured at fair value
and accrued redemption premium amounting to $3.6&nbsp;million up to March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The
investors gave Nipuna a notice of conversion of preference shares and in January&nbsp;2007
preference shares amounting to $10&nbsp;million have been converted into 6,422,267 equity shares of
Nipuna. Due to the issue of shares by Nipuna, Satyam Computer Services&#146; ownership interest in
Nipuna was reduced from 100.0% as at March&nbsp;31, 2006 to 74.0% as at March&nbsp;31, 2007. The shares
issued to the investors are at amounts per share higher than Satyam Computer Services&#146; average cost
per share. With respect to this transaction, the resulting gain of US$7.9&nbsp;million, net of taxes
during the year ended March&nbsp;31, 2007 has been recorded as an increase in additional paid in
capital. Since the losses applicable to the minority interest in Nipuna exceeded the minority
interest in the equity capital of Nipuna, such excess and further losses have been charged in
Satyam&#146;s consolidated statement of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During 2007, we have also established the following schemes &#147;Associate Stock Option Plan -
Restricted Stock Units (ASOP &#150; RSUs)&#148; and &#147;Associate
Stock Option Plan &#151; RSUs (ADS)&#148;. See &#147;Item 6.
Directors, Senior Management and Employees&nbsp;&#151;&nbsp;Employee
Benefit Plans&#148;&nbsp;&#151;&nbsp;for more information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe customers are increasingly demanding full-service IT providers that have expertise in
both existing systems and new technologies, access to a large pool of highly-skilled technical
personnel and the ability to service customers globally at competitive rates. To meet these
requirements, we offer our customers an integrated global delivery model, which we refer to as the
&#147;Right Sourcing Model,&#148; to provide flexible delivery alternatives to our customers through our
offshore centers located in India, offsite centers which we have established in our major markets,
nearshore centers located geographically near our customers&#146; premises and through our onsite teams
operating at our customers&#146; premises. In addition, we use the expertise resident in our focused
industry groups to provide specialized services and solutions to our customers in the
manufacturing, banking and financial services, insurance, TIMES, healthcare, retail and
transportation industries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our revenues and profitability have grown significantly in recent years. Our total revenues
increased by 33.3% to $1,461.4&nbsp;million in fiscal 2007 as compared to $1,096.3&nbsp;million in fiscal
2006. Our net income increased by 19.6% to $298.4&nbsp;million in fiscal 2007 from $249.4&nbsp;million in
fiscal 2006. Our total revenues increased by 38.1% to $1,096.3&nbsp;million in fiscal 2006 as compared
to $793.6&nbsp;million in fiscal 2005. Our net income increased by 62.2% to $249.4&nbsp;million in fiscal
2006 from $153.8&nbsp;million in fiscal 2005. Our revenue and profitability growth is attributable to a
number of factors related to the expansion of our business, including increase in the volume of
projects completed for our widening customer base, increase in our associate numbers, increased
growth in our consulting and enterprise business solutions business and a strengthening of our
customer base in United States and Europe. Our growth has continued despite increasing pressure for
higher wages for our associates coupled with pressure for lower prices for our customers. In fiscal
2007, fiscal 2006 and fiscal 2005, our five largest customers accounted for 23.3%, 24.2% and 29.2%
respectively, of our total revenues. As of March&nbsp;31, 2007, we had 39,018 employees (including
employees of our subsidiaries), whom we refer to as associates, worldwide as compared to 28,624
associates as of March&nbsp;31, 2006. With our continuing geographical expansion we now have offshore
facilities in India and overseas facilities located in Australia, Canada, China, Hungary, Japan,
Malaysia, Singapore, United Arab Emirates, United Kingdom and United States. We also have sales and
marketing offices located in Brazil, Canada, Germany, Italy, the Netherlands, Saudi Arabia, Spain,
Sweden, United Kingdom and United States and sales and marketing offices in the rest of the world.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has adopted SFAS 131; <I>&#147;Disclosures about Segments of an Enterprise and Related Information&#148;</I>
which requires disclosure of financial and descriptive information about Satyam&#146;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. The executive management evaluates Satyam&#146;s operating segments based on the
following two business groups:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>IT services: </I></B>We provide a comprehensive range of IT services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, and infrastructure management services. We seek to be the single
service provider capable of servicing all of our customers&#146; IT requirements. Our consulting
and enterprise business solutions includes services in the area of enterprise resource
planning, customer relationship management</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and supply chain management, data warehousing and business intelligence, knowledge
management, document management and enterprise application integration. We also assist our
customers in making their existing computing systems accessible over the Internet. The
segment information includes the results of Citisoft and Knowledge Dynamics Pte Ltd,
Singapore, or Knowledge Dynamics which were acquired during 2005.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><I>BPO: </I></B>We provide outsourced BPO services in areas such as human resources, finance and
accounting, customer care (such as voice, email and chat) besides also providing
industry-specific transaction processing services. We target our BPO services at the
insurance, healthcare, banking and financial services, transportation, tourism,
manufacturing, automotive, telecommunications, media, utilities and retail industries.
Revenues from this business segment currently do not constitute a significant proportion of
our total revenues; however, we anticipate that this proportion will increase over time. Our
BPO services are offered through our majority-owned subsidiary, Nipuna. As part of the
investor rights and securities subscription agreements which we have entered into with
Nipuna&#146;s two other investors, we have agreed not to compete with Nipuna. Pursuant to these
agreements, we and our affiliates are restricted from engaging in activities that are or
could directly or indirectly be competitive with the business of Nipuna. Such activities
include among others providing BPO, soliciting existing or prospective customers of Nipuna
to obtain the services offered by Nipuna from other service providers and investing in
companies engaged in the same or similar business as Nipuna. These non-compete restrictions
apply until the investors redeem all of their preference shares in Nipuna or their equity
interest in Nipuna up to 5%.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenues</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We generate revenues through fees for professional services rendered in our two segments, namely,
IT services and BPO services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the total revenues (excluding inter-segment revenues) for our
business segments&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for fiscal 2007, 2006 and 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Segment</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,461.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We discuss below the components of our IT services revenues by technology type, contract type,
offshore or onshore designation, top customers and customer geography:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenues by technology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The vast majority of our revenues are generated from our various IT service offerings. The
following table presents our IT services revenues (excluding inter-segment revenues) by type of
service offering for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Technology type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Application development and maintenance services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">675.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">541.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">429.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consulting and enterprise business solutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">429.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Extended engineering solutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Infrastructure management services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenues by contract type</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our IT services are provided on a time-and-material basis or on a fixed-price basis. Revenues from
IT services provided on a time-and-material basis are recognized in the period that the services
are performed. Revenues from IT services provided on a fixed-price basis are recognized under the
percentage of completion method of accounting and are recorded when we can reasonably estimate the
time period to complete the work. 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 to us. Although we have
revised our project completion estimates from time to time, such revisions have not materially
affected our reported revenues to date. In recent years, we have experienced some pricing pressure
from our customers, which has had a negative impact on margins. In response to current market
trends, we are considering the viability of introducing performance-based or variable-pricing
contracts. In the near term, we expect that revenue from fixed-price contracts will continue to
increase as current market trends indicate a customer preference towards fixed-price contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents our IT services revenues (excluding inter-segment revenues) by type of
contract for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contract type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Time-and-material basis</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">873.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">702.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">64.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">517.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">65.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed-price basis</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">559.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenues based on offshore and onsite/offsite</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide our IT services through a combination of (i)&nbsp;offshore centers located throughout India,
(ii)&nbsp;teams working onsite at a customer&#146;s location, (iii)&nbsp;nearshore centers located in Canada,
China and Hungary to service U.S.-based, Asia Pacific based and Europe based customers,
respectively, and (iv)&nbsp;29 offsite centers in locations in Australia, Brazil, Canada, China,
Germany, Hungary, Japan, Korea, Malaysia, Singapore, South Africa, Thailand, United Arab Emirates,
the United Kingdom and United States.. Offshore IT services revenues consist of revenues earned
both from IT services work conducted at our offshore centers in India as well as onsite work
conducted at customers&#146; premises which is related to offshore work. Offshore IT services revenues
do not include revenues from our offsite or nearshore centers located outside of India or revenues
from onsite work which is not related to any offshore work. These later revenues are included in
onsite/offsite revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We generally charge higher rates and incur higher compensation expenses for work performed by our
onsite teams at our customer&#146;s premises or at our offsite and nearshore centers, as compared to
work performed at our offshore centers in India. Services performed by 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents our IT services revenues (excluding inter-segment revenues) based on
the location where services are performed for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Offshore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">704.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">49.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">496.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Onsite/Offsite</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">728.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">586.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenues by top customers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our top two customers accounted for 11.0% of our IT services&#146; revenues in fiscal 2007, as compared
to 14.1% and 18.3% of IT services&#146; revenues in fiscal 2006 and 2005 respectively. Our top five
customers accounted for 21.5% of IT services&#146; revenues in fiscal
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->39<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2007, as compared to 24.5% and 29.5% of IT services&#146; revenues in fiscal 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenues based on customer location</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have experienced increasing volumes of business from customers located in United States and
Europe, attributable to both new customers and additional business from existing customers. We
expect that most of our revenues will be generated in United States followed by Europe in fiscal
2007. The following table gives the composition of our IT services revenues (excluding inter-segment
revenues) based on the location of our customers for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Geographic location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">908.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">63.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">699.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">64.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">538.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">India</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rest of the world</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">164.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cost of revenues</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our cost of revenues consists primarily of the compensation cost of technical staff, depreciation
on dedicated assets and system and application software costs, amortization of intangibles, travel
costs, data communication expenses and other expenses incurred that are related to the generation
of revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The principal component of our cost of revenues is the wage cost of our technical associates. Wage
cost in India, including in the IT services industry, have historically been significantly lower
than wage cost in the United States and Europe for comparably skilled professionals. However, as
wages in India increase at a faster rate than in the United States, we may experience increase in
our costs of personnel, particularly project managers and other mid-level professionals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The utilization levels of our technical associates also affect our revenue and gross profits. We
calculate utilization levels on a monthly basis, 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 or she works 157 hours per
month. We manage utilization by monitoring project requirements and timetables. The number of
associates assigned to a project will vary according to size, complexity, duration, and demands of
the project. Associate utilization levels for IT services were 83.8%, 85.0% and 82.1% in fiscal
2007, 2006 and 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Selling, general and administrative expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Selling, general and administrative expenses generally include the compensation costs of sales,
management and administrative personnel, travel costs, advertising, business promotion,
depreciation on assets, rent, repairs, electricity and other general expenses not attributable to
cost of revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Subsidiaries</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, we have four wholly-owned subsidiaries, Satyam Technologies Inc., or
STI, Satyam Computer Services (Shanghai) Company Limited, or Satyam Shanghai, Citisoft and
Knowledge Dynamics as well as one majority owned subsidiary, Nipuna. These five subsidiaries have been consolidated in our consolidated financial
statements for the year ended March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Citisoft</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;12, 2005, Satyam Computer Services acquired a 75% interest in Citisoft Plc or Citisoft, a
specialist business and systems
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->40<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">consulting firm located in the United Kingdom that has focused on the investment management
industry since 1986. The results of Citisoft&#146;s operations have been consolidated by Satyam
Computer Services from the consummation date of May&nbsp;12, 2005. The acquisition has been accounted
for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consideration for the 75% equity interest in Citisoft amounted to $17.4&nbsp;million comprising of
an initial consideration of $14.3&nbsp;million (including direct acquisition costs of $0.9&nbsp;million) and
deferred consideration (non-contingent) of $3.1&nbsp;million. Deferred consideration for the acquisition
of the 75% equity interest was accounted for as part of the purchase consideration and disclosed as
a current liability in the consolidated balance sheet as of March&nbsp;31, 2006 this has been paid
subsequently in June&nbsp;2006. Satyam Computer Services is also required to pay a maximum earn out
consideration amounting to $3.9&nbsp;million in May&nbsp;2007 based on achievement of targeted revenues and
profits for the year ended April&nbsp;30, 2007. The earn-out consideration will be accounted for as
additional purchase consideration when the contingency is resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services had a call option and the minority shareholders had a put option to
acquire / sell the balance 25% equity shares in two tranches 12.5% on April&nbsp;30, 2007 and 12.5% on
April&nbsp;30, 2008. The consideration payable for the first tranche of 12.5% equity shares on April
30, 2007 would amount to $2.8&nbsp;million and a maximum earn-out consideration amounting to $2.7
million based on achievement of targeted revenues and profits. The consideration payable for the
second tranche of 12.5% equity shares on April&nbsp;30, 2008 would amount to $2.9&nbsp;million and a maximum
earn-out consideration amounting to $4.2&nbsp;million based on achievement of targeted revenues and
profits. Satyam Computer Services recorded 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
75.0% interest in Citisoft. The difference between the fair values at each valuation date was
charged to selling, general and administration expenses in statement of income. On the basis of an
independent valuation, the value of put option was $ Nil and $1.1&nbsp;million as of May&nbsp;12, 2005 and
March&nbsp;31, 2006 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;29, 2006, Satyam Computer Services exercised the call option and acquired the remaining 25%
equity interest for a deferred consideration of $5.9&nbsp;million payable on April&nbsp;30, 2007 and a
maximum earn-out consideration of $2.7&nbsp;million and $4.2&nbsp;million payable in May&nbsp;2007 and 2008
respectively based on achievement of targeted revenues and profits for the years ended April&nbsp;30,
2007 and 2008. As a result Satyam reversed the put option liability during the year ended March&nbsp;31,
2007. The acquisition was accounted for as a step purchase of the 25% equity interest, the deferred
consideration for the acquisition of the 25% equity interest was accounted for as part of the
purchase consideration and disclosed as a current liability in the consolidated balance sheet as of
March&nbsp;31, 2007. The earn-out consideration will be accounted for as additional purchase
consideration when the contingency is resolved.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->41<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services is also required to fund an Employee Benefit Trust (&#147;EBT&#148;) formed by
Citisoft for the purpose of providing additional incentive to employees to contribute to the
success of Citisoft. Satyam is required to fund a maximum of $3.4&nbsp;million and $1.7&nbsp;million on
April&nbsp;30, 2007 and 2008 respectively, based on achievement of targeted revenues and profits. Satyam
Computer Services has recognized $1.7&nbsp;million and $1.4&nbsp;million in the consolidated statement of
income as part of cost of revenues in respect of the EBT contribution for the years ended March&nbsp;31,
2007 and 2006 respectively. The unpaid EBT contribution (disclosed as a current liability) amounted
to $1.6&nbsp;million and $1.4&nbsp;million as of March&nbsp;31, 2007 and 2006 respectively
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase consideration for acquisition of interest has been allocated to the assets acquired
and liabilities assumed as of the date of acquisition based on management&#146;s estimates and a
valuation done by an independent valuer in accordance with Statement of Financial Accounting
Standards No.&nbsp;141, Business Combinations. The goodwill has been allocated to the IT services
segment. The purchase price allocation is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><B>$ in millions</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Acquisition of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Acquisition of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>75% interest</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>25% interest</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>Allocated to:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp; &nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts related intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationship related intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp; &nbsp; &nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp; &nbsp; &nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pro forma disclosure regarding this acquisition has not been provided because it is not material to
the operations of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Knowledge Dynamics</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics, a leading Data Warehousing and Business Intelligence Solutions provider. The
transaction was consummated on October&nbsp;1, 2005, the date of transfer of shares to Satyam Computer
Services and Satyam Computer Services has consolidated Knowledge Dynamics, from October&nbsp;1, 2005.
The acquisition has been accounted for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consideration for this acquisition amounted to $3.3&nbsp;million comprising of initial consideration
of $1.8&nbsp;million (including direct acquisition costs of $11 thousand) and deferred consideration
(non-contingent) of $1.5&nbsp;million. The total deferred consideration for the acquisition of $1.5
million has been accounted for as part of the purchase consideration out of which $0.8&nbsp;million has
been paid during the year ended March&nbsp;31, 2007 and $0.7&nbsp;million as current liability in the balance
sheet. Satyam Computer Services is also required to pay a maximum earn out consideration amounting
to $1.1&nbsp;million and $1.1&nbsp;million on April&nbsp;30, 2007 and 2008 respectively based on the achievement
of targeted revenues and profits from the date of acquisition upto April&nbsp;30, 2007 and 2008
respectively. The earn-out consideration will be accounted for as purchase consideration when the
contingency is resolved.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->42<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management&#146;s estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No.&nbsp;141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>$
in millions</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts and Related Relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp; &nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 3px double #000000">&nbsp; &nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pro forma disclosure regarding this acquisition has not been provided because it is not material to
the operations of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Associate &#151; Sify</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing our
entire investment of 31.6% of the outstanding equity shares of Sify Limited., or Sify. The sale
transaction was consummated on November&nbsp;9, 2005 at a sale price of $5.60 per equity share
aggregating to $62.3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We accounted for our share of equity in earnings/(losses) of Sify under the equity method of
accounting up to November&nbsp;9, 2005. The excess of sale proceeds (net of transaction costs) over the
carrying value of investment in Sify as on the date of sale amounting to $43.6&nbsp;million has been
recognized as gain in the statement of income during year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Preferred Stock of Subsidiary</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna issued 45,669,999 and 45,340,000 0.05% convertible redeemable cumulative preference shares
of par value Rs 10 ($0.23) per share in October&nbsp;2003 and June&nbsp;2004 respectively to the investors
at an issue price of Rs.10 ($0.23) per share, in exchange for an aggregate consideration of $20
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As per the agreement, these preference shares were mandatorily convertible into equity shares of
Nipuna no later than June&nbsp;2006, if Nipuna achieved certain targets for revenues and profits earned
up to March&nbsp;31, 2006. If these targeted revenues and profits were not achieved by Nipuna along
with other triggering events, the investors had an option to either redeem these preference shares
or convert them. Although certain triggering events for early redemption as per the agreement
occurred during the period January&nbsp;2004 to December&nbsp;2004 the investors waived the right of early
redemption. Further Nipuna has not achieved the targeted revenues and profits upto March&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If not converted, early converted or redeemed, these convertible preference shares were redeemable
on maturity in June&nbsp;2007 at a redemption premium, which could range between 7.5% to 13.5% p.a. The
Investors are entitled to receive dividends at the rate of 0.05% per cent per annum, on the face
value of Rs. 10 ($0.23) from the date of issuance of such Preference Shares. The dividends are
cumulative and payable in cash at the rate indicated above, whether or not they have been declared
and whether or not there are profits, surplus or other funds of Nipuna legally available for the
payment of dividends. These preference shares rank senior to all classes of Nipuna&#146;s currently
existing capital stock or established subsequently with respect to dividend distributions and
repayment of capital and premium upon a Bankruptcy Event or Change in Control with respect to
Nipuna, unless the terms and conditions of such class expressly provide that such class will rank
senior to or on parity with the convertible redeemable cumulative preference shares. The dividend
on the preference shares for the year ended March&nbsp;31, 2007 is payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;20, 2006, a Share Purchase, Redemption and Amendment Agreement (&#147;SPRA Agreement&#148;)
was entered into between Satyam, the Investors and Nipuna. Out of the total preference shares,
50% of the preference shares ($ 10&nbsp;million) would be redeemed
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">for $13.6&nbsp;million at the target date on May&nbsp;21, 2007 and the balance 50% would get converted into
equity shares of Nipuna based on the terms of the existing subscription agreement. Since 50% of
the Preference Shares are mandatorily redeemable, Satyam has reclassified 50% of the preference
shares as a current liability measured at fair value and accrued redemption premium amounting to
$3.6&nbsp;million up to March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Further as per the SPRA Agreement, Satyam agrees to purchase and the Investors agree to sell these
equity shares at an aggregate purchase price based on a formula. If the share purchase closing
occurs on or before the share purchase target date (May&nbsp;21, 2007) then the purchase price would
range from a minimum of $35&nbsp;million to maximum of $45&nbsp;million, however if an acceleration event
occurs the purchase price would equal $45&nbsp;million. If the share purchase closing occurs after the
share purchase target date then the purchase price shall not be less than $35&nbsp;million however if
an acceleration event occurs the purchase price shall not be less than $45&nbsp;million. This is
subject to fulfillment of terms and conditions specified in the agreement and obtaining necessary
approvals from appropriate authorities. As of March&nbsp;31, 2007 an acceleration event has occurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The forward contract is freestanding and has been accounted for under SFAS 150 and hence the
issuance of Nipuna&#146;s equity shares has been considered as a minority interest. The Investors gave
Nipuna a Notice of Conversion of Preference Shares and in January&nbsp;2007 preference shares amounting
to $10&nbsp;million have been converted into 6,422,267 equity shares of Nipuna. Due to the issue of
shares by Nipuna Satyam Computer Services&#146; ownership interest in Nipuna was reduced from 100.0% as
at March&nbsp;31, 2006 to 74.0% as at March&nbsp;31, 2007. The shares issued to the Investors are at
amounts per share higher than Satyam Computer Services&#146; average cost per share. With respect to
this transaction, the resulting gain of $7.9&nbsp;million, net of taxes during the year ended March&nbsp;31,
2007 has been recorded as an increase in additional paid in capital. Since the losses applicable
to the minority interest in Nipuna exceeded the minority interest in the equity capital of Nipuna,
such excess and further losses have been charged in Satyam&#146;s consolidated statement of income.
The Investors holding in Nipuna has been accounted for as a minority interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The forward contract has a zero fair vale at inception and at balance sheet date since as per
regulatory requirements the transaction can take place only at fair value. Upon settlement of the
forward the acquisition of the minority interest would be reflected as a step acquisition with a
corresponding reduction in minority interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The statutory corporate income tax rate in India is currently 30.0%. This tax rate is presently
subject to a 10.0% surcharge. The amount of tax and surcharge payable is further subject to a 2.0%
education cess, resulting in an effective tax rate of 33.66%. The provision for foreign taxes is
due to income taxes payable in overseas tax jurisdictions by our offsite, nearshore and onsite
centers, principally in the United States. We benefit from tax incentives provided to software
entities as an exemption from payment of Indian corporate income taxes until the earlier of fiscal
2009 or 10 consecutive years of operations of software development facilities designated as
&#147;Software Technology Parks,&#148; or STP units. The benefits of this tax incentive have historically
resulted in our effective tax rate being well below statutory rates. The exemption for one of our
STP unit in Bangalore and one in Hyderabad, Chennai, Pune and Bhubaneswar expired at the beginning
of fiscal 2006 and fiscal 2007 respectively and the exemption for balance of our STP units will
expire in fiscal 2008 and fiscal 2009. We also earn certain other foreign income and domestic
income, which are taxable irrespective of the tax holiday as stated above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our subsidiaries are subject to income taxes of the countries in which they operate. Our
subsidiaries&#146; operating loss carried forward for tax purposes amounted to approximately $39.8
million as of March&nbsp;31, 2007, which is available as an offset against future taxable income of such
entities. These carried forward amounts expire at various dates primarily over eight to twenty
years. Realization is dependent on such subsidiaries generating sufficient taxable income prior to
expiration of the loss carried forward. A valuation allowance is established attributable to
deferred tax assets and losses carried forward in subsidiaries where, based on available evidence,
it is more likely than not that they will not be realized. Currently, a full valuation allowance
has been made for such losses since we believe that our subsidiaries will not generate sufficient
taxable income prior to expiration of carry forwards and under Indian regulations we are not
allowed to file a consolidated tax return.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->44<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth operating data in dollars and as a percentage of revenues for the
years indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Statement of Operations data:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,433.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,083.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">787.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,461.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
<TD colspan="25"><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues: (1)
</DIV></TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(920.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(678.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(502.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(937.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(689.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(506.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">405.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
<TD colspan="25"><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative expenses: (2)
</DIV></TD></TR>



<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(219.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(176.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total selling, general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(232.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(124.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income/(loss):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">IT services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale of shares in associated companies/ others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain/ (loss)&nbsp;on foreign exchange transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income/(expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes and equity in earnings/(losses) of
associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/(losses) of associated companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Inclusive of stock-based compensation expenses of $12.8&nbsp;million, $Nil and $0.8
million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively in the IT services
segments.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Inclusive of stock-based compensation expenses of
$2.9&nbsp;million, $0.8&nbsp;million and $1.1&nbsp;million for the
years ended March&nbsp;31, 2007, 2006 and 2005 respectively, in the IT services
segments.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->45<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Comparison of results for fiscal 2007 and fiscal 2006.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Revenues. </I></B>Our revenues increased by 33.3% to $1,461.4&nbsp;million in fiscal 2007 from $1,096.3&nbsp;million
in fiscal 2006. This revenue growth of $365.1&nbsp;million in fiscal 2007 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 27.6% to $1,267.3&nbsp;million in fiscal 2007 from $993.0&nbsp;million in fiscal 2006.
Revenues from new customers increased by 87.9% to $194.1&nbsp;million in fiscal 2007 from $103.3&nbsp;million
in fiscal 2006. We added 138 and 120 customers including 7 and 12 from the Fortune Global 500 and
Fortune U.S. 500 list in fiscal 2007 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007, revenues (IT services excluding inter-segment revenues) from consulting and
enterprise business solutions increased by $170.5&nbsp;million, revenues from application development
and maintenance increased by $133.7&nbsp;million, followed by extended engineering solutions and
infrastructure management services, increased by $23.3&nbsp;million and $22.3&nbsp;million respectively. In
terms of percentage growth in fiscal 2007 over fiscal 2006, revenues from consulting and enterprise
solutions has grown by 39.7%, application development and maintenance services has grown by 24.7%,
extended engineering solutions and infrastructure management services have grown by 33.2% and
53.6%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials basis
decreased to 61.0% in fiscal 2007 from 64.9% in fiscal 2006. Revenues from IT services provided on
a fixed-price basis increased to 39.0% in fiscal 2007 from 35.1% in fiscal 2006. The increase in
fiscal 2007 for fixed-price contracts is primarily due to the shift in customer preference
regarding type of contracts from time-and-material to fixed-price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The onsite revenues increased as a result of new engagements in consulting and enterprise business
solutions in fiscal 2007, and the need for extensive interactions with customers in the early
stages of new engagements to understand their business needs and create the relevant processes
before we move the appropriate portion of the work offshore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Of the total increase of $365.1&nbsp;million in total revenues in fiscal 2007, $212.9&nbsp;million is due to
increased business in United States, $70.2&nbsp;million in Europe, $46.6&nbsp;million in rest of the world,
$30.1&nbsp;million in India and $5.3&nbsp;million in Japan. Our increased business in United States and
Europe was due to new customers and additional business from existing customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cost of Revenues. </I></B>Cost of revenues increased by 36.1% to $937.6&nbsp;million in fiscal 2007 from $689.0
million in fiscal 2006. Cost of revenues represented 64.2% of revenues in fiscal 2007 and 62.8% in
fiscal 2006. This increase by $248.6&nbsp;million was attributable primarily to increases in associate
compensation and benefits expenses, traveling expenses, communication expenses, depreciation and
other expenses, attributable largely to an overall increase in our business during this period.
Associate compensation and benefits expenses increased by 33.2% to $725.2&nbsp;million, or 49.6% of
revenues, in fiscal 2007 from $544.4&nbsp;million, or 49.7% of revenues, in fiscal 2006. The increase in
the associate compensation and benefits is due to: (i)&nbsp;revision of salaries on July&nbsp;1, 2006 to the
associates (ii)&nbsp;increase in the total number of technical associates by 10,286 to 36,997 as of
March&nbsp;31, 2007 from 26,711 as of March&nbsp;31, 2006. (iii)&nbsp;increase in number of onsite technical
associates by 1,959 to 7,286 as of March&nbsp;31, 2007 from 5,327 as of March&nbsp;31, 2006, for which we pay
a higher compensation and (iv)&nbsp;salary incentives amounting to $22.9&nbsp;million given to technical
associates in fiscal 2007 as compared to $20.9&nbsp;million in fiscal 2006. Traveling expenses increased
by 73.7% to $82.7&nbsp;million, or 5.7% of revenues, in fiscal 2007 from $47.6&nbsp;million or 4.3% of
revenues, in fiscal 2006. This increase was primarily due to increase in the number of travels
resulting from increase in the number of technical associates. Communication expenses increased by
5.8% to $15.6&nbsp;million or 1.1% of revenues in fiscal 2007 from $14.7&nbsp;million, or 1.3% of revenues in
fiscal 2006. This increase was primarily due to increase in number of locations of operations, both
in India and abroad. Stock-based compensation expenses increased to $12.8&nbsp;million, or 0.9% of
revenues, in fiscal 2007 from $8 thousand in fiscal 2006 due to adoption of SFAS 123R effective
from April&nbsp;1, 2006. Depreciation expense increased by 10.0% to $28.7&nbsp;million, or 2.0% of revenues,
in fiscal 2007 from $26.1&nbsp;million, or 2.4% of revenues in fiscal 2006. Other expenses comprised
mainly of rent, power and fuel and maintenance expenses. Other expenses increased by 29.5% to $72.8
million, or 5.0% of revenues, in fiscal 2007 from $56.2&nbsp;million, or 5.1% of revenues in fiscal
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Selling, general and administrative expenses. </I></B>Selling, general and administrative expenses
increased by 23.7% to $232.2&nbsp;million in fiscal 2007 from $187.6&nbsp;million in fiscal 2006. Selling,
general and administrative expenses represented 15.9% of revenues in fiscal 2007 and 17.1% of
revenues in fiscal 2006. This increase of $44.6&nbsp;million in fiscal 2007 was a result primarily of
increase in associate compensation and benefits for non-technical associates, communication
expenses, and traveling expenses. Associate compensation and benefits increased by 27.7% to $128.8
million, or 8.8% of revenues, in fiscal 2007 as compared to $100.9&nbsp;million or 9.2% of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">revenues in fiscal 2006 primarily on account of (i)&nbsp;revision of salaries on July&nbsp;1, 2006 to the
associates and (ii)&nbsp;increase in number of non-technical associates by 108 to 2,021 as of March&nbsp;31,
2007 from 1,913 as of March&nbsp;31, 2006. Traveling expenses increased by 36.4% to $25.5&nbsp;million or
1.7% of revenues in fiscal 2007 from $18.7&nbsp;million or 1.7% of revenues in fiscal 2006. Professional
charges increased by 11.7% to $13.4&nbsp;million or 0.9% of revenues in fiscal 2007 from $12.0&nbsp;million
or 1.1% of revenues in fiscal 2006. Communication expenses increased by 9.5% to $6.9&nbsp;million or
0.5% of revenues in fiscal 2007 as compared to $6.3&nbsp;million or 0.6% of revenues in fiscal 2006.
Stock-based compensation expenses increased to $2.9&nbsp;million, or 0.2% of revenues, in fiscal 2007
from $0.8&nbsp;million, or 0.1% of revenues in fiscal 2006 due to adoption of SFAS 123R effective from
April&nbsp;1, 2006 Other expenses comprised primarily of power and fuel, rent, marketing, repairs and
maintenance and advertisement expenses. Other expenses increased by 11.9% to $54.5&nbsp;million or 3.7%
of revenues in fiscal 2007 from $48.7&nbsp;million, or 4.4% of revenues in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Operating income. </I></B>Our operating income was $291.6&nbsp;million in fiscal 2007, representing an increase
of 32.7% over the operating income of $219.7&nbsp;million in fiscal 2006. As a percentage of revenues,
operating income was 20.0% in fiscal 2007, as compared to 20.0% of revenues in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Interest income. </I></B>Interest income increased by 41.8% to $37.3&nbsp;million in fiscal 2007 from $26.3 in
fiscal 2006. The increase is primarily due to additional bank deposits made in fiscal 2007
amounting to $745.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain on sale of investments. </I></B>Gain on sale of investments was $Nil in fiscal 2007 as compared to
$43.6&nbsp;million in fiscal 2006. The gain of $43.6&nbsp;million in fiscal 2006 was on account of the gain
on sale of 11,182,600 equity shares representing its entire 31.61% investment in Sify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain/(loss) on foreign exchange transactions. </I></B>Our revenues generated in U.S. dollars were 74.7% and
77.6% of total revenues in fiscal 2007 and 2006, respectively. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2007 was Rs. 45.11 against Rs. 44.18 in fiscal 2006. As at March&nbsp;31,
2007, the Indian rupee appreciated to Rs. 43.10 against Rs. 44.48 at March&nbsp;31, 2006. As at March
31, 2006, the Indian rupee depreciated to Rs. 44.48 against 43.62 at March&nbsp;31, 2005. As a result of
these fluctuations in exchange rates during fiscal 2007 and fiscal 2006, loss on foreign exchange
transactions was $3.3&nbsp;million in fiscal 2007 as compared to a gain of $0.3&nbsp;million in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Other income/(expenses), net. </I></B>Other income/ (expenses), net were $6.2&nbsp;million in fiscal 2007, as
compared to other income /(expenses), net were $(0.8) million in fiscal 2006. The increase in the
other income is primarily on account of gain on forward and options contracts due to rupee
appreciation to Rs 43.10 as on March&nbsp;31, 2007 from Rs 44.48 as on March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Income taxes. </I></B>Income taxes were $30.6&nbsp;million in fiscal 2007, representing a decrease of 18.8% from
$37.7&nbsp;million in fiscal 2006. The decrease in income taxes is primarily on account of income taxes
on sale of shares in Sify amounting to $7.7&nbsp;million in fiscal 2006. The expiry of tax exemption
benefit for three of our STP units resulted in increase in income taxes by $10.3&nbsp;million in fiscal
2007 as compared to the expiry of tax exemption benefit for two of our STP units resulted in
increase in income taxes by $2.8&nbsp;million in fiscal 2006, which is offset by decrease in income of
foreign branches primarily on account of rupee appreciation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Equity in earnings/(losses) of associated companies, net of taxes. </I></B>Equity in earnings/(losses) of
associated companies was $0.8&nbsp;million in fiscal 2007 as compared to $(0.8) million in fiscal 2006.
Equity in earnings/(losses) of Satyam Venture Engineering Services Private Limited, or Satyam
Venture, CA Satyam ASP Private Limited, or CA Satyam and Sify amounted to $0.6&nbsp;million, $0.2
million and Nil, respectively, in fiscal 2007 as compared to $0.5&nbsp;million, $(15) thousand and
$(1.3) million, respectively, in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net income. </I></B>As a result of the foregoing, our net income was $298.4&nbsp;million in fiscal 2007,
representing an increase of 19.6% over net income of $249.4&nbsp;million in fiscal 2006. As a percentage
of total revenues, net income decreased to 20.4% in fiscal 2007 from 22.7% in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Comparison of results for fiscal 2006 and fiscal 2005.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Revenues. </I></B>Our revenues increased by 38.1% to $1,096.3&nbsp;million in fiscal 2006 from $793.6&nbsp;million in
fiscal 2005. This revenue growth of $302.7&nbsp;million in fiscal 2006 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 35.8% to $993.0&nbsp;million in fiscal 2006 from $731.2&nbsp;million in fiscal 2005.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from new customers increased by 65.9% to $103.5&nbsp;million in fiscal 2006 from $62.4&nbsp;million
in fiscal 2005. We added 120 and 108 customers including 12 and 17 from the Fortune Global 500 and
Fortune U.S. 500 list in fiscal 2006 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2006, revenues (IT services excluding inter-segment revenues) from consulting and
enterprise business solutions increased by $159.8&nbsp;million, revenues from application development
and maintenance increased by $111.9&nbsp;million, followed by extended engineering solutions and
infrastructure management services, increased by $15.0&nbsp;million and $9.3&nbsp;million respectively. In
terms of percentage growth in fiscal 2006 over fiscal 2005, revenues from consulting and enterprise
solutions has grown by 59.3%, application development and maintenance services has grown by 26.1%,
extended engineering solutions and infrastructure management services have grown by 27.2% and 28.8%
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials basis
decreased to 64.9% in fiscal 2006 from 65.8% in fiscal 2005. Revenues from IT services provided on
a fixed-price basis increased to 35.1% in fiscal 2006 from 34.2% in fiscal 2005. The increase in
fiscal 2006 for fixed-price contracts is primarily due to the shift in customer preference
regarding type of contracts from time-and-material to fixed-price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The onsite revenues increased as a result of new engagements in consulting and enterprise business
solutions in fiscal 2006, and the need for extensive interactions with customers in the early
stages of new engagements to understand their business needs and create the relevant processes
before we move the appropriate portion of the work offshore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Of the total increase of $302.7&nbsp;million in total revenue in fiscal 2006, $168.9&nbsp;million was due to
increased business in United States, $74.6&nbsp;million in Europe, $39.7&nbsp;million in rest of the world,
$17.9&nbsp;million in India and $1.6&nbsp;million in Japan. Our increased business in United States and
Europe was due to new customers and additional business from existing customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cost of Revenues. </I></B>Cost of revenues increased by 35.9% to $689.0&nbsp;million in fiscal 2006 from $506.8
million in fiscal 2005. Cost of revenues represented 62.8% of revenues in fiscal 2006 and 63.9% in
fiscal 2005. This increase by $182.2&nbsp;million was attributable primarily to increases in associate
compensation and benefits expenses, traveling expenses, communication expenses, depreciation and
other expenses, attributable largely to an overall increase in our business during this period.
Associate compensation and benefits expenses increased by 35.7% to $544.4&nbsp;million, or 49.7% of
revenues in fiscal 2006 from $401.2&nbsp;million, or 50.6% of revenues in fiscal 2005. The increase in
the associate compensation and benefits is due to: (i)&nbsp;increase in the total number of technical
associates by 7,471 to 26,711 in fiscal 2006 from 19,240 in fiscal 2005; (ii)&nbsp;increase in number of
onsite technical associates by 1,026 to 5,327 in fiscal 2006 from 4,301 in fiscal 2005 for which we
pay a higher compensation; (iii)&nbsp;salary incentives amounting to $20.9&nbsp;million given to technical
associates in fiscal 2006 as compared to $7.9&nbsp;million in fiscal 2005. Salary incentives increased
primarily due to introduction of new incentive scheme by the company in fiscal 2006, and (iv)
increase of approximately $1.5&nbsp;million of the funding to Citisoft Employee Benefit Trust accounted
as compensation expense relating to employees of Citisoft. Traveling expenses increased by 21.7% to
$47.6&nbsp;million, or 4.3% of revenues, in fiscal 2006 from $39.1&nbsp;million, or 4.9% of revenues, in
fiscal 2005. This increase was primarily due to increase in the number of travels resulting from
increase in the number of technical associates. Communication expenses increased by 110.0% to $14.7
million or 1.3% of revenues in fiscal 2006 from $7.0&nbsp;million, or 0.9% of revenues in fiscal 2005.
This increase was primarily due to increase in number of locations of operations, both in India and
abroad. Other expenses comprised mainly of rent, power and fuel and maintenance expenses. Other
expenses increased by 47.5% to $56.2&nbsp;million, or 5.1% of revenues, in fiscal 2006 from $38.1
million, or 4.8% of revenues in fiscal 2005. Depreciation expense increased 26.7% to $26.1&nbsp;million,
or 2.4% of revenues, in fiscal 2006 from $20.6&nbsp;million, or 2.6% of revenues in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Selling, general and administrative expenses. </I></B>Selling, general and administrative expenses
increased 50.9% to $187.6&nbsp;million in fiscal 2006 from $124.3&nbsp;million in fiscal 2005. Selling,
general and administrative expenses represented 17.1% of revenues in fiscal 2006 and 15.7% of
revenues in fiscal 2005. This increase of $63.3&nbsp;million in fiscal 2006 was a result primarily of
increase in associate compensation and benefits for non-technical associates, communication
expenses, traveling expenses and sales and marketing expenses. Associate compensation and benefits
increased by 91.1% to $100.9&nbsp;million, or 9.2% of revenues, in fiscal 2006 as compared to $52.8
million or 6.7% of revenues in fiscal 2005 primarily on account of increase in number of
non-technical associates by 463 to 1,913 as of March&nbsp;31, 2006 from 1,450 as of March&nbsp;31, 2005, and
salary incentives amounting to $21.0&nbsp;million given to non-technical associates in fiscal 2006 as
compared to $3.9&nbsp;million in fiscal 2005. Salary incentives increased primarily due to introduction
of new incentive scheme by the company in fiscal 2006. Communication expenses decreased by 22.2% to
$6.3&nbsp;million or 0.6% of revenues in fiscal 2006 as compared to $8.1&nbsp;million or 1.0% of revenue in
fiscal 2005. Traveling expenses increased by 103.3% to $18.7&nbsp;million or 1.7% of revenues in fiscal
2006 from $9.2&nbsp;million or 1.2% of revenue in fiscal 2005. Traveling expenses
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">increased primarily due to increase in travels by our non-technical associates. Depreciation
expenses increased by 4.5% to $4.6&nbsp;million or 0.4% of revenues in fiscal 2006 from $4.4&nbsp;million or
0.6% of revenue in fiscal 2005. Professional charges increased by 27.7% to $12.0&nbsp;million or 1.1% of
revenues in fiscal 2006 from $9.4&nbsp;million or 1.2% of revenues in fiscal 2005. Stock-based
compensation expense decreased by 27.3% to $0.8&nbsp;million in fiscal 2006 from $1.1&nbsp;million in fiscal
2005. Other expenses comprised primarily of marketing expense, rent, power and fuel and maintenance
expenses. Other expenses increased by 12.7% to $44.3&nbsp;million or 4.0% of revenue in fiscal 2006
from $39.3&nbsp;million, or 5.0% of revenues in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Operating income. </I></B>Our operating income was $219.7&nbsp;million in fiscal 2006, representing an increase
of 35.2% over the operating income of $162.5&nbsp;million for fiscal 2005. As a percentage of revenues,
operating income decreased to 20.0% in fiscal 2006, from 20.5% in fiscal 2005. This decrease in
operating income as a percentage of revenue was due to (i)&nbsp;increase in the associate compensation
and benefits expenses by $191.3&nbsp;million to $645.3&nbsp;million or 58.9% of revenue in fiscal 2006 from
$454.0&nbsp;million, or 57.2% of revenues, in fiscal 2005 and (ii)&nbsp;offset by decrease in the traveling,
depreciation and other expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Interest income. </I></B>Interest income increased to $26.3&nbsp;million in fiscal 2006 representing an
increase of 17.9% from $22.3&nbsp;million in fiscal 2005, primarily due to additional bank deposits
during the period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain on sale of investments. </I></B>In fiscal 2006, gain on sale of investments was $43.6&nbsp;million as
compared to $Nil in fiscal 2005. The gain of $43.6&nbsp;million in fiscal 2006 was on account of the
gain on sale of 11,182,600 equity shares representing its entire 31.61% investment in Sify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain/(loss) on foreign exchange transactions. </I></B>In fiscal 2006 and fiscal 2005, 77.6% and 81.8%
respectively, of our revenues were generated in U.S. dollars. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2006 was Rs. 44.18 against Rs. 44.85 in fiscal 2005. As at March
31, 2006, the Indian rupee depreciated to Rs. 44.48 against 43.62 at March&nbsp;31, 2005. As at March
31, 2005, the Indian rupee depreciated to Rs. 43.62 against Rs. 43.40 as at March&nbsp;31, 2004. As a
result of these fluctuations in exchange rates during fiscal 2006 and fiscal 2005, gain on foreign
exchange transactions was $0.3&nbsp;million in fiscal 2006 as compared to a loss of $4.6&nbsp;million in
fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Other income/(expenses), net. </I></B>Other income/ (expenses), net were $(0.8) million in fiscal 2006, as
compared to other income /(expenses), net were $0.4&nbsp;million in fiscal 2005. The decrease in the
other income is primarily on account of loss on forward and options contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Income taxes. </I></B>Income taxes were $37.7&nbsp;million in fiscal 2006, representing an increase of 49.0%
from $25.3&nbsp;million in fiscal 2005. This increase was primarily due to increase in tax of $7.7
million relatable to sale of shares in Sify. The expiry of tax exemption benefit for two of our STP
units in Hyderabad resulted in increase in income taxes by $2.8&nbsp;million in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Equity in earnings/(losses) of associated companies, net of taxes. </I></B>Equity in earnings/(losses) of
associated companies was $(0.8) million in fiscal 2006 as compared to $(1.1) million in fiscal
2005. Equity in earnings/(losses) of Satyam Venture, CA Satyam and Sify amounted to $0.5&nbsp;million,
$(15) thousand and $(1.3) million, respectively, in fiscal 2006 as compared to $0.7&nbsp;million, $(63)
thousand and $(1.7) million, respectively in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net income. </I></B>As a result of the foregoing, our net income was $249.4million in fiscal 2006,
representing an increase of 62.2% over net income of $153.8&nbsp;million in fiscal 2005. As a
percentage of total revenues, net income increased to 22.7% in fiscal 2006 from 19.4% in fiscal
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net cash provided by operating activities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by operating activities was $261.5&nbsp;million, $162.7&nbsp;million and $171.3&nbsp;million in
fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2007, non-cash adjustments to reconcile the $298.4&nbsp;million net income to net cash used in
operating activities consisted primarily of depreciation and amortization expense of $33.6&nbsp;million,
stock-based compensation expense of $15.7&nbsp;million and increase
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in net accounts receivable and unbilled revenues. Net accounts receivable and unbilled revenues
increased by $127.7&nbsp;million primarily as a result of an increase in our revenues and increase in
collection period. Accounts payable and accrued expenses increased by $42.2&nbsp;million primarily on
account of provision for gratuity and unutilized leave by $23.7&nbsp;million and increase in provision
for taxation net of payments by $7.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2006, non-cash adjustments to reconcile the $249.4&nbsp;million net income to net cash used in
operating activities consisted primarily of depreciation and amortization expense of $31.5&nbsp;million, increase in net accounts receivable and unbilled revenues and gain on sale of investment of $43.6
million. Net accounts receivable and unbilled revenues increased by $81.9&nbsp;million primarily as a
result of an increase in our revenues. Accounts payable and accrued expenses increased by $37.6
million primarily on account of accrued compensation and benefits of $7.7&nbsp;million and increase in
provision for gratuity and unutilized leave by $5.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2005, non-cash adjustments to reconcile the $153.8&nbsp;million net income to net cash
provided by operating activities consisted primarily of depreciation expense of $25.0&nbsp;million and
increase in net accounts receivable and unbilled revenues. Net accounts receivable and unbilled
revenues increased by $40.7&nbsp;million primarily as a result of an increase in our revenues. Accounts
payable and accrued expenses increased by $18.3&nbsp;million primarily on account of an increase in
taxes by $2.1&nbsp;million and an increase in sub-contracting charges payable by $5.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Net cash used in investing activities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities was $422.7&nbsp;million, $5.2&nbsp;million and $115.5&nbsp;million in fiscal
2007, fiscal 2006 and fiscal 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities in fiscal 2007 increased by $417.5&nbsp;million to $422.7&nbsp;million
from $5.2&nbsp;million in fiscal 2006. This increase in net cash used in investing activities was
primarily due to investment in bank deposits amounting to $745.6&nbsp;million and purchase of premises,
plant and equipment of $81.5&nbsp;million during fiscal 2007 due to expansion of new facilities at
Bangalore, Chennai, Hyderabad and Visakhapatnam which is offset by receipt of proceeds from
maturity of bank deposits amounting to $408.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities in fiscal 2006 decreased by $110.3&nbsp;million to $5.2&nbsp;million
$115.5&nbsp;million in fiscal 2005. This decrease in net cash used in investing activities was
primarily due to proceeds from the sale of shares of Sify amounting to $62.3&nbsp;million, offset by
(i)&nbsp;payment of consideration for the acquisition of Citisoft Plc amounting to $12.1&nbsp;million net of
cash acquired,(ii) payment for acquisition of Knowledge Dynamics amounting to $1.6&nbsp;million net of
cash acquired and (iii)&nbsp;increase in purchases of premises, plant and equipment to $54.1&nbsp;million
in fiscal 2006 due to purchase of premises and equipment, primarily infrastructure, computers and
other equipment associated with the expansion of new facilities at Bangalore, Chennai, Hyderabad
and Visakhapatnam.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities in fiscal 2005 increased by $55.5&nbsp;million to $115.5&nbsp;million
from $60.0&nbsp;million in fiscal 2004. This increase was primarily due to increase in investments in
bank deposits amounting to $79.3&nbsp;million and purchases of premises, plant and equipment to $39.0
million during fiscal 2005 due to the purchase of land by Nipuna and purchase of equipment,
primarily infrastructure, computers and other equipment associated with the expansion of new
facilities at Hyderabad, Bangalore and Chennai.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Net cash provided by/(used in) financing activities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by/(used in) financing activities was $16.1&nbsp;million, $6.1&nbsp;million and $(12.9)
million in fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by financing activities in fiscal 2007, increased by $10.0&nbsp;million to $16.1
million from $6.1&nbsp;million in fiscal 2006. We received cash from exercise of associate stock options
(including shares subscribed but unissued) of $66.2&nbsp;million, $10.9&nbsp;million from short term debt by
Nipuna and $4.3&nbsp;million from long term debts by Nipuna. We used cash in repayment of loans
amounting to $8.6&nbsp;million. Cash dividends paid amounted to $56.7&nbsp;million in fiscal 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by/(used in) financing activities in fiscal 2006, increased by $19.0&nbsp;million to
$6.1&nbsp;million from $(12.9) million in fiscal 2005. We received cash from exercise of associate
stock options of $31.0&nbsp;million, $3.6&nbsp;million from short term debt by our subsidiary and $16.3
million from long term debts by Nipuna. We used cash in repayment of loans amounting to $3.9
million. Cash
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">dividends paid amounted to $41.3&nbsp;million in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in financing activities in fiscal 2005, increased by $1.3&nbsp;million to $12.9&nbsp;million
from $11.6&nbsp;million in fiscal 2004. We received cash from issuance of preferred stock (net of
issuance costs) of $9.5&nbsp;million by our subsidiary, $15.3&nbsp;million by associate stock options and
$1.7&nbsp;million from short-term debt by our subsidiary. Cash dividends paid amounted to $37.6
million in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, we had cash and cash equivalents of $152.2&nbsp;million, U.S. dollar denominated
loans of Nipuna amounting to $20.6&nbsp;million, short term borrowings of Nipuna amounting to $10.5
million and hire purchase loans amounting to $3.2&nbsp;million with maturities ranging from one to three
years. As of March&nbsp;31, 2007, we had an unused working capital line of credit of $9.0&nbsp;million from
banks and unused non-funded lines of credit of $16.2&nbsp;million from banks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following table describes our outstanding credit facilities as of March&nbsp;31, 2007
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Interest</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Computation</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Loan Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Lenders</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(per annum)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>method</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="9"><B>(dollars in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Working capital term loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BNP Paribas</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">6 month LIBOR &#043;0.95%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Floating</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">External commercial borrowing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BNP Paribas</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">6 month LIBOR &#043;0.95%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Floating</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Overdraft facility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BNP Paribas</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">6 month LIBOR &#043;0.25%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Floating</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Various other parties</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">3.0%-14.5%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fixed</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>34.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have incurred $81.5&nbsp;million in fiscal 2007 and we anticipate capital expenditure of
approximately $100.0&nbsp;million in fiscal 2008, principally to finance construction of new facilities
in our offshore centers, expand facilities in offshore centers in India and establish offsite
centers outside India. We believe that existing cash and cash equivalents 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. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have guaranteed payment of all sums payable by Nipuna to the Investors on redemption of the
0.05% cumulative convertible redeemable preference shares. We, Nipuna and the investors had also
entered into a warrant agreement whereby Nipuna agreed to issue to the Investors, one warrant in
consideration of and based upon every US$0.1&nbsp;million referral revenues received by Nipuna or its
subsidiaries. As of March&nbsp;31, 2007, there were no referral revenues and hence no warrants have been
issued.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth our contractual obligations and commitments to make future payments
as of March&nbsp;31, 2007. The following table excludes our accounts payable, accrued operating expenses
and other current liabilities which are payable in normal course of operations.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Payments due as at March 31, 2007,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Within 1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1-3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>3-5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>After 5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(dollars in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unconditional purchase obligations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other commercial commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank guarantees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gratuity Plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nipuna 0.05% Cumulative convertible redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Citisoft deferred, earn-out consideration and EBT funding (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Knowledge Dynamics deferred and earn-out consideration (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total contractual cash obligations.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>84.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>41.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>165.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The earn-out consideration and the further funding of EBT are based on fulfillment of
certain conditions.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Earn-out consideration of Knowledge Dynamics is based on certain conditions.<BR></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>We anticipate to incur capital expenditure of $100&nbsp;million in fiscal 2008.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on past performance and current expectations, we believe that our cash and cash equivalents
and cash generated from operations will satisfy our working capital needs, capital expenditures,
investment requirements, stock repurchases, commitments, and other liquidity requirements
associated with our existing operations through at least the next 12&nbsp;months. In addition, there are
no transactions, arrangements, and other relationships with unconsolidated entities or other
persons that are reasonably likely to materially affect liquidity or the availability of our
requirements for capital resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our research and development efforts are focused on developing services required by our existing
customers, to attract new customers and developing competencies and leadership in our service
offerings. We have established close alliances with U.S. and Indian institutions such as Carnegie
Mellon University and Indian Institute of Technology, Madras to strengthen our technology
competencies. We have set up an enterprise business solution laboratory where latest versions of
products are evaluated; business solution scenarios are created and validated. We have set up a
grid computing laboratory which simulates a live grid environment for testing sample applications
on the grid. We have also established a data warehousing and business intelligence center which has
developed proprietary business intelligence architectural platform which enables us to build large
scale data warehousing and business intelligence solutions. We are also working with major
technology providers in the areas of technology architectures for .NET for solutions for various
industries. In the embedded systems space, we have created an environment to simulate various
operating conditions and validate the solutions we build. We have an applied research group which
focuses on creating IP in the areas of competition, communication, networking and information
processing algorithms. In addition to presenting papers at international conferences and publishing
in referenced journals, this group has over 16 United States patent applications in various stages
of registration. In fiscal 2007, fiscal 2006 and fiscal 2005 we spent 0.03%, 0.05% and 0.08% of our
total revenues on research and development activities, respectively.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->52<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock-based Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective April&nbsp;1, 2006, Satyam adopted the fair value recognition provisions of Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (&#147;SFAS
123R&#148;). Prior to the adoption of SFAS 123R, Satyam recognized stock-based compensation using the
intrinsic value-based method of Accounting Principles Board (APB)&nbsp;Opinion No.&nbsp;25, <I>&#147;Accounting for
Stock Issued to Employees&#148;</I>, and related interpretations including Financial Accounting Standards
Board (FASB)&nbsp;Interpretation No.&nbsp;44, <I>Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No.&nbsp;25, </I>issued in March&nbsp;2000 to account for its
employee stock-based compensation plan. Satyam has therefore adopted the pro-forma disclosure
requirements of SFAS No.&nbsp;123, <I>&#147;Accounting for Stock-Based Compensation&#148; </I>and SFAS 148, <I>Accounting
for Stock-Based Compensation &#151; Transition and Disclosure, an amendment of FASB Statement No.&nbsp;123</I>.
Pursuant to SFAS No.&nbsp;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. In March&nbsp;2005, the Securities and Exchange Commission (the
&#147;SEC&#148;) issued Staff Accounting Bulletin No.107 (&#147;SAB 107&#148;) regarding the SEC&#146;s interpretation of
SFAS 123R and the valuation of share-based payments for public companies. Satyam has applied the
provisions of SAB 107 in its adoption of SFAS 123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam adopted SFAS 123R using the modified prospective transition method, which required the
application of the accounting standard as of April&nbsp;1, 2006, the first day of Satyam&#146;s fiscal year
2007. Under this transition method, stock-based compensation expensed for the year ended March&nbsp;31,
2007 includes a) compensation expense for all stock-based compensation awards granted prior to, but
not yet vested as of April&nbsp;1, 2006, based on the grant-date fair value estimated in accordance with
the original provisions of SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148;, (&#147;SFAS 123&#148;)
and b) Stock-based compensation expenses for all stock-based compensation awards granted after
April&nbsp;1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of
SFAS 123R. In accordance with the modified prospective transition method, Satyam&#146;s Consolidated
Financial Statements for the prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have five associate stock option plans. See &#147;Item&nbsp;6. Directors, Senior Management and Employees
&#150; Employee Benefit Plans&#148; for more information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s Consolidated Financial Statements as of and for the year ended March&nbsp;31, 2007 reflect the
impact of SFAS 123R. In accordance with the modified prospective transition method, Satyam&#146;s
Consolidated Financial Statements for the prior periods have not been restated to reflect, and do
not include, the impact of SFAS 123R. As required by SFAS 123(R), management has made an estimate
of expected forfeitures and is recognizing compensation costs only for those equity awards expected
to vest. Upon adoption of SFAS 123R, Satyam had no cumulative adjustment on account of expected
forfeitures for stock-based awards granted prior to April&nbsp;1, 2006. During the year ended March&nbsp;31,
2007, Satyam recorded stock-based compensation related to stock options of $15.7&nbsp;million on a
graded vesting basis for all unvested options granted prior to and options granted after the
adoption of SFAS 123(R). As of March&nbsp;31, 2007, there was $45.3&nbsp;million of unrecognized compensation
cost related to unvested options which is expected to be recognized over a weighted average period
of 3.84&nbsp;years. Satyam issues new shares to satisfy share option exercise. Cash received from option
exercises amounted to $64.4&nbsp;million, $31.0&nbsp;million and $15.4&nbsp;million for the years ended March&nbsp;31,
2007, 2006 and 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of each option award is estimated on the date of grant using the Black Scholes
option-pricing model. The following table gives the weighted-average assumptions used to determine
fair value:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Year ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>March 31,2007</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.78</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term (in years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Expected Term: The expected term represents the period that the Company&#146;s stock-based awards are
expected to be outstanding and was determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->53<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Risk-Free Interest Rate: The risk-free interest rate is based on the applicable rates of government
securities in effect at the time of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Expected Volatility: The fair values of stock-based payments were valued using a volatility factor
based on the Company&#146;s historical stock prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Expected Dividend: The Black Scholes option-pricing model calls for a single expected dividend
yield as an input.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Estimated Pre-vesting Forfeitures: When estimating forfeitures, the Company considers voluntary
termination behavior. Estimated forfeiture rates are trued-up to actual forfeiture results as the
stock-based awards vest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Effect of recently issued accounting pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2006, the FASB issued Interpretation No.&nbsp;48, Accounting for Uncertainty in Income Taxes&#151;an
interpretation of FASB Statement No.&nbsp;109 (&#147;FIN 48&#148;). The Interpretation clarifies the accounting
for uncertainty in income taxes recognized in a Company&#146;s financial statements and prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The Interpretation
also provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December&nbsp;15, 2006, which is April&nbsp;1, 2007 for us. The differences, if any between the amounts
recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts
reported after adoption will be accounted for as a cumulative-effect adjustment recorded to the
beginning balance of retained earnings. We are in the process of evaluating the impact this new
standard will have on our financial position, results of operations and liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the Securities and Exchange Commission (&#147;SEC&#148;) released SAB No.&nbsp;108,
&#147;Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements&#148; (&#147;SAB 108&#148;). SAB 108 provides interpretive guidance on the SEC&#146;s views on how
the effects of the carryover or reversal of prior year misstatements should be considered in
quantifying a current year misstatement. Satyam adopted SAB 108 during the fourth quarter of 2007.
The adoption did not have a material impact on our financial position, cash flows, or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the FASB issued SFAS 157, Fair Value Measurements, which establishes a framework
for measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. This Statement applies under other accounting pronouncements that require
or permit fair value measurements. SFAS 157 is effective for fiscal years beginning after November
15, 2007, which is fiscal year commending April&nbsp;1, 2008 for us. We are in the process of evaluating
the impact SFAS 157 will have on our financial position, results of operations, liquidity and its
related disclosures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in note 2(m), &#147;Significant Accounting Policies,&#148; effective March&nbsp;31, 2007, Satyam
adopted SFAS No.&nbsp;158, &#147;Employer&#146;s Accounting for Defined Benefit Pension and Other Postretirement
Plans&#151;an amendment of FASB Statements No.&nbsp;87, 88, 106 and 132(R),&#148; which requires the recognition
of the funded status of the retirement-related benefit plans in the Consolidated Balance Sheet and
the recognition of the changes in that funded status in the year in which the changes occur through
Accumulated Other Comprehensive Income, net of applicable tax effects. The provisions of SFAS No.
158 were adopted pursuant to the transition provisions therein. Satyam measures defined benefit
plan assets and obligations as of March&nbsp;31 and SFAS No.&nbsp;158 did not affect the company&#146;s existing
valuation practices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2007, the FASB issued FASB Statement 159, The Fair Value Option for Financial Assets
and Financial Liabilities (&#147;SFAS 159&#148;). SFAS 159 allows the company to choose to measure many
financial assets and financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159 is effective for
fiscal years beginning after November&nbsp;15, 2007, which is fiscal year commending April&nbsp;1, 2008 for
us. We are in the process of evaluating the impact SFAS 159 will have on our financial position,
results of operations, liquidity and its related disclosures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a brief discussion of the more significant accounting policies and methods used by
us. 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 this section 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
included elsewhere in this Annual Report on Form 20-F.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->54<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 judgments 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 judgments 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management believes the following critical accounting policies, among others, affect its more
significant judgments and estimates used in the preparation of its consolidated financial
statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Revenue recognition</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We derive our revenues primarily from IT services, which includes application development and
maintenance services, consulting and enterprise business solutions, extended engineering solutions,
and infrastructure management services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our IT service contracts are either on a time-and-material or fixed-price basis. The IT contracts
on a fixed-price basis specify a fixed fee to create a specific deliverable for IT services within
a fixed time frame. Typically, contracts for maintenance services specify the fee amounts for
maintenance services during a fixed period, typically a month. In the case of development projects,
the contracts specify the deliverable to be provided to the client at pre-determined prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 basis, with
revisions to estimates reflected in the period in which changes become known. The use of the
percentage of completion method reflects the pattern in which the obligations to the customer are
fulfilled. We have used an input-based approach since the input measures are a reasonable
surrogate for output measures. Provisions for estimated losses on such engagements are made during
the period in which a loss becomes probable and can be reasonably estimated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the percentage of completion method is appropriate for revenue recognition as our
revenues are earned as services are provided over the contractual term of the arrangement by
rendering services to create a specific deliverable or as maintenance services are provided over
the contract term. In determining whether delivery has occurred, we pay careful attention to the
terms of the arrangement, specifically our&#146;s and the customer&#146;s rights and obligations. The use of
the percentage of completion method reflects the pattern in which the obligations to the customer
are fulfilled. We have used an input-based approach since the input measures are a reasonable
surrogate for output measures. Our method to measure progress-to-completion on our contracts best
approximates progress-to-completion as:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have established a direct relationship between units of input and productivity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We evaluate each contract and apply judgment to ensure the existence of a
relationship between efforts expended and productivity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We periodically ensure that no inefficiencies exist between the input and
productivity and that the incurrence of an input results in progress-to-completion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We periodically review and confirm by alternative measures the acceptability of
the results provided by the input measures with the output measures.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The progress of work on a specific deliverable is monitored on a continuous basis using a project
plan developed specifically for each project. The progress of the project is measured based on
units of work performed (hours incurred by staff members) on a continuous basis and any
modifications to the project plan are made with requisite customer approvals.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->55<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At any point in time, it is possible to determine: a) the extent of progress to date on the
project, b) estimates of future efforts for completion of the project and c) the variance of the
revised project plan(s) from the original project plan. As there is a direct relationship between
the efforts expended and the productivity in measuring progress towards completion, the efforts
expended method has been used since it is found to be reliable and also the best approximation of
progress towards completion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We provide our customers with one to three months warranty as post-sale support for our
fixed-price engagements. Historically, we have not incurred any material 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Delivery of services/deliverables to the customer is clearly the point at which all of our
obligations have been completed (i.e., the earnings process is complete and revenue recognition is
appropriate) and the Company is not required to perform any additional steps. We have conformed to
SAB 104 (SAB Topic 13) framework for evaluating whether customer acceptance has occurred and when a
customer acceptance clause is substantively a right of return clause, a warranty provision or an
arrangement for demonstration purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The title to the deliverable/services passes upon their delivery and the payment is due after a
specified period after customer acceptance but we are not responsible for any post-delivery
services other than those imposed by the terms of the contract&#146;s warranty. Customer acceptance is
indicated either by the customer&#146;s formal sign-off or by the passage of credit period, if the
customer makes no claim under the acceptance provisions during such time. The customer sign-off
only ensures that the services would not be rejected for failure to meet specifications that had
already been determined to be in compliance with the arrangement, and therefore, the
customer-acceptance provision is evaluated as a warranty under FAS 5, Accounting for Contingencies.
We are able to reasonably and reliably estimate the amount of its warranty obligation at the time
of revenue recognition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In respect of the customer sign-offs in our arrangements:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we do not have any arrangements where services / deliverables are for trial or
evaluation purposes and we do not grant a right of return / exchange;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fees for these contracts are fixed and non refundable and delivery occurs on a
prorate basis as the services are rendered. The customer sign-off rights are generally
identical to those granted to all others within the same class of customer and for which
satisfaction can be generally assured without consideration of conditions specific to the
customer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we are able to objectively demonstrate that the deliverables meet the specified
criteria and that these provisions are not different from general or specific warranties and
accordingly should be accounted for as warranties in accordance with FAS 5, Accounting for
Contingencies. We are able to reliably estimate the related warranty costs based on a
demonstrated history of substantially similar transactions; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>no uncertainty exists about customer acceptance once the services have been
rendered. We are able to reliably demonstrate that the criteria specified in the acceptance
provisions and all other revenue recognition criteria are met prior to formal customer
sign-off. We believe that we would be successful in enforcing a claim for payment even in
the absence of formal sign-off.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>Impairment of Goodwill</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill represents the excess of the cost of an acquired entity over the net of the amounts
assigned to assets acquired and liabilities assumed.. Effective April&nbsp;1, 2002, we adopted
provisions of SFAS No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148; which sets forth the accounting
for goodwill and intangible assets subsequent to their acquisition. Goodwill is tested annually for
impairment, or sooner when circumstances indicate an impairment may exist, using a fair-value
approach at the reporting unit level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We assess the impairment of 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B><B>&#149;</B> </B>significant underperformance relative to expected historical or projected future operating results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#149;</B> significant changes in the manner of our use of the acquired assets or the strategy for our overall business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#149;</B> significant negative industry or economic trends;
</TD>
</TR>
</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#149;</B> significant decline in our stock price for a sustained period; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><font face="wingdings">&#110;</Font></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#149;</B> our market capitalization relative to net book value.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When we determine that the carrying value of 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
the two-step impairment recognition and measurement guidance in accordance with SFAS 142.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The first step of the impairment test, used to identify potential impairment, compares the fair
value of the reporting unit with its carrying amount, including goodwill. If the carrying amount
of the reporting unit exceeds its fair value, goodwill of the reporting unit is considered
impaired, and step two of the impairment test is performed. The second step of the impairment test
quantifies the amount of the impairment loss by comparing the carrying amount of goodwill to the
implied fair value. An impairment loss is recorded to the extent the carrying amount of goodwill
exceeds its implied fair value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We amortize other intangible assets over their estimated useful lives on a straight line basis
unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows, and, if impaired, written down to fair value based on either
discounted cash flows or appraised values. Intangible assets with indefinite lives are tested
annually for impairment and written down to fair value as required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We performed an annual impairment review of goodwill in 2007 and based on these tests there is no
impairment of goodwill during the year ended March&nbsp;31, 2007. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Accounts Receivable</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We estimate the amount of uncollectible receivables each period and establish an allowance for
uncollectible 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
uncollectible amounts are revised each period, and changes are recorded in the period they become
known. A significant change in the level of uncollectible amounts would have a significant effect
on our results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Accounting for income taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stock-Based Compensation Expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective April&nbsp;1, 2006 we adopted SFAS 123R using the modified prospective method and therefore
have not restated prior periods&#146; results. Under the fair value recognition provisions of SFAS 123R,
we recognize stock-based compensation net of an estimated forfeiture rate and therefore only
recognize compensation cost for those shares expected to vest over the service period of the award.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to SFAS 123R adoption, we accounted for share-based payments under APB 25 and accordingly,
generally recognized stock-based compensation expense related to stock options with intrinsic value
and accounted for forfeitures as they occurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Calculating stock-based compensation expense requires the input of highly subjective assumptions,
including the expected term of the stock-based awards, stock price volatility, and the pre-vesting
option forfeiture rate. We estimate the expected life of options granted based on historical
exercise patterns, which we believe are representative of future behavior. We estimate the
volatility of our common stock on the date of grant based on the historically volatility of our
common stock. The assumptions used in calculating the fair value of stock-based awards represent
our best estimates, but these estimates involve inherent uncertainties and the application of
management judgment. As a result, if factors change and we use different assumptions, our
stock-based compensation expense could be materially different in the future. In addition, we are
required to estimate the expected forfeiture rate and only recognize expense for those shares
expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based
awards that are granted, exercised and cancelled. If our actual forfeiture rate is materially
different from our estimate, the stock-based compensation expense could be significantly different
from what we have recorded in the current period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Effects of Inflation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">India has experienced relatively high rates of inflation in the past however it has not had a
significant effect on our results of operations and financial condition to date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange Rates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Month end</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15"><B>(Rupees)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">April-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.72</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">May-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.41</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">June-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.71</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">July-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.40</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.05</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">August-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.00</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.00</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.36</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">September-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.94</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.85</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.98</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.75</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">October-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.09</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.76</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.00</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">November-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.87</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.87</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December-05
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.95</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.26</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.94</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">January-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.96</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.20</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.92</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.89</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">February-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.23</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.54</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">March-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.34</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.09</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">April-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.86</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.82</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.09</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.39</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">May-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.22</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.20</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.22</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.69</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">June-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.87</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.89</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.25</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.50</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">July-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.37</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.83</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.84</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">August-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.45</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.61</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.32</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">September-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.95</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.01</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46.38</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.74</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">October-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.90</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.36</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.97</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.90</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">November-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.73</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">45.26</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December-06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.70</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">January-07
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.07</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.07</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">February-07
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.08</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.87</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">March-07
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43.79</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44.43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42.78</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->58<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Management Policy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our functional currency is the Indian rupee, however we transact a major portion of our business in
U.S. dollars and other currencies and accordingly face foreign currency exposure from our sales in
the United States and elsewhere and from our purchases from overseas suppliers in U.S. dollars and
other currencies. Accordingly, we are exposed to substantial risk on account of adverse currency
movements in global foreign exchange markets. The exchange rate between the rupee and the U.S.
dollar has changed substantially in recent years and may fluctuate substantially in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We manage risk on account of foreign currency fluctuations through treasury operations. Our risk
management strategy is to identify risks we are exposed to, evaluate and measure those risks,
decide on managing those risks, regular monitoring and reporting to management. The objective of
our risk management policy is to minimize risk arising from adverse currency movements by managing
the uncertainty and volatility of foreign exchange fluctuations by hedging the risk to achieve
greater predictability and stability. Our risk management policies are approved by senior
management and include implementing hedging strategies for foreign currency exposures,
specification of transaction limits; specifying authority and responsibility of the personnel
involved in executing, monitoring and controlling such transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We enter into foreign exchange forward and options contracts to mitigate the risk of changes in
foreign exchange rates on cash flows denominated in U.S. dollars. We enter into foreign exchange
forward and options contracts where the counter party is generally a bank. We consider the risks of
non-performance by the counter party as non-material. These contracts mature between one and nine
months. These contracts do not qualify for hedge accounting under SFAS No.&nbsp;133, <I>Accounting for
Derivative Instruments and Hedging Activities, </I>as amended. Any derivative that is either not a
designated hedge, or is so designated but is ineffective per SFAS No.&nbsp;133, is marked to market and
recognized in earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables give details in respect of our outstanding foreign exchange forward and
options contracts:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>As at March 31,</B></TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount </B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>(dollars in millions)</B></TD>



</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate contracted principal amounts of contracts outstanding:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100.0   </TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">160.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352.6  </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>452.6 </B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>216.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>301.5</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>



<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gains/(loss) on outstanding contracts:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.1   </TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.4 </TD>
    <TD nowrap>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"> (1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>4.5  </B></TD>
    <TD nowrap><B>&nbsp;</B></TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR><TD colspan="15"><DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gains/(losses) on foreign exchange forward and options contracts are included under the
heading &#145;Other income/(expense)&#146; in the statement of income and are as stated below:
</DIV></TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>(dollars in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>(0.3</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We currently do not engage in any off-balance sheet arrangements.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->59<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Foreign Currency Transactions/ Translation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007, 2006 and 2005, 74.7%, 77.6% and 81.8%, respectively, of our total revenues were
generated in U.S. dollars. A significant amount of our expenses were incurred in Indian rupees and
the balance was primarily 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, U.S. dollar, Pound Sterling, Singapore Dollar and Renminbi are the functional
currencies of our foreign subsidiaries located in the United States, United Kingdom, Singapore and
China 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&#146; equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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/
depreciates against the U.S. dollar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The average exchange rate of rupee to U.S. dollar fiscal 2007 was Rs. 45.11 against Rs. 44.18 in
fiscal 2006. As at March&nbsp;31, 2007, the rupee appreciated to Rs. 43.10 against Rs. 44.48 as at March
31, 2006. As at March&nbsp;31, 2006, the rupee depreciated to Rs. 44.48 against Rs. 43.62 as at March
31, 2005. As a result, loss on foreign exchange transactions was $3.3&nbsp;million in fiscal 2007 as
compared to a gain of $0.3&nbsp;million in fiscal 2006.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the name, age, and position of each of our directors and key
management personnel of Satyam, as of March&nbsp;31, 2007:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Directors</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">B. Ramalinga Raju
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">B. Rama Raju
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">47</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Managing Director and Chief Executive Officer(3)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ram Mynampati
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President &#038; Whole Time Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">V.P. Rama Rao
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">73</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1)(2)(3)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dr. Mangalam Srinivasan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">68</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1)(2)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Krishna G. Palepu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vinod K. Dham
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(2)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">M.Rammohan Rao
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">65</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1)(2)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">T.R.Prasad
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">66</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1)(3)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">V.S. Raju
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">67</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1)(2)(3)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Key Management Personnel </B>(4)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Anand T. R.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President, Vertical Business Unit &#151; TIMES</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hari T.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director &#038; Sr. Vice President &#150; Human Resources</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jayaraman G.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sr. Vice President, Corporate Governance and Company Secretary</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Joseph Abraham
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">54</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President, Vertical Business Unit &#151; Retail</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keshab Panda
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President, Regional Business Unit, Europe</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Manish Sukhlal Mehta
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President, Horizontal Competency Unit &#151; SAP, Engineering and Spatial Services</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->60<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mohan Eddy F.S
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">V Murali
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#150; Commercial and Contract</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Murty A.S
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President, Leadership Development Group</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ravi Shanker Bommakanti
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#151; Vertical Business Unit &#151; Insurance</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shailesh Shah
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#151; Corporate Strategy Group</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Srinivas V
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Senior Vice President and Chief Financial Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Subramanian D
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">47</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#151; Vertical Business Unit &#151; Manufacturing, Energy, Oil and Gas and
Utilities</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vijay Prasad Boddupalli
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#151; Horizontal Competency Unit &#151; Enterprise Applications and Business
Intelligence Solutions</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Virender Aggarwal
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President
&#151; Regional Business Unit-India, Middle East, Africa &#038; Asia Pacific</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit Committee</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Compensation Committee</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Investors&#146; Grievance Committee</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Directors listed under key management personnel are directors of
business/support units and not members of our board of directors.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>B.&nbsp;Ramalinga Raju </I></B>has been on our Board of directors since our inception in 1987. Prior to becoming
the Chairman in 1995, he was the Vice Chairman of the Satyam Corporate Group. Mr.&nbsp;Ramalinga Raju
also sits on the board of directors of Nipuna. Mr.&nbsp;Raju founded Satyam Computer Services in 1987
and has been instrumental in developing Satyam into one of the top Indian IT services company.
Among the many awards received by him, Mr.&nbsp;Raju was awarded the &#147;Corporate Citizen of the Year&#148;
award during the Asian Business Leadership Summit held in Hong Kong in 2002. He was also named as
the &#147;IT Man of the Year&#148; by Dataquest in 2001 and was conferred the &#147;Entrepreneur of the Year Award
(Services)&#148; by Ernst &#038; Young, India in 2000. Mr.&nbsp;Ramalinga Raju holds a Master of Business
Administration degree from Ohio University and has attended the Advanced Management Program
conducted by Harvard Business School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>B.&nbsp;Rama Raju </I></B>has been on our board of directors since our inception in 1987. He became the Managing
Director and Chief Executive Officer in 1991. Prior to joining our company, he was a director of
Maytas Infra Limited. Mr.&nbsp;Rama Raju also sits on the board of directors of Nipuna, Maytas Infra
Limited and Satyam Venture Engineering Services Private Limited. Mr.&nbsp;Rama Raju holds a Master of
Economics degree from Loyola College, Chennai and a Master of Business Administration degree from
Loredo State University, Texas. He has also attended the Advanced Management Program conducted by
Harvard Business School. Mr.&nbsp;Rama Raju is the younger brother of Mr.&nbsp;Ramalinga Raju, the Chairman
of the company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Ram Mynampati </I></B>has been inducted on the Board as whole time director effective August&nbsp;21, 2006. He
has been our President, Commercial and Healthcare Businesses since October&nbsp;2002. He was our
Executive Vice President and Chief Operating Officer, Vertical Business Unit &#151; Insurance, Banking
and Financial Services, Healthcare since November&nbsp;2000 and Executive Vice President, Strategic
Business Units 1, 2 and 4 in 1999. He also provides executive leadership to our customer
relationship with General Electric and oversees our industry groups which service the U.S.
Government. Prior to joining Satyam, Mr.&nbsp;Mynampati has held key positions in large, multinational
organizations, such as UNISYS and Southern California Gas Company. Mr.&nbsp;Mynampati holds a Master of
Computer Science degree from California State University. He is the Chairman of Citisoft Plc. and
Satyam Technologies, Inc. and also a director of Satyam Venture Engineering Services Pvt. Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>V.&nbsp;P. Rama Rao </I></B>was appointed to our board of directors in July&nbsp;1991 as an independent
director. Before joining our company, he was with the Indian Government&#146;s 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.&nbsp;Rama Rao holds a Post-Graduate degree in Arts, a
Bachelor degree in Civil Law and a Post-Graduate diploma in Technical Science and Industrial
Administration, from Manchester University, England. Mr.&nbsp;Rama Rao also sits on the board of
directors of VBC Ferro Alloys Limited, NCC Finance Limited and Konaseema EPS Oakwell Power Limited.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Dr.&nbsp;Mangalam Srinivasan </I></B>was appointed to our board of directors in July&nbsp;1991 as an independent
director. 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 the Kennedy School of Government, Harvard University,
Massachusetts where she is a distinguished fellow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Professor Krishna G. Palepu </I></B>was appointed to our board of directors on January&nbsp;23, 2003 as an
independent director. Professor Palepu is the Ross Graham Walker Professor of Business
Administration at the Harvard Business School, where he also holds the title of Senior Associate
Dean, Director of Research. Professor Palepu joined the Harvard Business School faculty in 1983. He
graduated with a Masters degree in Physics from Andhra University and holds a Master of Business
Administration degree from the Indian Institute of Management, and a Ph.D. from the Massachusetts
Institute of Technology. Professor Palepu serves as consultant to a wide variety of businesses, and
is on the boards of Dr.&nbsp;Reddy&#146;s Laboratories Limited in India and Brooks Automation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Vinod K. Dham </I></B>was appointed to our board of directors on January&nbsp;23, 2003 as an independent
director. Mr.&nbsp;Dham is Vice President and General Manager, Carrier Access Business Unit, of Broadcom
Corporation. Prior to this, he was the Chairman, President and Chief Executive Officer of Silicon
Spice Inc., which was acquired by Broadcom Corporation. Mr.&nbsp;Dham obtained his Bachelor&#146;s degree in
Electrical Engineering (electronics)&nbsp;from the University of Delhi and received his Master degree in
Electrical Engineering (solid state) from the University of Cincinnati. He held the positions of
Vice President of Intel Corporation&#146;s Microprocessor Products Group and General Manager of the
Pentium Processor Division. Mr.&nbsp;Dham is also a director of NewPath Ventures LLC, Hellosoft Inc.,
Sasken Communication Technologies Limited, Nevis Networks Inc., Telsima Inc, Insilica and Montalvo
Systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>M Rammohan Rao, </B>Dean, Indian School of Business was appointed to our board of directors on July&nbsp;29,
2005 as an independent director. Mr.&nbsp;Rao is recognized internationally for his research and
teaching capabilities. As a Research Fellow, Mr.&nbsp;Rao was associated with the International
Institute of Management, Science Center, Berlin, Germany, and the International Center for
Management Sciences, Center for Operations Research and Econometrics, University Catholique de
Louvain, Belgium. He has also conducted research at the Operations Research Group, United States
Steel Corporation, Applied Research Laboratory, Monroeville, Pennsylvania. Mr.&nbsp;Rao has a PhD in
Industrial Administration from the Graduate School of Industrial Administration, Carnegie-Mellon
University, Pittsburgh, Pennsylvania, USA. He has completed two Masters Degrees &#151; Master of Science
in Industrial Administration, Carnegie-Mellon University, Pittsburgh, Pennsylvania, and Master of
Engineering (Industrial), Cornell University, New York. Mr.&nbsp;Rao has won several prestigious awards
conferred on him by leading institutions across the world. Mr.&nbsp;Rao also sits on the Boards of
Krishna Fabrications Pvt. Ltd., MosChip Semiconductor Technology Ltd. and APIDC Venture Capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Mr.&nbsp;T.R. Prasad </I></B>was a member of the Indian Administrative Services. He was the Cabinet Secretary,
Government of India and was also a member of the Finance Commission of India. Prior to this, he
held the following positions: Defence Secretary, Government of India; Secretary, Industrial Policy
and Promotion, Ministry of Industry; Chairman, Foreign Investment Promotion Board; Secretary, Heavy
Industry and Chairman, Maruti Udyog Ltd. Mr.&nbsp;Prasad holds a Master&#146;s degree in Physics
(Electronics) from Banaras University and is a lifetime fellow of the Institute of Engineers (FIE).
He is also a member of the board of directors of TVS Motors Company Ltd., Suven Life Sciences
Ltd., Taj GVK Hotels and Resorts Ltd., Nelcast Ltd., GMR Infrastructure Company Ltd. and Indofil
Organic Industries Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Prof. V. S. Raju </I></B>is the Chairman of the Naval Research Board, Defense Research and Development
Organization, Government of India. Prior to this, he was the Director of the Indian Institute of
Technology, Delhi and was a professor and Dean at the Indian Institute of Technology, Madras.
During his over 40&nbsp;year&#146;s academic career, he interacted extensively with the IT industry as a
consultant, and at a policy level promoted Industry-Academia collaboration. Mr.&nbsp;Raju holds a
Bachelor&#146;s and a Master&#146;s degree in engineering from Andhra University and Indian Institute of
Science, respectively and a Doctorate in engineering from the University of Karlsruhe, Germany. He
is also a member of the board of directors of Bharti Airtel Ltd., Kaytee Switchgar Ltd and
Nagarjuna Construction Company Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Anand T.R. </I></B>has been our Director and Senior Vice President of the Telecom, Infrastructure, Media &#038;
Entertainment, and Semiconductors (TIMES)&nbsp;business unit since April&nbsp;2004. Prior to this, he was the
Chief Operating Officer of the Telecom Business Unit. During 2001 &#151; 2002 he was the chairperson of
Satyam, Japan. Prior to joining our company, he was the Country General
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Manager &#151; e-Business and Cross Industry Solutions at IBM Global Services, India. He started his
career at Tata Consultancy Services and later worked at the Groupe Bull subsidiary in India for
eleven years. Mr.&nbsp;Anand holds a bachelor degree in electronics engineering from the University
Visvesvaraya College of Engineering, Bangalore, and a post- graduate diploma in Business Management
(with specialization in Information Systems) from the Indian Institute of Management, Ahmedabad.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Hari
T</I></B>. is our Director and Senior Vice President &#150; Human
Resources. He joined Satyam in 1998. Prior to joining our company, he
was with Hyderabad-based OMC Computers Ltd, and moved on to DSQ Software Limited, Chennai. He
currently spearheads various initiatives and handles the Attraction, Retention and Motivation
related initiatives for this organization. He is part of the three member Leadership Development
Council, which includes the chairman. He also heads the Real Time Leadership Centre &#151; Satyam&#146;s 24x7
Business Performance Management centre. He is also the co-chairman for CII (HR)&nbsp;South Chapter and
represents Satyam in various national and international
bodies/forums. He holds a Masters in Personnel
Management &#038; Organisational Behavior.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Jayaraman G. </I></B>has been our Sr.Vice President, Corporate Governance and Company Secretary since April
2005. From October&nbsp;2000 to April&nbsp;2005 he was Vice President &#150; Corporate Affairs and Company Secretary.
Prior to joining our company, he was with Samrat Spinner Limited as Director (Finance) and Company
Secretary. Mr.&nbsp;Jayaraman holds a Bachelor of Science degree from University of Madras, 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 fellow member of the Institute of Company Secretaries of
India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Joseph Abraham </I></B>was appointed as our Director and Senior Vice President, Vertical Business Unit
&#151; Retail in November&nbsp;2000 after being the Senior Vice President, Strategic Business Unit 7 since
1998. Prior to joining our company, he was with Tata Consultancy Services Limited as Executive Vice
President, Human Resources. Mr.&nbsp;Abraham holds a Master of Personnel Management and Industrial
Relations degree from Tata Institute of Social Services and a Differential Test Battery Certificate
from Morrisby Institute, United Kingdom.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Keshab Panda </I></B>has been our Director and Senior Vice President &#151; Head of Satyam Europe
Operations since April&nbsp;2004. He is also the Chief Executive Officer of Satyam Technologies Inc, a
wholly owned subsidiary of Satyam and additionally manages multiple strategic relationships with
our key customers as well. Prior to this, as a veteran of the Indian Space Research Organization
(ISRO)&nbsp;Satellite Centre, he played an important role with the design of India&#146;s indigenous
communications satellite, INSAT II Satellite and the Defence Research Development Organization
(DRDO)&nbsp;in various capacities. He is also a director of Satyam Technologies, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Manish Sukhlal Mehta </I></B>has been our Director and Senior Vice President &#151; Horizontal Competency
Unit &#151; SAP, Engineering &#038; Spatial Services, since April&nbsp;2004. Prior to his current role, he was
responsible for building our automotive practice. Mr.&nbsp;Mehta also played a key role in establishing
the Manufacturing Business Unit in Satyam. He also established a Strategic Business Unit for
Banking &#038; Finance and managed it successfully as a profit center. Prior to joining our company, Mr.
Mehta was heading the business operations of Datamatics in Chennai. He began his career with Tata
Consultancy Services Limited, where he served for 15&nbsp;years in various positions. Mr.&nbsp;Mehta holds a
Masters in Science (Hons.) &#151; Chemistry, and a Masters in Engineering &#151; Industrial Development from
the Birla Institute of Technology &#038; Science (BITS), Pilani. He is also a director of Satyam
Computer Services (Shanghai) Co. Limited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Mohan Eddy F. S. </I></B>has been our Director, Internal Information Systems and Platinum Processes Group
since 2003. He was the Director, Horizontal Business Unit &#151; Collaborative Enterprise Solutions
since November&nbsp;2000 and a Director, Strategic Business Unit of Satyam Renaissance Consulting from
1995. Mr.&nbsp;Mohan Eddy holds a Bachelor of Engineering degree and a Post-Graduate diploma in
Management from the Indian Institute of Management, Calcutta.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>V&nbsp;Murali </I></B>is our Director and Senior Vice President &#151; Commercial and Contract Management. He is
responsible for creating and maintaining world-class facilities both in terms of physical and IT
infrastructure that meets the growing demand of Satyam&#146;s global operations. Mr.Murali joined Satyam
in May&nbsp;1998 as Head of Finance for one of the then Subsidiary companies of Satyam, and moved to
Satyam Computer Services Limited in 2000. Mr.Murali has a total experience of 20&nbsp;years in the
industry handled various roles and responsibilities during his tenure. Mr.Murali is also Director
of Satyam Venture Engineering Services Private Limited and CA Satyam ASP Pvt. Ltd. He is a member
of Infrastructure Panel constituted by Confederation of Indian Industry&#146;s A.P. Council. Mr.&nbsp;Murali
is a Chartered Accountant, Cost and Works Accountant and Company Secretary and holds a Post
Graduate Diploma in Business Management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Murty A. S. </I></B>has been our Director and Senior Vice President, Global Human Resources since
November&nbsp;2000. He was Senior Vice President, Human Resources in 1999 and Senior Vice President of
Strategic Business Unit I since 1994. Before joining our company, Mr.&nbsp;Murty was with Tata
Consulting Services Limited for over 12&nbsp;years. Mr.&nbsp;Murty holds a Master of Engineering degree from
the Indian Institute of Science, Bangalore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Ravi Shanker Bommakanti </I></B>has been our Director and Senior Vice President of Insurance Business
Unit since April, 2004. Prior to this, he was responsible for the GE Strategic Relationship unit of
Satyam for five years. Mr.&nbsp;Bommakanti was also responsible for managing the Dun and Bradstreet
relationship for Satyam and in developing client-server competencies in Satyam. Prior to joining
our company, Mr.&nbsp;Bommakanti worked with Citicorp in United States and India and Bankers Trust in
Australia. Mr.&nbsp;Bommakanti is a
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Chartered Accountant with experience in Financial Services and Accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Shailesh Shah </I></B>has been our Director and Senior Vice President &#151; Corporate Strategy since
September, 2004. Mr.&nbsp;Shah&#146;s last employment was with Watson Wyatt (India), as its Managing
Director. Spanning his 20&nbsp;year career, Mr.&nbsp;Shah has worked with organizations like Price
Waterhouse, The Strategy Consulting Group and the Hay Group. Mr.&nbsp;Shah holds a Bachelors degree in
Mechanical Engineering from Bangalore University, a Masters in Science Industrial Engineering &#038;
Operations Research from Syracuse University and a Master of Business Administration degree from
Drexel University, United States. He is also a director of Citisoft Plc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Srinivas V. </I></B>has been our Director, Senior Vice President and Chief Financial Officer since
October&nbsp;2002. He was our Senior Vice President and Chief Financial Officer since November&nbsp;2000 and
as Vice President and Chief Financial Officer from 1998. Mr.&nbsp;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. In addition,
he holds a Bachelor of Law degree and a Master of Commerce degree from Osmania University,
Hyderabad. He is also a director of Nipuna and Satyam Computer Services (Shanghai) Co. Limited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Subramanian D. </I></B>has been our Director since October&nbsp;2002. He is also Director and Senior Vice
President &#151; Manufacturing, Automotive, Energy, Oil and Gas and Utilities since April&nbsp;2004. He was
Senior Vice President &#151; SAP &#151; Manufacturing and Engineering practices since October&nbsp;2002 and Vice
President &#151; SAP since joining our company in 1999. Mr.&nbsp;Subramanian graduated with a Master of
Business Administration degree from Annamalai University, Tamil Nadu and is an associate member of
the Institute of Cost and Works Accountants of India. He is also a director of CA Satyam ASP Pvt
Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Vijay Prasad Boddupalli </I></B>has been our Director and Senior Vice President &#151; EABIS (Enterprise
Applications and Business Intelligence Solutions) business unit since April&nbsp;2004. Prior to joining
our company in 1996 Mr.&nbsp;Boddupalli worked in the United States and Australia. He started his career
with Tata Consulting Services Limited, during which time he worked with American Express in the
United Kingdom, Slavenburg&#146;s bank in the Netherlands, New Zealand Post Office in New Zealand. Mr.
Boddupalli has a Bachelor degree of Technology in Electronics &#038;
Communications Engineering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Engineering, from Regional Engineering College, Warangal and a Masters degree of Technology in
Computer Science from Indian Institute of Technology, Bombay. He is also a director of CA Satyam
ASP Pvt Ltd and Knowledge Dynamics Pvt. Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Virender Aggarwal </I></B>is our Director and Senior Vice President &#151; APAC-MEIA territories (Asia Pacific,
Middle East, India and Africa) since April, 2004. He is responsible for management of business and
delivery operations, which include the development centers across China, Australia, Malaysia,
Singapore, Middle East and Japan. Prior to joining Satyam, Mr.&nbsp;Aggarwal was the head of a large
Indian Software and Training Company operating out of Singapore. Mr.&nbsp;Aggarwal has completed his
Masters in Management from BITS, Pilani and has more than 18&nbsp;years&#146; experience, including eight
years in general management positions. Mr.&nbsp;Aggarwal&#146;s other assignments included working for
management consultancy firm &#151; AF Ferguson and Co in India, and various positions of responsibility
in other organizations in the field of IT consulting. He is also a director of Satyam Computer
Services (Shanghai) Co. Limited and Knowledge Dynamics Pvt. Ltd.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation of Directors and Key Management Personnel</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the
Companies Act, our shareholders must approved the salary, bonus and
benefits of all executive directors at an annual general meeting of
shareholders. At our general meeting held on July&nbsp;23, 2004, our
shareholders approved the employment terms and conditions for each of
our executive directors including monthly salary, benefits, medical
reimbursement and pension fund contributions. These term are made for
a five-year period. The employment term of Mr.&nbsp;B. Ramalinga Raju, the
chairman of our Board of directors, and Mr.&nbsp;Rama Raju, our
managing director and chief executive officer, were renewed for a
period of five years with effect from April&nbsp;1, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth all compensation awarded to, earned by or paid to Mr.&nbsp;B. Rama
Raju, our managing director and chief executive officer, during fiscal 2007 for services rendered
in all capacities to us. Mr.&nbsp;Raju was appointed as managing director and
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">chief executive officer of our company in 1991. The total remuneration received by our executive officers and directors
for their services to us for the fiscal year ended March&nbsp;31, 2007 was $4.8&nbsp;million. The total
remuneration and the amounts in the following table are in dollars based on the noon buying rate of
Rs. 43.1 per dollar on March&nbsp;30, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At our general meeting held on July&nbsp;25, 2003, our shareholders approved the payment of
remuneration to our non-executive directors by way of commission. There are no loans to, or
guarantees in favor of, directors or key management personnel other than interest-bearing housing
loans provided to certain key management personnel which have not been made, modified or renewed
after July&nbsp;30, 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Annual Compensation</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6"><I>$ in millions</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Others </B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">B. Rama Raju, Managing
Director and Chief Executive
Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes membership fees and housing allowance.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Option Grants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal year ended March&nbsp;31, 2007, we granted options to our key managerial personnel to
purchase 377500 shares under our ASOP &#151; RSUs and 80000 under our ASOP &#150; RSUs (ADS). The expiration
dates for these options granted under ASOP &#151; RSUs and ASOP &#150; RSUs(ADS) ranged from January&nbsp;28, 2013
to January&nbsp;28, 2016. The exercise price for the options granted under ASOP &#150; RSUs was Rs. 2/- and
the exercise price for the options granted under ASOP &#150; RSUs(ADS) was the U.S. dollar equivalent to
Rs. 4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employee Benefit Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have instituted an incentive plan to reward associates&#146; performance through cash payments
and, since September&nbsp;1999, stock options. Associate performance is measured by reference to the
associate&#146;s contribution to (1)&nbsp;profits and his or her tenure of service, (2)&nbsp;organizational
development and (3)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our ASOP and ESOP Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have five associate stock option plans: our Associate Stock Option Plan, or ASOP, established in
May&nbsp;1998; our Associated Stock Option Plan B, or ASOP B, established in May&nbsp;1999; our Associated
Stock Option Plan ADS, or ASOP ADS, established in May&nbsp;1999; our Associate Stock Option Restricted
Stock Units or ASOP RSUs and our Associate Stock Option Restricted Stock Units ADS or ASOP RSUs ADS
established in October&nbsp;2006. We also have the Employee Stock Option Plan, or ESOP, established by
Nipuna in April&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>ASOP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;1998, Satyam Computer Services established its Associate Stock Option Plan (the &#147;ASOP
plan&#148;), which provided for the issue of 26,000,000 shares, as adjusted to eligible associates.
Satyam Computer Services issued warrants to purchase these shares to a controlled associate welfare
trust called the Satyam Associate Trust (the &#147;SC-Trust&#148;). In December&nbsp;1999 the SC- Trust exercised
all its warrants to purchase Satyam Computer Services shares prior to the stock split using the
proceeds obtained from bank loans. The warrants vest immediately or vest over a period ranging
from one to three years. Upon vesting, associates have 30&nbsp;days in which to exercise these warrants.
As of March&nbsp;31, 2007, warrants (net of lapsed and cancelled) to purchase 23,829,720 equity shares
have been granted to associates pursuant to ASOP since inception.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We
established a controlled associate welfare trust called the Satyam Associate Trust to administer
the ASOP and issued warrants to purchase 13.0&nbsp;million equity shares of Satyam. To give our
associates the benefit of our stock split in September&nbsp;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&#146;s length of service and performance. Upon vesting, employees have
30&nbsp;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
($10.4), 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>ASOP B</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2000, Satyam Computer Services established its Associate Stock Option Plan B (the &#147;ASOP
B&#148;) and reserved warrants for 83,454,280 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% in
second year, 30% in the third year and 50% in the fourth year. Upon vesting, associates have 5
years to exercise these warrants. As of March&nbsp;31, 2007, options (net of lapsed and cancelled) to
purchase 54,582,747 equity shares have been granted to associates under this plan since inception.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The ASOP B is substantially similar to the ASOP and is administered by a committee of our
board of directors. The SEBI guidelines define the exercise price as the price payable by the
employee for exercising the option granted to him in pursuance of the stock option plan. In
determining the exercise price, we opted for the higher of the following: (a)&nbsp;the closing price of
the shares on the date of the meeting of the Compensation Committee convened to grant the stock
options, on the stock exchange where highest volumes are traded; or (b)&nbsp;the average of the two
weeks high and low price of the share preceding the date of grant of option on the stock exchange
on which the shares of the company are listed. As of March&nbsp;31, 2007, options (net of forfeited and
cancelled) to purchase 54,582,747 equity shares have been granted to associates under this plan and
warrants to purchase 34,606,537 equity shares have been exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>ASOP ADS</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2000, Satyam Computer Services established its Associate Stock Option Plan (ADS) (the &#145;ASOP
(ADS)&#146;) to be administered by the Administrator of the ASOP (ADS)&nbsp;which is a committee appointed by
the Board of Directors of Satyam Computer Services and reserved 5,149,330 ADSs (10,298,660 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 NYSE on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the grant date. These warrants
vest over a period of 1-10&nbsp;years from the grant date. As of March&nbsp;31, 2007, warrants (net of lapsed
and cancelled) for 3,215,800 ADSs representing 6,431,600 equity shares have been granted to
associates under the ASOP ADS since inception.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. The
warrants issued under ASOP ADS can be granted 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 of March&nbsp;31, 2007, warrants
(net of forfeited and cancelled) for 65,104,736 ADSs representing 130,209,472 equity shares have
been granted to associates under the ASOP ADS, and warrants to purchase 65,104,736 ADSs
representing 130,209,472 equity shares have been exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In October&nbsp;2005, our compensation committee approved amendments to our associate stock option plans
(ASOP B and ASOP ADS) to allow for continuation of vesting of options upon retirement and
accelerated vesting upon death. These amendments are applicable retrospectively for ASOP-B and
prospectively for ASOP-ADS. Refer to Exhibits 4.2 and 4.3 to this Annual Report for a copy of the
amended and restated plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><i>Associate
Stock Option Plan &#151; Restricted Stock Units (ASOP &#150;
RSUs)</i></B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->66<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2007, we established the &#147;Associate Stock Option Plan &#151; Restricted Stock Units,&#148; or
ASOP &#150; RSUs, to be administered by the Administrator of the ASOP &#150; RSUs, a committee appointed by
the Board of Directors of the Company. Under the scheme 13&nbsp;million equity shares are reserved to be
issued to eligible associates at a price to be determined by the Administrator which shall not be
less than the face value of the share. ASOP RSUs vest over a period of one to four years from the
date of the grant. Upon vesting, associates have 5&nbsp;years in which to exercise these warrants. As
of March&nbsp;31, 2007, warrants for 3,293,140 equity shares have been granted under the ASOP &#151; RSUs
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Associate Stock Option Plan &#151; RSUs (ADS) (ASOP &#150; RSUs(ADS))</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In fiscal 2007, we established the &#147;Associate Stock Option Plan &#151; RSUs (ADS),&#148; or
ASOP-RSUs(ADS), to be administered by the Administrator of the ASOP &#150; RSUs (ADS), a committee
appointed by the Board of Directors of the Company. Under the scheme 13&nbsp;million equity shares minus
the number of shares issued from time to time under the ASOP &#151; RSUs are reserved to be issued to
eligible associates at a price to be determined by the Administrator not less than the face value
of the share. These RSUs vest over a period of one to four years from the date of the grant. Upon
vesting, associates have five years in which to exercise these warrants. As of March&nbsp;31, 2007,
warrants for 236,620 ADS representing 473,240 equity shares have been granted under the ASOP &#150; RSUs
(ADS).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Nipuna ESOP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2004, Nipuna established its Employee Stock Option Plan (the &#147;ESOP&#148;). As per the ESOP, the
options are granted at fair value as determined by an independent valuer as on the date of the
grant and hence no compensation cost has been recognized. These options vest starting with 33.33%
at the end of the second year, 33.33% at the end of the third year and remaining 33.34% at the end
of the fourth year from the date of grant. As of March&nbsp;31, 2007, options (net of forfeited and
cancelled) for 998,702 equity shares have been granted to associates under the Nipuna ESOP, and no
options to purchase equity shares have been exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board Practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Board Composition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our Articles of Association set the minimum number of directors at three and the maximum number of
directors at 12. We currently have ten directors. The Companies Act and our Articles of
Association require the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least two-thirds of our directors shall be subject to retirement; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">B.&nbsp;Ramalinga Raju, B. Rama Raju and Ram Mynampati are permanent directors and are not subject to
retirement by rotation. Dr.&nbsp;Mangalam Srinivasan, Krishna G. Palepu, Vinod K. Dham, V.P. Rama Rao, M
Rammohan Rao, T.R. Prasad and V.S.Raju are the directors who are scheduled to retire by rotation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board Committees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 registered public accounting firm, the scope of the annual audits, fees to be paid to
the independent registered public accounting firm, the adequacy and effectiveness of the accounting
and financial controls of our company and our accounting practices. The members of the audit
committee are M Rammohan Rao, Dr.&nbsp;Mangalam Srinivasan, T.R. Prasad and V.S. Raju each of whom
is an independent director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The compensation committee of the board of directors determines the salaries and benefits for our
executive directors and the stock options for all associates. The members of the compensation
committee are Dr.&nbsp;Mangalam Srinivasan, Vinod K Dham, M. Rammohan Rao and V.S. Raju each of whom is
an independent director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The investors&#146; grievance committee of the board of directors formed in January&nbsp;2001 focuses on
strengthening investor relations and
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->67<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">addressing
investors&#146; concerns. The members of the committee are T.R.
Prasad, and V.S Raju who are
independent directors, and B. Rama Raju, our Managing Director and Chief Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Directors Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.10,000 for every board or committee meeting. In addition, Independent directors receive
compensation by way of commission 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. In addition, special remuneration is paid to Mr.Krishna G Palepu for his
professional services in his capacity as a non-executive director of our company in the amount of
$0.2mn per fiscal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employment, Severance and Other Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. There are no severance agreements with our key
managerial personnel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For a description of our employees, see &#147;Item&nbsp;4. Information on the Company &#150; Employees.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth information with respect to the beneficial ownership of our equity
shares as of March&nbsp;31, 2007 by each of our directors and all of our directors and executive
officers as a group. The table gives effect to equity shares issuable within 60&nbsp;days of March&nbsp;31,
2007 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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="75%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Equity Shares</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Beneficially Owned</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial Owner</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Percent</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">B. Rama Raju</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2,000       </TD>
    <TD nowrap>(1)(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">B. Ramalinga Raju</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0       </TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ram Mynampati</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">946,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">V.P. Rama Rao</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Mangalam Srinivasan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Krishna G. Palepu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vinod K Dham</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">M Rammohan Rao</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>



<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">T.R. Prasad</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">V.S. Raju</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and executive officers as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,604,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 1,000 equity shares held by B. Rama Raju&#146;s wife, B.
Radha Raju. B. Rama Raju disclaims beneficial ownership of any equity
shares held by B. Radha Raju.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>B. Ramalinga Raju and B. Rama Raju control SRSR Holdings
Private Limited, which holds approximately 8.38% of our outstanding
equity shares as of March&nbsp;31, 2007.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->68<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Share Ownership</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information regarding beneficial ownership of our
shares of Common Stock as of March&nbsp;31, 2007 by all persons who are known to us to own five percent
(5%) or more of the outstanding shares of Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Beneficial ownership is determined in accordance with rules of the SEC, which generally attribute
beneficial ownership of securities to persons who possess sole or shared voting power or investment
power with respect to those securities and includes equity shares issuable pursuant to the exercise
of stock options or warrants that are immediately exercisable or exercisable within 60&nbsp;days of
1,962,105. These shares are deemed to be outstanding and to be beneficially owned by the person
holding those options or warrants for the purpose of computing the percentage ownership of that
person, but are not treated as outstanding for the purpose of computing the percentage ownership of
any other person. Unless otherwise indicated, all information with respect to the beneficial
ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise
indicated, we believe that persons named in the table have sole voting and sole investment power
with respect to all the equity shares shown as beneficially owned. The share numbers and
percentages listed below are based on &#091;667,196,009&#093; equity shares outstanding as of March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007, 975,251 of our equity shares, representing 0.14% of our outstanding shares,
were held by a total of 344 holders of record with addresses in the United States. As of March&nbsp;31,
2007, we have issued 65,104,736 ADSs (representing 130,209,472 equity shares) and which represent
19.6% of our outstanding equity shares and which are held by approximately 35,400 beneficial
holders.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="66%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Identity of Person or Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Percentage (%)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FMR Corp.<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,495,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.95</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SRSR Holdings Private Limited<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,728,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.38</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Information based on a report on Schedule&nbsp;13G jointly filed by FMR Corp. and Edward C.
Johnson with the SEC on February&nbsp;14, 2004 and as amended on February&nbsp;14, 2005, February&nbsp;14,
2006, August&nbsp;10, 2006 and February&nbsp;14, 2007. Based on Amendment No.&nbsp;4 to the Schedule&nbsp;13G
filed by FMR Corp. and Edward C. Johnson with the SEC on
February&nbsp;14, 2007 FMR Corp. has sole voting power for
6,443,905&nbsp;equity shares and sole dispositive power for
59,495,832&nbsp;equity shares. Edward Johnson has sole voting and
dispositive power for 59,495,832&nbsp;equity shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Information based upon a report on Schedule&nbsp;13G filed by SRSR Holdings Private Limited, with
the SEC on September&nbsp;21, 2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Related Party Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 or Satyam
Venture, formed in January&nbsp;2000, provides engineering services and computer services to the
automotive industry. We hold a 50% stake in the joint venture
company. For fiscal 2007, fiscal 2006 and
fiscal 2005, we provided infrastructure and other services to Satyam Venture, which amounted to
$0.5&nbsp;million, $0.5&nbsp;million and $0.3&nbsp;million
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->69<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">respectively.
For fiscal 2007, fiscal 2006 and fiscal 2005, we received services from Satyam Venture,
which amounted to $8.6&nbsp;million, $8.6&nbsp;million and $7.1&nbsp;million respectively. As of March&nbsp;31, 2007
and 2006, we owe $2.6&nbsp;million and $1.8&nbsp;million to Satyam Venture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007 and fiscal 2006, Sify, a company in which we used to hold 31.61% interest,
rendered services to us aggregating to $Nil and $2.9&nbsp;million, on terms which were no less
favorable to us than could have been obtained from independent third parties. During fiscal 2006,
Satyam sold its entire 31.61% stake in Sify.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. FINANCIAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Financial Statements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have elected to provide financial statements pursuant to Item&nbsp;18 of Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal Proceedings</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 2602.70&nbsp;million ($56.7
million), Rs1,820.5&nbsp;million ($ 41.3&nbsp;million), and Rs. 1,722.7&nbsp;million ($37.6&nbsp;million) in fiscal
2007, fiscal 2006 and fiscal 2005 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. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Holders 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
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. THE OFFER AND LISTING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Trading Markets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our equity shares are traded in India on BSE and NSE. Our ADSs evidenced by American Depositary
Receipts, or ADRs, are traded in the United States on the NYSE under the symbol &#147;SAY&#148;. Each ADS
represents two equity shares. The ADRs evidencing ADSs were issued by our depositary, Citibank,
N.A., pursuant to a deposit agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We had filed a request for arbitration with the London Court of
International Arbitration (or LCIA) naming Venture Global Engineering LLC, USA (VGE) as
respondent. The Arbitration concerned a dispute between us and VGE in
connection with their joint venture, Satyam Venture Engineering Services Private Limited (or SVES).
The LCIA Arbitrator issued his Final Award on April&nbsp;3, 2006 in our favour.
We has filed a petition to recognize and enforce the award in the United
States District Court in Michigan. VGE has separately filed a declaratory judgment action seeking
to refuse enforcement of the Award in the United States District Court in Illinois. Our management
believes that this will not have an adverse effect upon our results of operations, financial
condition and cash flows.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->70<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The number of our outstanding equity shares (including the underlying shares for ADSs) as of
March, 31, 2007 was 667,196,009. As of March&nbsp;31, 2007, there were 65,104,736 ADSs outstanding
(representing 130,209,472 equity shares).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Price History</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The information presented in the table below represents, for the periods indicated: (1)&nbsp;the
reported high and low sales prices quoted in Indian rupees for the equity shares on the BSE; and
(2)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Annual high and low market prices</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Rupee price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>U.S. dollar price</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>equity share(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>per equity share</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Fiscal year ended March 31,(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">221.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2008 (through April&nbsp;20, 2007)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 2006:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">283.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 2007:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">445.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">270.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">432.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.09</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">498.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">396.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">404.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 2008:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter (Through April&nbsp;20, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Monthly prices:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">453.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">396.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">484.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">498.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">454.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">404.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">474.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">409.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2007 (Though April&nbsp;20, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">495.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.20</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Data derived from the BSE website. The prices and volumes quoted on the NSE may be different.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>For comparative purposes, the price per equity share data above is adjusted for the October
10, 2006 one-for-one stock split</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->71<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our ADSs commenced trading on the New York Stock Exchange on May&nbsp;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.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>U.S. dollar</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Price per ADS</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.97</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.63</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008 (through April&nbsp;20, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Monthly prices</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2007 (through April&nbsp;20, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.04</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 10. ADDITIONAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Corporate Governance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are subject to the NYSE listing standards, although, because we are a foreign private issuer,
those standards are considerably different from those applied to U.S. companies. Under the NYSE
rules, we need only (i)&nbsp;establish an independent audit committee that has specified
responsibilities as described in the following table; (ii)&nbsp;provide prompt certification by our
chief executive officer of any material non-compliance with any corporate governance rules; (iii)
provide periodic written affirmations to the NYSE with respect to our corporate governance
practices; and (iv)&nbsp;provide a brief description of significant differences between our corporate
governance practices and those followed by U.S. companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table compares our principal corporate governance practices to those required of U.S.
companies.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->72<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Standard for U.S. Listed Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Our Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Director Independence</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> A majority of the board must consist
of independent directors.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Six of our ten
directors, namely Mr.&nbsp;VP
Rama Rao, Dr.&nbsp;Mangalam
Srinivasan, Mr.&nbsp;Vinod K
Dham, Mr.&nbsp;M Rammohan Rao,
Mr.&nbsp;T.R. Prasad and Mr.
V.S. Raju are independent
within the meaning of the
NYSE standards.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-0px">Independence is defined by various
criteria including the absence of a
material relationship between the
director and the listed company. For
example, directors who are employees,
are immediate family of the chief
executive officer or receive over
$100,000 per year in direct compensation
from the listed company are not
independent. Directors who are employees
of or otherwise affiliated through
immediate family with the listed
company&#146;s independent auditor are also
not independent.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> The non-management directors of each
company must meet at regularly scheduled
executive sessions without management.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Our
non-management directors
do not meet periodically
without management
directors.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Audit Committee</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Listed companies must have an audit
committee that satisfies the requirements of
Rule&nbsp;10A-3 under the Securities Exchange Act.
The rule requires that the audit committee (i)
be comprised entirely of independent
directors; (ii)&nbsp;be directly responsible for
the appointment, compensation and oversight of
the independent auditor; (iii)&nbsp;adopt
procedures for the receipt and treatment of
complaints with respect to accounting and
auditing issues; (iv)&nbsp;be authorized to engage
independent counsel and other advisors it
deems necessary in performing its duties; and
(v)&nbsp;be given sufficient funding by the board
of directors to compensate the independent
auditors and other advisors as well as for the
payment of ordinary administrative expenses
incurred by the committee.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We have an audit
committee which meets all
of the requirements of
Rule&nbsp;10A-3.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> The audit committee must consist of at
least three members, and each member must be
independent within the meaning established by
the NYSE.</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B>
Our audit committee consists of four members and all the members are
independent under the NYSE&#146;s rules.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->73<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Standard for U.S. Listed Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Our Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> The audit committee must have a
written charter that addresses the committee&#146;s
purpose and responsibilities.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our audit committee has a charter
outlining the committee&#146;s purpose and responsibilities.</TD>
</TR>


<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-0px">At a minimum, the committee&#146;s purpose
must be to assist the board in the
oversight of the integrity of the
company&#146;s financial statements, the
company&#146;s compliance with legal and
regulatory requirements, the independent
auditor&#146;s qualifications and
independence and the performance of the
company&#146;s internal audit function and
independent auditors.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-0px">The audit committee is also required to
review the independent auditing firm&#146;s
annual report, describing the firm&#146;s
internal quality control procedures, any
material issues raised by the most
recent internal quality control review
or peer review of the firm and any steps
taken to address such issues. The audit
committee is also to assess the
auditor&#146;s independence by reviewing all
relationships between the company and
its auditor. It must establish the
company&#146;s hiring guidelines for
employees and former employees of the
independent auditor.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-0px">The committee must also discuss the
company&#146;s annual audited financial
statements and quarterly financial
statements with management and the
independent auditors, the company&#146;s
earnings press releases, as well as
financial information and earnings
guidance provided to analysts and rating
agencies, and policies with respect to
risk assessment and risk management. It
must also meet periodically with the
internal auditors and the board of
directors.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Each listed company must have
disclosed whether their board of directors has
identified an Audit Committee Financial
Expert, and if not the reasons why the board
has not done so.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We do not have an
individual serving on out
audit committee as an
&#147;Audit Committee
Financial Expert,&#148; as
defined in applicable
rules of the Securities
and Exchange Commission.
This is because our board
of directors has
determined that no
individual audit
committee member
possesses all of the
attributes required by
the definition of &#147;Audit
Committee Financial
Expert.&#148;</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Each listed company must have an
internal audit function.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We have a
separate department for
our internal audit
function.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->74<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Standard for U.S. Listed Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Our Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Compensation Committee</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Listed companies must have a
compensation committee composed entirely of
independent board members as defined by the
NYSE listing standards.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Our compensation
committee has four
members, each of whom is
independent within the
meaning of the NYSE
standards.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> The committee must have a written
charter that addresses its purpose and
responsibilities.<BR><BR>
These responsibilities include (i)
reviewing and approving corporate goals
and objectives relevant to CEO
compensation; (ii)&nbsp;evaluating CEO
performance and compensation in light of
such goals and objectives for the CEO;
(iii)&nbsp;based on such evaluation,
reviewing and approving CEO compensation
levels; (iv)&nbsp;recommending to the board
non-CEO compensation, incentive
compensation plans and equity-based
plans; and (v)&nbsp;producing a report on
executive compensation as required by
the Securities and Exchange Commission
to be included in the company&#146;s annual
proxy statement or annual report. The
committee must also conduct an annual
performance self-evaluation.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Our compensation
committee reviews among
other things our general
compensation structure,
and reviews and
recommends the
compensation and benefits
of directors and the
chief executive officer,
subject to ratification
by the Board of
Directors.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Nominating/Corporate Governance Committee</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Listed companies must have a
nominating/corporate governance committee
composed entirely of independent board
members.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We do not have a
nominating/corporate
governance committee.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-0px">The committee must have a written
charter that addresses its purpose and
responsibilities, which include (i)
identifying qualified individuals to
become board member; (ii)&nbsp;selecting, or
recommending that the board select, the
director nominees for the next annual
meeting of shareholders; (iii)
developing and recommending to the board
a set of corporate governance principles
applicable to the company; (iv)
overseeing the evaluation of the board
and management; and (v)&nbsp;conducting an
annual performance evaluation of the
committee.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Equity-Compensation Plans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Shareholders must be given the
opportunity to vote on all equity-compensation
plans and material revisions thereto, with
limited exceptions.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> The Company is in
compliance with this
requirement.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Corporate Governance Guidelines</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> Listed companies must adopt and
disclose corporate governance guidelines.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We are fully
compliant with Clause 49
of the listing agreement
of Indian Stock
Exchanges, with regard to
corporate governance
guidelines. We publish a
report on corporate
governance in annual
report which is
distributed to our
domestic shareholders and
ADS holders annually.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>Code of Business Conduct and Ethics</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> All listed companies, U.S. and
foreign, must adopt and disclose a code of
business conduct and ethics for directors,
officers and employees, and promptly disclose
any waivers of the code for directors or
executive officers.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:10px; text-indent:-10px"><B>&#149;</B> We have adopted a
Code of Business Conduct
and Ethics Policy, which
is available at
www.satyam.com.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Memorandum and Articles of Association</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 &#147;A&#148; 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 &#147;A&#148;
of the Companies Act, as exhibits to our Registered Statements. See
exhibit index.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Objects and Purposes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under our Memorandum of Association, the main objectives of our company include, but are not
limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacturing and selling computer systems, peripherals, accessories, consumables and other
computer Products</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>providing electronic data processing centers, word processing, software consultancy, system
studies, management consultancy, feasibility studies and computer training</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Managerial remuneration</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a public company, the total managerial remuneration in any year cannot exceed 11% 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% 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%
of our net profits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146;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 capital and free
reserves.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Equity Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our authorized share capital is 800,000,000 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 on equity shares which
are not fully paid-up. All of our issued and outstanding equity shares are fully paid-up.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We paid
out dividends of Rs 2,602.70&nbsp;million ($56.7&nbsp;million), Rs1,820.5&nbsp;million ($41.3
million), Rs. 1,722.7&nbsp;million ($37.6&nbsp;million) in fiscal 2007, fiscal 2006 and fiscal 2005
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Indian 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&#146;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&nbsp;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&#146;s order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Indian 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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the balance of reserves after withdrawals shall not fall below 5.0% of its paid up capital</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For additional information regarding dividends, please see &#147;Item&nbsp;8. Financial Information&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Bonus Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 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 October&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Preemptive Rights and Issue of Additional Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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)&nbsp;the right, exercisable by the shareholders of record, to renounce the shares offered
in favor of any other person; and (2)&nbsp;the number of shares offered and the period of the offer,
which may
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not be less than 15&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Annual General Meetings of Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 Company Secretary
pursuant to a resolution of the board. Written notice setting out the agenda of the meeting must be
given at least 21&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Voting Rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Audit and Annual Report</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At least 21&nbsp;days before the date of the annual general meeting of shareholders (excluding the day
of mailing), we must distribute to our shareholders our audited balance sheet
and profit and loss account and the related 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&nbsp;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&nbsp;days of the conclusion of
the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Register of Shareholders; Record Dates; Transfer of Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We maintain a register of shareholders at our registered office. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146; and fifteen days&#146;
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">prior notice respectively 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&nbsp;days in a year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Following the introduction of the Depositories Act, 1996, and the repeal of Section&nbsp;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&nbsp;111A of the Companies Act. Because we are a
public company, the provisions of Section&nbsp;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&nbsp;111A (2)&nbsp;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&nbsp;111A (3) of
the Companies Act, 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 &#147;Investment by Foreign Institutional Investors&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 there under together with delivery of the share certificates. We
have entered into listing agreements with two of the Indian
Stock exchanges: Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.
Clause 40A of each of the listing agreements provides that if an acquisition of a listed company&#146;s
shares results in the acquirer and its associates holding 5.0% or more of the company&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Disclosure of Ownership Interest</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;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&#146;s interest in the shares. Any person who fails to make the required
declaration within 30&nbsp;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&nbsp;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&nbsp;187C applies to holders of ADSs,
investors who exchange ADSs for the underlying equity shares will be subject to the restrictions of
Section&nbsp;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.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Company Acquisition of Equity Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidation Rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Takeover Code</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, or Takeover Code, upon the acquisition of more than 5% or 10% or 14%
or 54% or 74% of the outstanding shares or voting rights of a publicly-listed 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 such company are listed. Further, the
Takeover Code requires that any person holding more than 15% and less than 55% of the shares or
voting rights in a company, upon the sale or purchase of 2% or more of the shares or voting rights
of the company, is required to notify the company and all the stock exchanges where the shares are
listed. A holder of ADSs would be subject to these notification requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon the acquisition of 15% or more of such shares or voting rights, or a change in control of
the company, the purchaser is required
to make an open offer to the other shareholders, offering to purchase at least 20% of all the
outstanding shares of the company at a minimum offer price determined pursuant to the Takeover
Code. Since we are
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a listed company in India, the provisions of the Takeover Code will apply to us and to any person
acquiring our equity shares or voting rights in our company. However, the Takeover Code provides
for a specific exemption from this provision to a holder of ADSs and states that this provision
will apply to a holder of ADSs only once he or she converts the ADSs into the underlying equity
shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Material Contracts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as described herein, we have not entered into any material contracts in the two years
preceding the date of this Annual Report, other than contracts entered into in the ordinary course
of business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to June&nbsp;1, 2000, investment in Indian securities was regulated by the Indian Foreign Exchange
Regulation&nbsp;Act, 1973. Under Section&nbsp;29(1)(b) of the Indian Foreign Exchange Regulation&nbsp;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&nbsp;19(1)(d)
of the Indian Foreign Exchange Regulation&nbsp;Act, 1973, the transfer and 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&nbsp;19(5) of the Indian Foreign Exchange Regulation&nbsp;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.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of June&nbsp;1, 2000, the Indian Foreign Exchange Regulation&nbsp;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&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ADR Guidelines</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shares of Indian companies represented by ADSs are no longer required to be approved for issuance
to foreign investors by either Ministry of Finance or the RBI 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 GoI. This change was effected through the guidelines
for ADR and GDR issues by Indian companies issued by the Ministry of Finance on January&nbsp;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&nbsp;days of
the completion of an offering.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
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&nbsp;115AC of the Indian
Income-tax Act, 1961 for purposes of the application of Indian tax law. The GoI does not restrict
the payment of dividends to the holders of our ADSs or equity shares, whether or not such holders
reside in India. For additional information, please see &#147;Taxation&#151;Indian Taxation&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Foreign Direct Investment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 and non-resident Indians in Indian companies do not require the approval of the Foreign
Investment Promotion Board, or FIPB, a body formed by the GoI to negotiate with large foreign
companies interested in making long-term investments in India. Furthermore, henceforth no prior
approval of the RBI 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 an 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;1994, the GoI 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. In November&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Investment by Non-Resident Indians</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 and non-resident
Indians. These facilities permit non-resident Indians to make portfolio
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 may also invest in Indian companies through foreign direct investments. For
additional information, see &#147;&#151;Foreign Direct Investment&#148;. Under the foreign direct investment
rules, non-resident Indians 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Investment by Foreign Institutional Investors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;1992, the GoI issued guidelines which enable Foreign Institutional Investors, or FIIs,
including institutions such as pension funds, investment trusts, asset management companies,
nominee companies and incorporated/institutional portfolio managers, to invest in all the
securities traded on the primary and secondary markets in India. Under the guidelines, FIIs are
required to obtain an initial registration from the Securities and Exchange Board of India, or
SEBI, and a general permission from the Reserve Bank of India to engage in transactions regulated
under the Foreign Exchange Management Act. FIIs must also comply with the provisions of the SEBI
Foreign Institutional Investors Regulations, 1995. When it receives the initial registration, the
FII also obtains general permission from the Reserve Bank of India to engage in transactions
regulated under the Foreign Exchange Management Act. Together, the initial registration and the
Reserve Bank of India&#146;s general permission enable the registered FII to: (i)&nbsp;buy (subject to the
ownership restrictions discussed below) and sell unrestricted securities issued by Indian
companies; (ii)&nbsp;realize capital gains on investments made through the initial amount invested in
India; (iii)&nbsp;participate in rights offerings for shares; (iv)&nbsp;appoint a domestic custodian for
custody of investments held; and (v)&nbsp;repatriate the capital, capital gains, dividends, interest
income and any other compensation received pursuant to rights offerings of shares. The current
policy with respect to purchase/sale of securities of an Indian company by an FII is enshrined in
Schedule&nbsp;2 and Regulation&nbsp;5(2) of the Foreign Exchange Management
(Transfer or Issue of Securities by a Person Resident Outside India) Regulations, 2000.
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 &#147;&#151;Foreign Director Investment.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Ownership Restrictions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Securities and Exchange Board of India and Reserve Bank of India regulations, restrict
investments in Indian companies by FIIs and NRIs or collectively, Foreign Direct Investors. Under
the current SEBI regulations applicable to us, subject to the requisite approvals of the
shareholders in a general meeting, Foreign Direct Investors in aggregate may hold no more than 49%
of a company&#146;s equity shares, excluding the equity shares underlying the ADSs. Pursuant to
Notification No.&nbsp;FEMA.45/2001-RB dated September&nbsp;20, 2001 under Foreign Exchange Management
(Transfer or Issue of Securities by a Person Resident Outside India) (Amendment) Regulations, 2001,
upon obtaining the approval of the shareholders by a special resolution, the limit of FII
investment in a company may be increased to 100% for companies in the IT industry. Furthermore,
SEBI regulations provide that no single FII may hold more than 10% of a company&#146;s total equity
shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Detailed provisions relating to FII investment have been introduced by the SEBI with the
introduction of the SEBI Foreign Institutional Investors Regulations, 1995. These provisions relate
to the registration of FIIs, their general obligations and responsibilities, and certain investment
conditions and restrictions. One such restriction is that the total investment in equity and
equity-related instruments should not be less than 70% of the aggregate of all investments of an
FII in India. The SEBI has also permitted private placements of shares by listed companies with
FIIs, subject to the prior approval of the Reserve Bank of India under the Foreign Exchange
Management Act. Such private placements must be made at the average of the weekly highs and lows of
the closing price over the preceding six months or the preceding two weeks, whichever is higher.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Takeover Code, which replaced the 1994 Takeover Code (as defined herein), upon the
acquisition of more than 5% or 10% or 14% or 54% or 74% of the outstanding shares of a public
Indian company, a purchaser is required to notify the company and the company and the purchasers
are required to notify to 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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the other shareholders offering to purchase at least 20% of all the outstanding shares of the
company at a minimum offer price as determined pursuant to the rules of the Takeover Code. Upon
conversion of ADSs into equity shares, a holder of ADSs will be subject to the Takeover Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Open market purchases of securities of Indian companies in India by Foreign Direct Investors
above the ownership levels set forth above require GoI approval on a case-by-case basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Voting Rights of Deposited Equity Shares Represented by ADSs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146; 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&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following summary of the material Indian and United States federal income and estate tax
consequences of an investment in our ADSs is based upon laws and relevant interpretations thereof
in effect as of the date of this document, all of which are subject to change. This summary does
not deal with all possible tax consequences relating to an investment in our equity stock, such as
the tax consequences under state, local and other tax laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Indian Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>General. </I></B>The following is a summary of the principal Indian tax consequences for holders of ADSs
and equity <I>shares </I>received upon withdrawal of such equity shares who are not resident in India,
whether of Indian origin or not. The following is based on the provisions of the Income-tax Act,
1961, including the special tax regime contained in Section&nbsp;115AC and 115ACA of the Income-tax Act
and the 1993 Regulations as amended on January&nbsp;19, 2000. The Income-tax Act is amended every year
by the Finance Act of the relevant year. Some or all of the tax consequences of Section&nbsp;115AC and
115ACA may be amended or changed by future amendments of the Income-tax Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe this information is materially complete as of the date hereof. However, this summary 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 should therefore consult their own tax advisors 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a period or periods amounting to 182&nbsp;days or more; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>60&nbsp;days or more if within the four preceding years he/she has been in India for a period
or periods amounting to 365&nbsp;days or more; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>182&nbsp;days or more, in the case of a citizen of India or a person of Indian origin living
abroad who visits India and within the four preceding years has been in India for a period
or periods amounting to 365&nbsp;days or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>182&nbsp;days or more, in the case of a citizen of India who leaves India for the purposes of
employment outside India in any previous year and has within the four preceding years been
in India for a period or periods amounting to 365&nbsp;days or more.</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 resident of India
would be treated as non-residents for purposes of the Income-tax Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Taxation of Distributions. </I>There is no withholding tax on dividends paid to shareholders. However,
the company paying the dividend would be subject to a dividend distribution tax of 13.75% including
the presently applicable surcharge of 10%, of the total amount it distributes, declares or pays as
a dividend. Additionally, an education cess at the rate of 2.0% of such tax and surcharge after
which the effective dividend distribution tax payable would be
14.025%.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
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 &#147; &#151; Stamp Duty and Transfer Tax.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Taxation of Capital Gains. </I>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a brief summary of capital gains taxation of non-resident holders and resident
employees relating to the sale of ADSs and equity shares received upon conversion of ADSs. The
relevant provisions are contained mainly in sections 45, 47(vii)(a), 115AC and 115ACA, of the
Income-tax Act, in conjunction with the Scheme. Effective April&nbsp;1, 2002, the Finance Act, 2001
introduced a new section 115AC in place of the prevailing section 115AC of the Income-tax Act. You
should consult your own tax advisor concerning the tax consequences of your particular situation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Capital gains arising to the non-resident investor on the transfer of the equity shares received
upon conversion of the ADSs (whether in India or outside India to a non-resident investor) will be
liable for income tax under the provisions of the Income-tax Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">With effect from October&nbsp;1, 2004 any gain realized on the sale of listed equity shares held for
more than 12&nbsp;months to an Indian resident or to a non-resident investor in India will not be
subject to Indian capital gains tax if the STT has been paid on the transaction. With effect from
June&nbsp;1, 2005, the STT levied on delivery-based transactions on both buyer and seller is at the rate of 0.1 per cent and on non-delivery based transactions it is 0.02
per cent. Further, consequent to the Finance Act, 2006, with effect from June&nbsp;1, 2006, the new rate
of STT on delivery-based transactions (for both buyer and seller) will be 0.125% and on
non-delivery based transactions it will be 0.025%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any gain realized on the sale of equity shares to an Indian resident, whether in India or outside
India, or to a non-resident in India, on which no STT has been paid will be subject to Indian
capital gains tax at the rate of 10% plus applicable surcharge on income tax and education cess at
the rate of 2.0% of sale of shares on which no STT is paid. For the purpose of computing capital
gains tax on the sale of the equity shares under section 115AC, the cost of acquisition of equity
shares received in exchange for ADSs will be determined on the basis of the prevailing price of the
equity shares on the BSE or NSE as on the date on which the relevant depositary gives notice to its
custodian for the delivery of such equity shares upon redemption of the ADSs, while the cost of
acquisition of shares directly converted from the ADSs will be determined on the basis of the price
prevailing on the BSE or the NSE on the date of conversion into shares. A non-resident holder&#146;s
holding period (for purpose 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 advice of withdrawal of
such equity shares by the relevant depositary to its custodian.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Capital gain realized in respect of equity shares held (calculated in the manner set forth in
the prior paragraph) for 12&nbsp;months or less (short-term gain) on which STT is paid in the manner and
rates set out above, is subject to tax at the rate of 10% plus applicable surcharge on income tax
and an education cess at the rate of 2.0%. In the event that no STT is paid, short-term gain is
subject to tax at variable rates with the maximum rate of 40% plus applicable rate of surcharge on
income tax and education cess at the rate of 2.0% The actual rate of tax on short-term gains
depends on a number of factors, including the legal status of the non-resident holder and the type
of income chargeable in India. The provisions of the Agreement for Avoidance of Double Taxation
entered into by the GoI, or India Double Taxation Avoidance Agreement, with the country of
residence of the non-resident investor will be applicable to the extent they are more beneficial to
the non-resident investor. The capital gains tax is computed by applying the appropriate tax rates
to
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the difference between the sale price and the purchase price of the ADSs or equity shares. It is
unclear as to whether section 115AC and the Scheme are applicable 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 conversion of the ADSs. It is unclear as to whether capital gains derived from the sale
of subscription rights or other rights by a non-resident holder not entitled to an exemption under
a tax treaty will be subject to Indian capital gains tax. If such subscription rights or other
rights are deemed by the Indian tax authorities to be situated within India, the gains realized on
the sale of such subscription rights or other rights will be subject to Indian taxation. The
capital gains realized on the sale of such subscription rights or other rights, which will
generally be in the nature of short-term capital gains, will be subject to tax at variable rates
with a maximum rate of 40% excluding the applicable surcharge and education cess, in case of a
foreign company, and 30% excluding the applicable surcharge and education cess, in case of resident
employees, and non-resident individuals with taxable income over Rs.150,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Capital Losses. </I></B>Neither section 115AC nor the 1993 Regulations deals with capital losses arising on
a transfer of equity shares in India. In general terms, losses arising from a transfer of a capital
asset in India can only be set off against capital gains. A long-term capital loss can be set off
only against a long-term capital gain. To the extent that the losses are not absorbed in the year
of transfer, they may be carried forward for a period of eight assessment years immediately
succeeding the assessment year for which the loss was first determined by the assessing authority
and may be set off against the capital gains assessable for such subsequent assessment years. In
order to set off capital losses as above, the non-resident investor would be required to file
appropriate and timely tax returns in India and undergo the usual assessment procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Withholding Tax on Capital Gains. </I></B>Any taxable gain realized by a non-resident on the sale of
ADSs or equity shares is to be withheld at the source by the buyer. However, as per the provisions
of Section&nbsp;196D(2) of the Income-tax Act, no withholding tax is required to be deducted from any
income by way of capital gains arising to Foreign Institutional Investors as defined in Section
115AD of the Income-tax Act on the transfer of securities defined in Section&nbsp;115AD of the
Income-tax Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Buy-back of Securities. </I></B>Indian companies are not subject to any tax on the buy-back of their
shares. However, the shareholders will be taxed on any resulting gains. We would be required to
deduct tax at source according to the capital gains tax liability of a non-resident shareholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Tax Treaties. </I></B>Currently divided income is not subject to tax in India in the hands of the holder of
the equity shares. If any equity shares are held by a non-resident investor following withdrawal
thereof from the depositary facility under the deposit agreements, the double taxation treaty, if
any, entered into by India with the country of residence of such non-resident investor will be
applicable to taxation with respect to any capital gain arising from transfer of such equity shares
or the ADSs. However, during the period of fiduciary ownership of equity shares in the hands of the
Depositary, the provisions of the India Double Taxation Avoidance Agreement entered into by the GoI
with the country of residence of the Depositary will be applicable in the matter of taxation of
capital gains, if any, on ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Stamp Duty and Transfer Tax. </I></B>Our equity shares are compulsorily deliverable in dematerialized
form (except for trades of up to 500 equity shares which may be delivered in physical form), and
accordingly, there would be no stamp duty in India on transfer of these equity shares in
dematerialized form. Upon issuance of the equity shares underlying our ADSs, we are required to pay
a stamp duty of Rs. 0.30 per share certificate or per share. 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 0.25% 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 0.25% 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Wealth Tax. </I></B>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 advisors in this context.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gift Tax and Estate Duty. </I></B>Indian gift tax was abolished in October&nbsp;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.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->85<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Service Tax. </I></B>Brokerage or commission paid to stock brokers in connection with the sale or purchase
of shares listed on a recognized stock exchange in India is subject to a service tax of 10%,
excluding surcharges and education cess. There is an additional add on tax at the rate of 2.0%. The
stock broker is responsible for collecting the service tax from the shareholder and paying it to
the relevant authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Recent Developments &#150; Budget  &#151;  </I></B>The Finance Bill 2007 has proposed, among
others, the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Increase in Education Cess from 2% to 3%, consequently, the tax rates for domestic
companies increased from 33.66% to 33.99% and for foreign companies from 41.82% to 42.23%;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Applicability Minimum Alternate Tax to Companies claiming deduction under section
10A/10B of the Income Tax Act.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Increase in dividend distribution tax from 14.03% to 16.995%;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee stock options have been brought under net of Fringe Benefit Tax.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>U.S. Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion describes the material U.S. federal income tax consequences under present
law of an investment in the ADSs or equity shares. This summary applies only to investors that hold
the ADSs or equity shares as capital assets and that have the U.S. dollar as their functional
currency. This discussion is based on the tax laws of the United States as in effect on the date of
this document and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the
date of this document, as well as judicial and administrative interpretations thereof available on
or before such date. All of the foregoing authorities are subject to change, which change could
apply retroactively and could affect the tax consequences described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion does not deal with the tax consequences to any particular investor or to
persons in special tax situations such as:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>banks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>financial institutions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>insurance companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>broker dealers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>traders that elect to mark to market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>tax-exempt entities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons liable for alternative minimum tax;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>U.S. expatriates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons holding an ADS or equity share as part of a straddle, hedging, conversion or integrated transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons that actually or constructively own 10% or more of our voting stock; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons holding ADSs or equity shares through partnerships or other pass-through entities.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE
U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL AND FOREIGN
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The discussion below of the U.S. federal income tax consequences to &#147;U.S. Holders&#148; will apply
if you are the beneficial owner of ADSs or equity shares and you are, for U.S. federal income tax
purposes,
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a citizen or resident of the U.S.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation (or other entity taxable as a corporation for U.S. federal income tax
purposes) organized under the laws of the U.S., any State or the District of Columbia</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate whose income is subject to U.S. federal income taxation regardless of its
source; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust that (1)&nbsp;is subject to the supervision of a court within the United States and
the control of one or more U.S. persons or (2)&nbsp;has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S.&nbsp;person.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If a partnership holds ADSs or equity shares, the U.S. federal income tax treatment of a
partner in the partnership generally will depend on the status of the partner and the activities of
the partnership. Partners of partnerships holding ADSs or equity shares should consult their own
tax advisors regarding the U.S. federal income tax consequences to them of the acquisition,
ownership and disposition of ADSs or equity shares. The discussion below assumes that the
representations contained in the deposit agreement are true and that the obligations in the deposit
agreement and any related agreement will be complied with in accordance with the terms. If you hold
ADSs, you should be treated as the holder of the underlying equity shares represented by those ADSs
for U.S. federal income tax purposes. The U.S. Treasury has expressed concerns that parties to whom
ADSs are pre-released may be taking actions that are inconsistent with the claiming, by U.S.
Holders of ADSs, of foreign tax credits for U.S. federal income tax purposes. Such actions would
also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received
by certain non-corporate U.S. Holders, as described below. Accordingly, the availability of the
reduced tax rate for dividends received by certain non-corporate U.S. Holders could be affected by
future actions that may be taken by the U.S. Treasury.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to the passive foreign investment company rules discussed below, the gross amount of
distributions made by us with respect to the ADSs or the equity shares will generally be includable
in your gross income in the year received as foreign source dividend income to the extent that such
distributions are paid out of our current or accumulated earnings and profits as determined under
U.S. federal income tax principles. To the extent, if any, that the amount of any such distribution
exceeds our current or accumulated earnings and profits, as determined under U.S. federal income
tax principles, it will be treated first as a tax-free return of your tax basis in the ADSs or the
equity shares (thereby increasing the amount of any gain or decreasing the amount of any loss
realized on the subsequent sale or disposition of such ADSs or equity shares) and thereafter as
capital gain. No dividends received deduction will be allowed for U.S. federal income tax purposes
with respect to dividends paid by us. With respect to non-corporate U.S. Holders, including
individuals, for taxable years beginning before January&nbsp;1, 2011, dividends may be &#147;qualified
dividend income&#148; which is taxed at the lower applicable capital gains rate provided that (1)&nbsp;either
(a)&nbsp;we are eligible for the benefits of the income tax treaty between the United States and India
or (b)&nbsp;the ADSs or equity shares, as applicable, are readily tradable on an established securities
market in the United States, (2)&nbsp;we are not a passive foreign investment company (as discussed
below) for either our taxable year in which the dividend was paid or the preceding taxable year and
(3)&nbsp;certain holding period requirements are met. Under Internal
Revenue Service authority, common shares, or ADSs representing such shares, are considered to be
readily tradable on an established securities market in the United States if they are listed on the
New York Stock Exchange, as our ADSs are. You should consult your own tax advisors regarding the
availability of the lower rate for dividends paid with respect to ADSs or equity shares. The amount
of any distribution paid in Indian rupees will be equal to the U.S. dollar value of such Indian
rupees on the date such distribution is received by the depositary, in the case of ADSs, or by you,
in the case of equity shares, regardless of whether the payment is in fact converted into U.S.
dollars at that time. Gain or loss, if any, realized on the sale or other disposition of such
Indian rupees will generally be U.S. source ordinary income or loss. The amount of any distribution
of property other than cash will be the fair market value of such property on the date of
distribution. For foreign tax credit purposes, dividends
distributed by us with respect to ADSs or equity shares would generally constitute &#147;passive
category income&#148; but could, in the case of certain U.S. Holders, constitute &#147;general category
income.&#148; A U.S. Holder will not be able to claim a U.S. foreign tax credit for any Indian taxes
imposed with respect to distributions on equity shares or ADSs (as discussed under &#147;&#151;Indian
Taxation&#151; Taxation of Distributions.&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sale or Other Disposition of ADSs or Equity Shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subject to the passive foreign investment company rules discussed below, upon a sale or other
disposition of ADSs or equity shares, you will recognize a capital gain or loss for U.S. federal
income tax purposes in an amount equal to the difference between the amount realized and your tax
basis in such ADSs or equity shares. Your tax basis in your ADSs or equity shares will generally
equal the cost of such ADSs or equity shares, as applicable. Any such gain or loss will generally
be U.S. source gain or loss and will be treated as long-term capital gain or loss if your holding
period in the ADSs or the equity shares exceeds one year. If you are a non-corporate U.S. Holder,
including an individual, any capital gain generally will be subject to U.S. federal income tax at
preferential rates if specified minimum holding periods are met. The deductibility of capital
losses is subject to significant limitations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Because capital gains generally will be treated as U.S. source gain, as a result of the U.S.
foreign tax credit limitation, any Indian income tax imposed upon capital gains in respect of
equity shares or ADSs (as discussed under &#147;&#151;Indian Taxation&#151;Taxation of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->87<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Capital Gains&#148;) may not be currently creditable unless a U.S. Holder has other foreign source
income for the year in the appropriate U.S. foreign tax credit limitation basket.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stamp Duty and Transfer Tax</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">U.S. Holder generally will not be able to claim a U.S. foreign tax credit for any Indian stamp
duty for which such U.S. Holder is liable (as discussed under &#147;&#151;Indian Taxation&#151;Stamp Duty and
Transfer Tax&#148;) and which is paid by such U.S. Holder. You should consult your tax advisor regarding
the effect of payment of any Indian stamp duty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Passive Foreign Investment Company</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A non-U.S.
corporation is considered a passive foreign investment company, or a
PFIC, for any taxable year if either
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 75% of its gross income is passive income, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 50% of the value of its assets (determined on the basis of a quarterly average)
is attributable to assets that produce or are held for the production of passive income</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We will be treated as owning our proportionate share of the assets and earning our proportionate
share of the income of any other corporation in which we own, directly or indirectly, at least 25%
(by value) of the stock. We do not believe that we were a PFIC for the taxable year ended March&nbsp;31,
2006, and we do not anticipate that we will be a PFIC for future taxable years. This is a factual
determination, however, that must be made annually at the end of the taxable year. Therefore there
can be no assurance that we will not be classified as a PFIC for the current taxable year or for
any future taxable year. If we were classified as a PFIC for any taxable year during which you held
our ADSs or equity shares, you could be subject to materially adverse tax consequences with respect
to certain distributions on, and gain realized from a disposition of, ADSs or equity shares. You
should consult your own tax advisors regarding the potential application of the PFIC rules to your
ownership of ADSs or equity shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>U.S. Information Reporting and Backup Withholding</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dividend payments with respect to ADSs or equity shares and proceeds from the sale, exchange or
redemption of ADSs or equity
shares may be subject to information reporting to the Internal Revenue Service and possible U.S.
backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S.
Holder who furnishes a correct taxpayer identification number and makes any other required
certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to
establish their exempt status generally must provide such certification on Internal Revenue Service
Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited
against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for refund with the
Internal Revenue Service and furnishing any required information. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Documents On Display</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Judiciary Plaza<BR>
100 F Street, N.E.<BR>
Washington, D.C. 20549
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Copies of these materials can also be obtained from the Public Reference Section of the SEC,
100 F Street, N.F., Washington D.C. 20549, at prescribed rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->88<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Subsidiary Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our currency, maturity and interest rate information relative to our short-term and long-term
debt are disclosed in Note. 12 &#147;Borrowings&#148; to our consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
dollars, 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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="35" style="border-bottom: 1px solid #000000"><B>As at March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Total Recorded</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Total Recorded</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fair value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>( dollars in millions)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Variable rate
short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.71</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.61</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Variable rate long term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.58</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fixed rate long-term
debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.93</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.78</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.49</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Limitations: </I></B>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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007 and fiscal 2006, 94.9% and 98.6%, respectively, of our revenues were
generated outside of India. Using sensitivity analysis, a hypothetical 10% increase in the value of
the Indian rupee against all other currencies would decrease revenue by 2.5%, or $36.9&nbsp;million, in
fiscal 2007, 2.3%, or $24.9&nbsp;million, in fiscal 2006 while a hypothetical 10% decrease in the value
of the Indian rupee against all other currency would increase revenue by 2.5% or $36.9&nbsp;million, in
fiscal 2007, 2.3%, or $24.9&nbsp;million in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We had outstanding forward and options contract amounting to $452.6&nbsp;million and $216.0&nbsp;million as
at March&nbsp;31, 2007 and 2006, respectively. Gains/ (losses)&nbsp;on outstanding forward and options
contracts amounted to $4.5&nbsp;million and $(1.4) million during fiscal 2007 and 2006 respectively.
Using sensitivity analysis, a hypothetical 1% increase in the value of the Indian rupee against all
other currencies would decrease these gains by $0.7&nbsp;million in fiscal 2007 and by $0.8&nbsp;million in
fiscal 2006 while a hypothetical 1% decrease in the value of the Indian rupee against all other
currency would increase these gains by $0.7&nbsp;million in fiscal 2007 and by $0.8&nbsp;million in fiscal
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the opinion of management, a substantial portion of this fluctuation would be offset by expenses
incurred in local currencies. As a result, the aggregate of the hypothetical movement described
above of the value of the Indian rupee against all other currencies in either direction would have
impacted our earnings before interest and taxes by $37.6&nbsp;million fiscal 2007 and $25.7&nbsp;million in
fiscal 2006. This amount would be offset, in part, from the impacts of local income taxes and local
currency interest expense. As of March
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->89<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">31, 2007, we had approximately $141.7&nbsp;million of non-Indian rupee denominated cash and cash
equivalents
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PART II
</DIV>

<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;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 $150.6&nbsp;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 SEC on May&nbsp;14, 2001 (Registration No.&nbsp;333-13464). In May&nbsp;2005, we filed a registration statement on
Form F-3 (Registration No.&nbsp;333-122996) for the sale by certain selling shareholders of an
aggregate 13,043,480 ADSs of the Company held by such shareholders. We did not receive any
proceeds from such offering. As of March&nbsp;31, 2007, the entire $150.6&nbsp;million of these proceeds has been
used for prepayment of loans ($26.9&nbsp;million); strategic investments in our subsidiaries ($39.3
million); development of facilities and infrastructure ($58.5&nbsp;million) and working capital and
general corporate purposes ($25.9&nbsp;million). 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
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Evaluation of Disclosure Controls and Procedures</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the U.S. SEC&#146;s rules
and forms, and that such information is accumulated and communicated to our management, to allow
timely decisions regarding required disclosures. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and, in reaching a reasonable level of assurance, management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures. Also, we have investments in certain unconsolidated entities. As we do not control or
manage these entities, our disclosure controls and procedures with respect to such entities are
necessarily substantially more limited than those we maintain with respect to our consolidated
subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have carried out an evaluation, under the supervision and with the participation of our Chief
Executive Officer, Chief Financial Officer and other management, of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Management&#146;s Report on Internal Control Over Financial Reporting</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board
of directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->90<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>accordance with authorizations of our management and members of our board of directors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on our
financial statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Internal control over financial reporting cannot provide absolute assurance of achieving financial
reporting objectives because of its inherent limitations. Internal control over financial reporting
is a process that involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal control over financial reporting also can be
circumvented by collusion or improper override. Because of such limitations, there is a risk that
material misstatements may not be
prevented or detected on a timely basis by internal control over financial reporting. However,
these inherent limitations are known features of the financial reporting process, and it is
possible to design into the process safeguards to reduce, though not eliminate, this risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management evaluated the effectiveness of our internal control over financial reporting as of March
31, 2007 using the framework set forth in the report of the Treadway Commission&#146;s Committee of
Sponsoring Organizations (COSO), <I>&#147;Internal Control &#151; Integrated Framework.&#148;</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on the foregoing, management has concluded that our internal control over financial reporting
was effective as of March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Price Waterhouse, who have audited the consolidated financial statements for the year ended March
31, 2007, have also audited management&#146;s assessment of the effectiveness of internal control over
financial reporting as at March&nbsp;31, 2007 and have issued an attestation report on management&#146;s
assessment. For the auditor&#146;s report please refer to Item&nbsp;18..
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Changes in Internal Control over Financial Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial
Officer, whether any changes in our internal control over financial reporting that occurred during
our last fiscal year have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. Based on the evaluation we conducted, management has
concluded that no such changes have occurred.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our Audit Committee members as of April&nbsp;27, 2007 are Dr.&nbsp;Mangalam Srinivasan, M Rammohan Rao,
T.R. Prasad and V.S. Raju each of whom is an independent director pursuant to the applicable rules
of the Securities and Exchange Commission and the NYSE. See &#147;Item&nbsp;6. Directors, Senior Management and
Employees&#148; for the experience and qualifications of the members of the Audit Committee. We do not
have an individual serving on our audit committee as an &#147;Audit Committee Financial Experts,&#148; as
defined in applicable rules of the SEC. This is because although our
audit committee members have certain financial expertise, our board of directors has determined
that no individual audit committee member possesses all of the attributes required by the
definition of &#147;Audit Committee Financial Expert.&#148;
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16B. CODE OF ETHICS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have adopted a written Code of Ethics that is applicable to all of our directors, senior
management and employees. We will make available a copy of the Code of Ethics to any person,
without charge, if a written request is made to our Company Secretary at Mayfair Center, SP Road,
Secunderabad 500 003, Andhra Pradesh, India. Our Code of Ethics is
also available on our corporate website, www.satyam.com.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the remuneration that we paid to our Independent Auditors and its
associated entities in each of our previous two fiscal years:
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->91<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Audit Related</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Fiscal Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Audit Services</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Services</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Tax Services</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other Services</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">873,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">342,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">328,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">257,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,802,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">493,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">206,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">109,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">819,092</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Audit Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Audit of the standalone financial statements, consolidated financial statements of our Company and
our subsidiaries prepared in accordance with Indian GAAP, US GAAP and other local GAAPs of the
subsidiaries and attest services that generally only the auditor can provide.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Audit Related Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Audit Related Services represent assurance and related services that are related to the performance
of the audit of our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tax Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Tax audit, tax returns, tax processing, tax filing and advisory services pertaining to
withholding taxes, double tax avoidance agreements, indirect tax matters, etc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Other Services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Work permit related services and other advisory services
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007, the Audit Committee pre-approved a list of services that could be rendered
by the principal accountant in fiscal 2007 pursuant to pre-approval policies and procedures
established by the Audit Committee. For services other than those specified, approval would need to
be obtained from the Audit Committee prior to the performance of such services. Services provided
by the principal accountant in fiscal 2006 were allowable services that were approved by the Audit
Committee.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PART III
</DIV>

<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;18 for a list of financial statements filed under Item&nbsp;17.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->92<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. FINANCIAL STATEMENTS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>Financial Statement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">The following financial statements are filed as part of this document, together with the report
of the independent auditors:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Report of Independent Registered Public Accounting Firm
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-2</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Balance Sheets as of March&nbsp;31, 2007 and 2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-4</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Income for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-5</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Shareholder&#146;s Equity and Comprehensive Income for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-6</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Cash Flows for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-9</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Notes to the Consolidated Financial Statements
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-10</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Financial Statement Schedule
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" nowrap valign="bottom">F-39</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>


<TR><TD>&nbsp;</TD></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Memorandum and Articles of Association of Satyam Computer Services Limited. (1)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Incorporation of Satyam Computer Services Limited. (2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimens of Share Certificates. (2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deposit Agreement dated May&nbsp;14, 2001, by and among Satyam Computer Services Limited,
Citibank, N.A. (as Depositary) and the holders from time to time of American Depositary
Receipts issued thereunder (including as an exhibit, the form of American Depositary
Receipt). (3)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate Stock Option Plan (including the Trust Deed). (2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate Stock Option Plan B, as
amended and restated. (4)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate Stock Option Plan ADS, as
amended and restated. (4)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate Stock Option
Plan&#150;RSUs(ADS). (5)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Associate Stock Option
Plan&#150;RSUs. (6)</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of Significant Subsidiaries. (6)</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive
Officer under Section&nbsp;302 of the Sarbanes-Oxley Act 2002. (6)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Financial
Officer under Section&nbsp;302 of the Sarbanes-Oxley Act 2002. (6)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive
Officer under Section&nbsp;906 of the Sarbanes-Oxley Act 2002. (6)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Financial
Officer under Section&nbsp;906 of the Sarbanes-Oxley Act 2002. (6)</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Price Waterhouse,
Independent Registered Public Accounting Firm. (6)</TD>
</TR>



<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->93<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Registration Statement on Form F-3 (File No.
333-122996) filed on February&nbsp;25, 2005 and incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Registration Statement on Form F-1 (File No.
333-13464) filed on May&nbsp;7, 2001 and incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Form 20-F (File No.&nbsp;001-15190) filed on August
13, 2001 and incorporated herein by reference.</TD>
</TR>


<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Form 20-F (File No.&nbsp;001-15190) filed on April&nbsp;28,
2006 and incorporated here in by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Form S-8 (File No.&nbsp;333-139949) filed on January
12, 2007 and incorporated herein by reference.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Filed herewith.</TD>
</TR>

</TABLE>


<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">SATYAM COMPUTER SERVICES LIMITED<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/&nbsp;&nbsp;B. Rama Raju</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>

    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left" colspan="2">B. Rama Raju</TD>

    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>

    <TD valign="top">Title:</TD>
    <TD align="left" colspan="2">Managing Director and Chief Executive
Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/&nbsp;V. Srinivas</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>

    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left" colspan="2">Srinivas V.</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>

    <TD valign="top">Title:</TD>
    <TD align="left" colspan="2">Director and Senior Vice President<BR>
&#038; Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date:
April&nbsp;30, 2007
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->94<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SATYAM COMPUTER SERVICES LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX TO THE U.S. GAAP CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="89%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Report of Independent Registered Public Accounting Firm
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-2</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Balance Sheets as of March&nbsp;31, 2007 and 2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-4</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Income for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-5</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Shareholder&#146;s Equity and Comprehensive Income for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-6</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consolidated Statements of Cash Flows for the three years ended March&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-9</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Notes to the Consolidated Financial Statements
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">F-10</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Financial Statement Schedule
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" nowrap valign="bottom">F-39</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the Board of Directors and Shareholders of Satyam Computer Services Limited:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have completed an integrated audit of Satyam Computer Services Limited&#146;s March&nbsp;31, 2007
consolidated financial statements and of its internal control over financial reporting as of March
31, 2007 and audits of its March&nbsp;31, 2006 and March&nbsp;31, 2005 consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States).
Our opinions, based on our audits, are presented below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consolidated financial statements and financial statement schedule
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Satyam Computer Services Limited and
its subsidiaries at March&nbsp;31, 2007 and 2006, and the results of their operations and their cash
flows for each of the three years in the period ended March&nbsp;31, 2007 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement schedule are the
responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We conducted our audits
of these statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit of financial statements 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 provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in Note 2(p) to the consolidated financial statements, effective April&nbsp;1, 2006, the
Company changed its method of accounting for stock-based compensation in accordance with Statement
of Financial Accounting Standards No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Internal control over financial reporting
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Also, in our opinion, management&#146;s assessment, included in Management&#146;s Report on Internal Control
Over Financial Reporting appearing under Item&nbsp;15, that the Company maintained effective internal
control over financial reporting as of March&nbsp;31, 2007 based on criteria established in Internal
Control &#151; Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of March&nbsp;31, 2007, based on criteria established in Internal
Control &#151; Integrated Framework issued by the COSO. The Company&#146;s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express
opinions on management&#146;s assessment and on the effectiveness of the Company&#146;s internal control over
financial reporting based on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes obtaining an
understanding of internal control over financial reporting, evaluating management&#146;s assessment,
testing and evaluating the design and operating effectiveness of internal control, and performing
such other procedures as we consider necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A company&#146;s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company&#146;s internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii)&nbsp;provide reasonable
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the company&#146;s assets that could have a material effect on the financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ Price
Waterhouse<BR>
Price Waterhouse<BR>
Secunderabad, India<BR>
April&nbsp;27, 2007

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; border-bottom: 1px solid #000000"><B>Satyam Computer Services Limited<BR>
Consolidated Balance Sheets</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="font-variant: SMALL-CAPS"><B>Assets</B></FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">152.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">292.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable, net of allowance for doubtful debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unbilled revenue on contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses and other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>609.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,017.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">767.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,624.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,181.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="font-variant: SMALL-CAPS"><B>Liabilities and shareholders&#146; equity</B></FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term and current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share (45,505,000 shares as of March&nbsp;31, 2007)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unearned and deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>211.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>134.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued benefit cost &#151; Gratuity, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>253.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>165.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contingencies and Commitments (<I>Note No.19)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interest</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Preferred Stock of Subsidiary</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share
<I>(100&nbsp;million preference shares authorized, Nil and 91,009,999 preference shares issued
as of March&nbsp;31, 2007 and 2006 respectively)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock &#151; par value Rs.2 (US$0.05)* per equity share
(<I>800&nbsp;million and 750&nbsp;million equity shares authorized as of March&nbsp;31, 2007 and 2006
respectively. 667,196,009 and 648,899,078 equity shares as of March&nbsp;31, 2007 and 2006
respectively</I>)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">552.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares subscribed but unissued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">721.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,372.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>995.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares held by the SC-Trust under associate stock option plan
<I>(2,295,880 and 2,386,280 equity shares as of March&nbsp;31, 2007 and 2006 respectively)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,371.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>994.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,624.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,181.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 6pt; width: 18%; border-top: 1px solid #ffffff">&nbsp;</DIV>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><I>*</I></TD>
    <TD>&nbsp;</TD>
    <TD><I>The par value in US$ has been converted at the closing
rate as of March&nbsp;31, 2007, 1US$ = Rs 43.10</I><BR></TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt; border-bottom: 1px solid #000000"><B>Satyam Computer Services Limited<BR>
Consolidated Statements of Income</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,461.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of
revenues</DIV>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD>
(<I>Includes stock-based compensation of US$12.8,US$Nil and US$0.8
for the three years ended March&nbsp;31, 2007, 2006 and 2005
respectively)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(937.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(689.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(506.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Gross profit</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>523.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>407.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>286.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling,
general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><I>(Includes stock-based compensation of US$2.9,US$0.8 and US$1.1
for the three years ended March&nbsp;31, 2007, 2006 and 2005
respectively)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(232.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(187.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(124.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total operating expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(232.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(187.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(124.3</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>291.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>219.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>162.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on sale of investments (Refer note 7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain/(Loss) on foreign exchange transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income/(expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before income taxes and equity in earnings/(losses) of
associated companies</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>328.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>287.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before equity in earnings/(losses) of associated companies</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>297.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>250.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>154.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/(losses) of associated companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>298.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>249.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>153.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of shares used in computing earnings per
share (in millions) </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">652.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">666.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">662.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The accompanying notes form an integral part of these consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt; border-bottom: 1px solid #000000"><B>Satyam Computer Services Limited<BR>
Consolidated Statements of Shareholders&#146; Equity and Comprehensive Income</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares held</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>subscribed but</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>stock-based</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>by</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shareholders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Par Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>unissued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>income/(loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>632,503,420</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>416.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>172.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>29.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>633.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Comprehensive income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>154.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,027,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares subscribed but unissued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on dilution of interest in associate company
on its issuance of new shares, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares transferred by SC-Trust to employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividend paid at the rate of US$0.12 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>638,530,582</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>433.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>289.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>29.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>767.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited<BR>
Consolidated Statements of Shareholders&#146; Equity and Comprehensive Income</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares held</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>subscribed but</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>stock-based</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>by</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shareholders&#146;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Par Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>unissued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>income/(loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Equity</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>638,530,582</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>433.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>289.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>29.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(1.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>767.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss on foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Comprehensive income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>235.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,368,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares subscribed but unissued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares transferred by SC-Trust to employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividend paid at the rate of US$0.11 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>648,899,078</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>465.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>($0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>497.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>15.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>($1.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>994.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited<BR>
Consolidated Statements of Shareholders&#146; Equity and Comprehensive Income</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>subscribed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>stock-based</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>held by</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shareholders&#146;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Par Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>but unissued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>income/(loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Equity</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>648,899,078</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>465.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>497.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$15.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>(1.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$994.4</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to initially adopt SFAS No.&nbsp;158, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="32" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total Comprehensive income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>343.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,296,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock split (effected in the form of dividend)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares subscribed but unissued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gain on
dilution of interest in subsidiary company on its issuance of new shares, net of taxes (Refer note 4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">        7.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversal of Deferred stock based compensation on adoption
of SFAS 123R</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock-based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividend paid at the rate of US$0.13 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(56.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(56.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>667,196,009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>36.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>552.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>721.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>60.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>($1.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,371.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited<BR>
Consolidated Statements of Cashflows</B><BR>
<B><I>(Millions of US Dollars except per share data and as stated otherwise)</I></B>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
</TR>



<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<tr>
    <TD>&nbsp;</TD>
</tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Cash Flows From Operating Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Adjustments to reconcile net income to net cash provided by operating activities:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Gain on sale of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loss on sale of premises and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Minority Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Equity in (earnings)/losses of associated companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable, net and unbilled revenue on contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(127.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(81.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses and other receivables, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(31.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unearned and deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other liabilities non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net cash provided by operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>261.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>162.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>171.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Cash Flows From Investing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from maturity of bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">408.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Investment in bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(745.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(411.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of premises and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(81.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from sale of premises and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payment for purchase of Citisoft Plc, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payment for purchase of Knowledge Dynamics Pte. Ltd., net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from sale of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net cash used in investing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(422.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(115.5</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Cash Flows From Financing Activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Repayments of short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Repayment of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Shares subscribed but unissued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of Preferred stock by subsidiary, net of issuance cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(56.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net cash provided by/(used in) financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(12.9</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Net change in cash and cash equivalents</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(140.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>163.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>43.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents at the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Cash and cash equivalents at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>152.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>292.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>129.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<tr>
    <TD>&nbsp;</TD>
</tr>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplementary information:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Cash paid during the year for:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">44.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">25.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Non-cash items:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital leases and hire purchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred consideration for purchase of Citisoft Plc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred consideration for purchase of Knowledge Dynamics Pte Ltd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
<TD colspan="37"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</TD></TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these consolidated financial
statements.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Description of Business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services Limited, its consolidated subsidiaries and associated companies
(hereinafter referred to as &#147;<I>Satyam</I>&#148;) are engaged in providing Information Technology (&#147;IT&#148;)
services and Business Process Outsourcing (&#147;BPO&#148;) services. Satyam Computer Services Limited
(hereinafter referred to as &#147;<I>Satyam Computer Services</I>&#148;) is an IT services provider that uses 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&nbsp;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, United Kingdom, Japan, Australia, Singapore, Malaysia, Dubai, Germany, Canada, China,
Hungary, Saudi Arabia and Brazil. Satyam offers a comprehensive range of IT services, including
application development and maintenance, consulting and enterprise business solutions, extended
engineering solutions and infrastructure management 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna
Services Limited (&#147;Nipuna&#148;) a majority owned subsidiary of Satyam Computer Services is engaged
in providing BPO services covering HR, Finance &#038; Accounting, Customer Care (Voice, Mail and Chat),
and Transaction Processing (industry-specific offerings).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Summary of Significant Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a) Principles of Consolidation and Basis of Presentation</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 (&#147;U.S. GAAP&#148;). All significant inter-company balances and
transactions are eliminated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Minority interest in subsidiaries represents the minority shareholders&#146; proportionate share of the
net assets and the results of operations of Satyam&#146;s majority owned subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s investments in business entities in which it does not have control, but have the ability
to exercise significant influence over operating and financial policies (generally 20&#151;50&nbsp;percent
ownership), are referred to as associated companies and are accounted for by the equity method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On occasion, a subsidiary or associated company accounted for by the equity method (&#147;offering
company&#148;) 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&#146;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/(loss) in the statement of income. Such gains or losses are the difference between the sale
proceeds and net carrying value of investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The excess of the cost over the underlying net equity of investments in subsidiaries and associated
companies accounted for on 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>b) Use of Estimates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, and future obligations under employee benefit plans, valuation
allowances for deferred taxes, impairment of goodwill and useful lives of premises and equipment
(fixed assets). Actual results could differ materially from those estimates.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>c) Foreign Currency Translation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 U.S. Dollar, Pound Sterling, Singapore Dollar and Renminbi are the
functional currencies for its foreign subsidiaries located in U.S., UK, Singapore and China
respectively. The translation of the functional currencies into U.S. dollars 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&#146; equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 exchange rates prevailing on the date of transaction. Gains or losses
resulting from foreign currency transactions are included in the statement of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>d) Revenue Recognition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from IT services, which includes software development, system maintenance, package
software implementation, engineering design services and e-Business consist of revenues earned from
services performed either on a time-and-material basis or time bound fixed price engagements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 basis, with
revisions to estimates reflected in the period in which changes become known. The use of the
percentage of completion method reflects the pattern in which the obligations to the customer are
fulfilled. Satyam has used an input-based approach since the input measures are a reasonable
surrogate for output measures. Provisions for estimated losses on such engagements are made during
the period in which a loss becomes probable and can be reasonably estimated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues from BPO services consist of revenues from time-and-material services or time bound fixed
price engagements. Revenues from time-and-material services are recognized as the services are
performed. Revenues from BPO services are also on time bound fixed-price engagements, under which
revenue is recognized using the percentage completion method of accounting. The cumulative impact
of any revision in estimates of the percentage of work completed is reflected in the period in
which the change becomes known. Provisions for estimated losses are made during the year in which a
loss becomes probable and can be reasonably estimated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 &#147;Unbilled revenue on contracts&#148;.
Billings on uncompleted contracts in excess of accrued cost and accrued profit are classified in
current liabilities under the heading &#147;Unearned and deferred revenue&#148;. Satyam provides its clients
with one to three months&#146; warranty as post-sale support for its fixed price engagements. Satyam has
not provided for any warranty costs for the years ended March&nbsp;31, 2007, 2006 and 2005 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with Emerging Issues Task Force (EITF)&nbsp;01-14 (formerly Topic D-103), &#147;Income
Statement Characterization of Reimbursements Received for &#147;Out-of-Pocket&#148; Expenses Incurred&#148;,
Satyam has accounted for reimbursements received for out-of-pocket expenses incurred as revenues in
the statement of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>e) Cash and Cash Equivalents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam considers all highly liquid investments with an original maturity or remaining maturity of
three months or less at the date of purchase 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>f) Premises, Equipment and Depreciation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements

<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 income. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>g) Research and development Costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research and development costs are expensed as incurred and amounted to US$0.4&nbsp;million, US$0.5
million and US$0.6&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>h) Goodwill and Other Intangible Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill
represents the excess of the cost of an acquired entity over the net
of the amounts assigned to assets acquired and liabilities assumed. Effective April&nbsp;1, 2002, Satyam adopted
provisions of SFAS No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148; which sets forth the accounting
for goodwill and intangible assets subsequent to their acquisition. Goodwill is tested annually for
impairment, or sooner when circumstances indicate an impairment may exist, using a fair-value
approach at the reporting unit level. Satyam follows the two-step impairment recognition and
measurement guidance in accordance with SFAS&nbsp;142.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam amortizes other intangible assets over their estimated useful lives on a straight-line basis
unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows, and, if impaired, written down to fair value based on either
discounted cash flows or appraised values.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>i) Impairment of Long-lived Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam accounts for impairment of long-lived assets in accordance with the provisions of SFAS 144
&#147;<I>Accounting for the Impairment or Disposal of Long-Lived Assets</I>&#148;. Satyam reviews long-lived assets,
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 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>j) Investments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam accounts for investments in accordance with the provisions of SFAS 115, <I>&#147;Accounting for
Certain Investments in Debt and Equity Securities&#148;</I>. Other investments that are not marketable are
carried at cost, subject to tests of other than temporary impairment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>k) Cost of Revenues and Selling, General and Administrative Expenses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cost of revenues primarily include the compensation cost of technical staff, depreciation on
dedicated assets and system and application software costs, amortization of intangibles, travel
costs, data communication expenses and other expenses incurred that are related to the generation
of revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Selling, general and administrative expenses generally include the compensation costs of sales,
management and administrative personnel, travel costs, advertising, business promotion,
depreciation on assets, rent, repairs, electricity and other general expenses not attributable to
cost of revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>l) Advertising Costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam expenses all advertising costs as incurred. Advertising costs charged to income amounted to
US$1.0&nbsp;million, US$2.2&nbsp;million and US$1.1&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>m) Employee Benefits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>i) Provident Fund</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with Indian law, employees 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&#146; 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&#146;s
monthly contributions are charged to income in the period they are incurred.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>ii) Gratuity Plan</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has a defined benefit retirement plan (the &#147;Gratuity Plan&#148;) 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&#146;s salary and years of employment with
Satyam.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam provides for the Gratuity Plan on the basis of actuarial valuation. The entire Gratuity
Plan of Satyam Computer Services and Nipuna is unfunded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective March&nbsp;31, 2007, Satyam adopted the provisions of SFAS No.&nbsp;158, &#147;Employer&#146;s
Accounting for Defined Benefit Pension and Other Postretirement Plans &#151; an amendment of FASB
Statements No.&nbsp;87, 88, 106, and 132(R)&#148;. The provisions of SFAS No.&nbsp;158 were adopted pursuant to
the transition provisions therein. Accordingly, Satyam has recognized unrecognized actuarial losses
as a liability with corresponding adjustment to accumulated other comprehensive income (net of
tax), a separate component of shareholders&#146; equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The funded status of the company&#146;s retirement-related benefit plans is recognized in the
Consolidated Balance Sheet. The funded status is measured as the difference between the fair value
of plan assets and the projected benefit obligation at March&nbsp;31, the measurement date. The current
portion of the benefit obligation represents the actuarial present value of benefits payable in the
next 12&nbsp;months exceeding the fair value of plan assets. This liability is recorded in Accrued
Expenses and Other Current Liabilities in the Consolidated Balance Sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(Gains)/losses not recognized as a component of net periodic gratuity cost/(income) in the
Consolidated Statement of Income as they arise are recognized as a component of other comprehensive
income in the Consolidated Statement of Stockholders&#146; Equity, net of tax. Those (gains)/losses are
subsequently recognized as a component of net periodic gratuity period cost/(income) pursuant to
the recognition and amortization provisions of applicable accounting standards. (Gains)/losses
arise as a result of differences between actual experience and assumptions or as a result of
changes in actuarial assumptions. Net periodic gratuity cost/(income) is recorded in the
Consolidated Statement of Income and includes service cost, interest cost, expected return on plan
assets, amortization of prior service cost and (gains)/losses previously recognized as a component
of Other Comprehensive Income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>iii) Superannuation Plan</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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&#146;s basic salary.
Satyam Computer Services has no further obligations under the plan beyond its contributions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>iv) Other Benefit Plans</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam maintains a 401(k) retirement plan (the &#147;401(k) Plan&#148;) 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.
Effective October&nbsp;1, 2003, Satyam Computer Services has discontinued its matching contribution
under this plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>n) Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In
accordance wit h the provisions of SFAS 109, <I>&#147;Accounting for Income Taxes&#148;</I>, 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 carry forwards. 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 income in the period of enactment. Based on
management&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>o) Earnings Per Share</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In
accordance with the provisions of SFAS 128, <I>&#147;Earnings Per Share&#148;</I>, 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 &#147;treasury stock&#148; method
for options and warrants, except where the results will be anti-dilutive.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements

<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>p) Stock-Based Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective April&nbsp;1, 2006, Satyam adopted the fair value recognition provisions of Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (&#147;SFAS
123R&#148;). Prior to the adoption of SFAS 123R, Satyam recognized stock-based compensation using the
intrinsic value-based method of Accounting Principles Board (APB)&nbsp;Opinion No.&nbsp;25, <I>&#147;Accounting for
Stock Issued to Employees&#148;</I>, and related interpretations including Financial Accounting Standards
Board (FASB)&nbsp;Interpretation No.&nbsp;44, <I>Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No.&nbsp;25, </I>issued in March&nbsp;2000 to account for its
employee stock-based compensation plan. Satyam has therefore adopted the pro-forma disclosure
requirements of SFAS No.&nbsp;123, <I>&#147;Accounting for Stock-Based Compensation&#148; </I>and SFAS 148, <I>Accounting
for Stock-Based Compensation &#151; Transition and Disclosure, an amendment of FASB Statement No.&nbsp;123</I>.
Pursuant to SFAS No.&nbsp;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. In March&nbsp;2005, the Securities and Exchange Commission (the
&#147;SEC&#148;) issued Staff Accounting Bulletin No.107 (&#147;SAB 107&#148;) regarding the SEC&#146;s interpretation of
SFAS 123R and the valuation of share-based payments for public companies. Satyam has applied the
provisions of SAB 107 in its adoption of SFAS 123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam adopted SFAS 123R using the modified prospective transition method, which required the
application of the accounting standard as of April&nbsp;1, 2006, the first day of Satyam&#146;s fiscal year
2007. Under this transition method, stock-based compensation expensed for the year ended March&nbsp;31,
2007 includes a) compensation expense for all stock-based compensation awards granted prior to, but
not yet vested as of April&nbsp;1, 2006, based on the grant-date fair value estimated in accordance with
the original provisions of SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148;, (&#147;SFAS 123&#148;)
and b) Stock-based compensation expenses for all stock-based compensation awards granted after
April&nbsp;1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of
SFAS 123R. In accordance with the modified prospective transition method, Satyam&#146;s Consolidated
Financial Statements for the prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pro forma disclosure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Had deferred stock-based 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&#146;s net income and earnings per
share would have been as follows for the year ended March&nbsp;31, 2006 and 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #000000"><I>(US$ in millions except per share data)</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>249.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>153.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Add: Charge under APB25</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Less: Charge under FAS123</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>228.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>133.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings Per Share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt"><I>Note: The pro forma disclosures shown above are not representative of the effects on net income
and earnings per share in future years.</I></DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of Satyam Computer Services&#146; stock options used to compute pro forma net income
and earnings per share disclosures is the estimated present value at grant date using the
Black-Scholes option-pricing model.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following weighted average assumptions were used:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">57</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">61</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term (in years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>q) Derivative financial instruments</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has adopted the provisions of SFAS 133, &#147;<I>Accounting for Derivative Instruments and Hedging
Activities</I>&#148; as amended. Satyam enters into foreign exchange forward and options contracts where the
counter party is generally a bank. Satyam purchases foreign exchange forward and options contracts
to mitigate the risk of changes in foreign exchange rates on cash flows denominated in certain
foreign currencies. These contracts do not qualify for hedge accounting under SFAS 133, as amended.
Any derivative that is either not a designated hedge, or is so designated but is ineffective per
SFAS 133, as amended is marked to market and recognized in earnings immediately.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>r)
Recently issued accounting pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2006, the FASB issued Interpretation No.&nbsp;48, Accounting for Uncertainty in Income Taxes&#151;an
interpretation of FASB Statement No.&nbsp;109 (&#147;FIN 48&#148;). The Interpretation clarifies the accounting
for uncertainty in income taxes recognized in a Company&#146;s financial statements and prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The Interpretation
also provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December&nbsp;15, 2006, which is April&nbsp;1, 2007 for us. The differences, if any between the amounts
recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts
reported after adoption will be accounted for as a cumulative-effect adjustment recorded to the
beginning balance of retained earnings. We are in the process of evaluating the impact this new
standard will have on our financial position, results of operations and liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the Securities and Exchange Commission (&#147;SEC&#148;) released SAB No.&nbsp;108,
&#147;Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements&#148; (&#147;SAB 108&#148;). SAB 108 provides interpretive guidance on the SEC&#146;s views on how
the effects of the carryover or reversal of prior year misstatements should be considered in
quantifying a current year misstatement. Satyam adopted SAB 108 during the fourth quarter of 2007.
The adoption did not have a material impact on our financial position, cash flows, or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the FASB issued SFAS 157, Fair Value Measurements, which establishes a framework
for measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. This Statement applies under other accounting pronouncements that require
or permit fair value measurements. SFAS 157 is effective for fiscal years beginning after November
15, 2007, which is fiscal year commending April&nbsp;1, 2008 for us. We are in the process of evaluating
the impact SFAS 157 will have on our financial position, results of operations, liquidity and its
related disclosures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As discussed in note 2(m), &#147;Significant Accounting Policies,&#148; effective March&nbsp;31, 2007, Satyam
adopted SFAS No.&nbsp;158, &#147;Employer&#146;s Accounting for Defined Benefit Pension and Other Postretirement
Plans&#151;an amendment of FASB Statements No.&nbsp;87, 88, 106 and 132(R),&#148; which requires the recognition
of the funded status of the retirement-related benefit plans in the Consolidated Balance Sheet and
the recognition of the changes in that funded status in the year in which the changes occur through
Accumulated Other Comprehensive Income, net of applicable tax effects. The provisions of SFAS No.
158 were adopted pursuant to the transition provisions therein. Satyam measures defined benefit
plan assets and obligations as of March&nbsp;31 and SFAS No.&nbsp;158 did not affect the company&#146;s existing
valuation practices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2007, the FASB issued FASB Statement 159, The Fair Value Option for Financial Assets
and Financial Liabilities (&#147;SFAS 159&#148;). SFAS 159 allows the company to choose to measure many
financial assets and financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after
November&nbsp;15, 2007, which is fiscal year commencing April&nbsp;1, 2008 for us. We are in the process of
evaluating the impact SFAS 159 will have on our financial position, results of operations,
liquidity and its related disclosures.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>s) Reclassifications</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain items previously reported in specific financial statement captions have been reclassified
to conform to the current period&#146;s presentation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Acquisitions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a) Citisoft Plc.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;12, 2005, Satyam Computer Services acquired a 75% interest in Citisoft Plc or Citisoft, a
specialist business and systems consulting firm located in the United Kingdom that has focused on
the investment management industry since 1986. The results of Citisoft&#146;s operations have been
consolidated by Satyam Computer Services from the consummation date of May&nbsp;12, 2005. The
acquisition has been accounted for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consideration for the 75% equity interest in Citisoft amounted to US$17.4&nbsp;million comprising of
an initial consideration of US$14.3&nbsp;million (including direct acquisition costs of US$0.9&nbsp;million)
and deferred consideration (non-contingent) of US$3.1&nbsp;million. Deferred consideration for the
acquisition of the 75% equity interest was accounted for as part of the purchase consideration and
disclosed as a current liability in the consolidated balance sheet as of March&nbsp;31, 2006 this has
been paid subsequently in June&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services is also required to pay a maximum earn out consideration amounting to
US$3.9&nbsp;million in May&nbsp;2007 based on achievement of targeted revenues and profits for the year ended
April&nbsp;30, 2007. The earn-out consideration will be accounted for as additional purchase
consideration when the contingency is resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services had a call option and the minority shareholders had a put option to
acquire / sell the balance 25% equity shares in two tranches 12.5% on April&nbsp;30, 2007 and 12.5% on
April&nbsp;30, 2008. The consideration payable for the first tranche of 12.5% equity shares on April
30, 2007 would amount to US$2.8&nbsp;million and a maximum earn-out consideration amounting to US$2.7
million based on achievement of targeted revenues and profits. The consideration payable for the
second tranche of 12.5% equity shares on April&nbsp;30, 2008 would amount to US$2.9&nbsp;million and a
maximum earn-out consideration amounting to US$4.2&nbsp;million based on achievement of targeted
revenues and profits. Satyam Computer Services recorded the put option at fair value at each
balance sheet date, with the initial fair value of the put option included as part of the
consideration for its 75.0% interest in Citisoft. The difference between the fair values at each
valuation date was charged to selling, general and administration expenses in statement of income.
On the basis of an independent valuation, the value of put option was US$ Nil and US$1.1&nbsp;million as
of May&nbsp;12, 2005 and March&nbsp;31, 2006 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On June&nbsp;29, 2006, Satyam Computer Services exercised the call option and acquired the remaining 25%
equity interest for a deferred consideration of US$5.9&nbsp;million payable on April&nbsp;30, 2007 and a
maximum earn-out consideration of US$2.7&nbsp;million and US$4.2&nbsp;million payable in May&nbsp;2007 and 2008
respectively based on achievement of targeted revenues and profits for the years ended April&nbsp;30,
2007 and 2008 respectively.. As a result Satyam reversed the put option liability during the year
ended March&nbsp;31, 2007. The acquisition was accounted for as a step purchase of the 25% equity
interest, the deferred consideration for the acquisition of the 25% equity interest was accounted
for as part of the purchase consideration and disclosed as a current liability in the consolidated
balance sheet as of March&nbsp;31, 2007. The earn-out consideration will be accounted for as additional
purchase consideration when the contingency is resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services is also required to fund an Employee Benefit Trust (&#147;EBT&#148;) formed by
Citisoft for the purpose of providing additional incentive to employees to contribute to the
success of Citisoft. Satyam is required to fund a maximum of US$3.4&nbsp;million and US$1.7&nbsp;million on
April&nbsp;30, 2007 and 2008 respectively, based on achievement of targeted revenues and profits. Satyam
Computer Services has recognized US$1.7&nbsp;million and US$1.4&nbsp;million in the consolidated statement of
income as part of cost of revenues in respect of the EBT contribution for the years ended March&nbsp;31,
2007 and 2006 respectively. The unpaid EBT contribution (disclosed as a current liability) amounted
to US$1.6&nbsp;million and US$1.4&nbsp;million as of March&nbsp;31, 2007 and 2006 respectively.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase consideration for acquisition of interest has been allocated to the assets acquired
and liabilities assumed as of the date of acquisition based on management&#146;s estimates and a
valuation done by an independent valuer in accordance with Statement of Financial Accounting
Standards No.&nbsp;141, Business Combinations. The goodwill has been allocated to the IT services
segment. The purchase price allocation is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>US$ in millions</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Acquisition of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Acquisition of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>75% interest</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>25% interest</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts related intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer relationship related intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pro forma disclosure regarding this acquisition has not been provided because it is not
material to the operations of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>b) Knowledge Dynamics Pte Ltd (&#147;Knowledge Dynamics&#148;).</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics Pte Ltd, Singapore, (&#147;Knowledge Dynamics&#148;), a leading Data Warehousing and
Business Intelligence Solutions provider. The transaction was consummated on October&nbsp;1, 2005, the
date of transfer of shares to Satyam Computer Services and Satyam Computer Services has
consolidated Knowledge Dynamics Pte Ltd, Singapore, from October&nbsp;1, 2005. The acquisition has been
accounted for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consideration for this acquisition amounted to US$3.3&nbsp;million comprising of initial
consideration of US$1.8&nbsp;million (including direct acquisition costs of $11 thousand) and deferred
consideration (non-contingent) of US$1.5&nbsp;million. The total deferred consideration for the
acquisition of US$1.5&nbsp;million has been accounted for as part of the purchase consideration out of
which US$0.8&nbsp;million has been paid during the year ended March&nbsp;31, 2007 and US$0.7&nbsp;million has been
disclosed as a current liability in the consolidated balance sheet. Satyam Computer Services is
also required to pay a maximum earn out consideration amounting to US$1.1&nbsp;million and US$1.1
million on April&nbsp;30, 2007 and 2008 respectively based on the achievement of targeted revenues and
profits from the date of acquisition up to April&nbsp;30, 2007 and
2008 respectively. The earn-out consideration will be accounted for as purchase consideration when the
contingency is resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management&#146;s estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No.&nbsp;141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>US$ in millions</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts and Related Relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pro forma disclosure regarding this acquisition has not been provided because it is not
material to the operations of the Company.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-17<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Preferred Stock of Subsidiary</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nipuna issued 45,669,999 and 45,340,000 0.05% convertible redeemable cumulative preference shares
of par value Rs 10 (US$0.23) per share in October&nbsp;2003 and June&nbsp;2004 respectively to the investors
at an issue price of Rs.10 (US$0.23) per share, in exchange for an aggregate consideration of US$20
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As per the agreement, these preference shares were mandatorily convertible into equity shares of
Nipuna no later than June&nbsp;2006, if Nipuna achieved certain targets for revenues and profits earned
up to March&nbsp;31, 2006. If these targeted revenues and profits were not achieved by Nipuna along with
other triggering events, the investors had an option to either redeem these preference shares or
convert them. Although certain triggering events for early redemption as per the agreement occurred
during the period January&nbsp;2004 to December&nbsp;2004 the investors waived the right of early redemption.
Further Nipuna has not achieved the targeted revenues and profits upto March&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If not converted, early converted or redeemed, these convertible preference shares were redeemable
on maturity in June&nbsp;2007 at a redemption premium, which could range between 7.5% to 13.5% p.a. The
Investors are entitled to receive dividends at the rate of 0.05% per cent per annum, on the face
value of Rs. 10 (US$0.23) from the date of issuance of such Preference Shares. The dividends are
cumulative and payable in cash at the rate indicated above, whether or not they have been declared
and whether or not there are profits, surplus or other funds of Nipuna legally available for the
payment of dividends. These preference shares rank senior to all classes of Nipuna&#146;s currently
existing capital stock or established subsequently with respect to dividend distributions and
repayment of capital and premium upon a Bankruptcy Event or Change in Control with respect to
Nipuna, unless the terms and conditions of such class expressly provide that such class will rank
senior to or on parity with the convertible redeemable cumulative preference shares. The dividend
on the preference shares for the year ended March&nbsp;31, 2007 is payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;20, 2006, a Share Purchase, Redemption and Amendment Agreement (&#147;SPRA Agreement&#148;) was
entered into between Satyam, the Investors and Nipuna. Out of the total preference shares, 50% of
the preference shares (US$10&nbsp;million) would be redeemed for US$13.6&nbsp;million at the target date on
May&nbsp;21, 2007 and the balance 50% would get converted into equity shares of Nipuna based on the
terms of the existing subscription agreement. Since 50% of the Preference Shares are mandatorily
redeemable, Satyam has reclassified 50% of the preference shares as a current liability measured at
fair value and accrued redemption premium amounting to US$3.6&nbsp;million up to March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Further as per the SPRA Agreement, Satyam agrees to purchase and the Investors agree to sell these
equity shares at an aggregate purchase price based on a formula. If the share purchase closing
occurs on or before the share purchase target date (May&nbsp;21, 2007) then the purchase price would
range from a minimum of US$35&nbsp;million to maximum of US$45&nbsp;million, however if an acceleration event
occurs the purchase price would equal US$45&nbsp;million. If the share purchase closing occurs after
the share purchase target date then the purchase price shall not be less than US$35&nbsp;million however
if an acceleration event occurs the purchase price shall not be less than US$45&nbsp;million. This is
subject to fulfillment of terms and conditions specified in the agreement and obtaining necessary
approvals from appropriate authorities. As of March&nbsp;31, 2007 an acceleration event has occurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The forward contract is freestanding and has been accounted for under SFAS 150 and hence the
issuance of Nipuna&#146;s equity shares has been considered as a minority interest. The Investors gave
Nipuna a Notice of Conversion of Preference Shares and in January&nbsp;2007 preference shares amounting
to US$10&nbsp;million have been converted into 6,422,267 equity shares of Nipuna. Due to the issue of
shares by Nipuna Satyam Computer Services&#146; ownership interest in Nipuna was reduced from 100.0% as
at March&nbsp;31, 2006 to 74.0% as at March&nbsp;31, 2007. The shares issued to the Investors are at amounts
per share higher than Satyam Computer Services&#146; average cost per share. With respect to this
transaction, the resulting gain of US$7.9&nbsp;million, net of taxes during the year ended March&nbsp;31,
2007 has been recorded as an increase in additional paid in capital. Since the losses applicable to
the minority interest in Nipuna exceeded the minority interest in the equity capital of Nipuna,
such excess and further losses have been charged in Satyam&#146;s consolidated statement of income. The
Investors holding in Nipuna has been accounted for as a minority interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The forward contract has a zero fair vale at inception and at balance sheet date since as per
regulatory requirements the transaction can take place only at fair value. Upon settlement of the
forward the acquisition of the minority interest would be reflected as a step acquisition with a
corresponding reduction in minority interest.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. Investments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments of Satyam consist of other non-marketable securities.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other investments, at cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Provision for impairment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investments &#151; Non current</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam records an investment impairment charge on other non-marketable investments, which are
carried at cost, when management believes an investment has experienced a decline in value that is
judged to be other than temporary. Satyam monitors its investments for impairment by considering
current factors including economic environment, market conditions and the operational performance
and other specific factors relating to the business underlying the investment. Based on its
assessment of its carrying values of investments, Satyam impaired the entire carrying value of
other non-marketable investments as of March&nbsp;31, 2003 due to adverse changes in the above factors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. Investments in bank deposits</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments in bank deposits represent term deposits placed with banks earning fixed rate of
interest. Investments in bank deposits with maturities of less than a year are disclosed as
current assets and with maturities of more than one year as non current. Interest on investments
in bank deposits is recognized on accrual basis. Investments in bank deposits amounted to US$767.6
million and US$403.7&nbsp;million as of March&nbsp;31, 2007 and 2006 respectively with maturities of more
than two years (as of March&nbsp;31, 2007).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. Investments in associated companies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The carrying values of investments in various associated companies of Satyam are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sify</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On November&nbsp;7, 2005, Satyam Computer Services offered to sell an aggregate of 11,182,600 equity
shares, representing its entire investment of 31.61% of the outstanding equity shares of Sify. The
sale transaction was consummated on November&nbsp;9, 2005 at a sale price of US$5.60 per equity share
aggregating to US$62.3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services accounted for its share of equity in earnings/(losses) of Sify under
equity method of accounting upto November&nbsp;9, 2005. The excess of sale proceeds (net of transaction
costs) over the carrying value of investment in Sify as on the date of sale amounting to US$43.6
million has been recognized as gain in the statement of income during the year ended March&nbsp;31,
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services&#146; equity in loss of Sify, net of taxes amounted to US$Nil, US$1.3&nbsp;million
and US$1.7&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Venture</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On October&nbsp;28, 1999, Satyam Computer Services entered into an agreement with Venture Industries,
USA (&#147;Venture&#148;) to form an equally held joint venture company Satyam Venture Engineering Services
Private Limited. (&#147;Satyam Venture&#148;). Satyam Computer Services holds 50% in Satyam Venture. The
joint venture was formed on January&nbsp;3, 2000 at Hyderabad, India. Satyam Venture is engaged in
providing engineering solutions, software development and customization services specifically for
the automotive industries worldwide. Satyam Computer Services&#146; equity in the profit of Satyam
Venture, net of taxes amounted to US$0.6&nbsp;million, US$0.5&nbsp;million and US$0.7&nbsp;million for the years
ended March&nbsp;31, 2007, 2006 and 2005 respectively. (Also refer note 19(f)).
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CA Satyam</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;29, 2000, Satyam Computer Services entered into an agreement with Computer Associates
International, Inc. (&#147;CA&#148;) to form an equally held joint venture company CA Satyam ASP Private
Limited (&#147;CA Satyam&#148;). Satyam Computer Services holds 50% in CA Satyam. The joint venture was
formed in January&nbsp;2001, at Mumbai, India. As per the agreement, both Satyam Computer Services and
CA have invested US$1.5&nbsp;million each in the joint venture. Satyam Computer Services equity in the
profit / (losses)&nbsp;of CA Satyam, net of taxes amounted to US$0.2&nbsp;million, US$(15) thousand and
US$(0.1) million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. Premises, Equipment and Depreciation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Premises and equipment at cost less accumulated depreciation consist of:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B><I>(</I></B><I>US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Freehold land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computers including servers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">System software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture and fixtures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vehicles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets under construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>387.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>291.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(224.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(185.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Premises and equipment, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>163.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>106.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has established the estimated useful lives of assets for depreciation purposes as
follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">28 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computers including servers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">2 &#151; 5 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">System Software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">3 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture and fixtures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vehicles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">5 years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation expense amounted to US$32.4&nbsp;million, US$30.6&nbsp;million and US$25.0&nbsp;million for the years
ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Goodwill</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill consists of:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of Citisoft Plc</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of Knowledge Dynamics Pte Ltd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of minority interest in</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Satyam Enterprise Solutions Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Satyam Technologies Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>44.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>39.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accumulated amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Goodwill, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>32.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>27.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the reconciliation of changes in carrying values of goodwill:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="13" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill at the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>27.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisitions during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Goodwill at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>32.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>27.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill represents the excess of amount paid towards purchase price over the fair value of assets
acquired, and relates to the acquisition of the minority interest in Satyam Enterprise Solutions
Limited and Satyam Technologies Inc., and acquisition of Citisoft Plc. and Knowledge Dynamics Pte
Ltd., by Satyam Computer Services<I>. </I>Goodwill is tested for impairment annually and when
circumstances indicate that the carrying amount may not be recoverable as provided under FAS 142.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. Intangible assets, net</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets consist of:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="29" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Acquired and</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>amortized intangible</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gross carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net intangible</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gross carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net intangible</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>life (in years)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>assets</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Citisoft Plc</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Relationship</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>8.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Knowledge Dynamics</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Contracts
and Related
Relationships</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trade name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Internally developed
technology</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year Satyam has not recognized any impairment of other intangible assets. Satyam has
adopted the provisions of SFAS No.&nbsp;141 and 142, and has accordingly assessed the remaining useful
lives of identified intangibles with definite useful lives and provides for amortization over the
determined useful life of the asset. Satyam does not have any intangible assets with indefinite
useful life.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the reconciliation of changes in carrying values of other intangible
assets:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="13" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Identifiable intangibles at the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisitions during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Identifiable intangibles at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>7.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The expected future annual amortization expense of other intangible assets is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>US$ in millions</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Estimated amortization expense:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">For the year ended March&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beyond 2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>11. Income Taxes</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The income tax expense consists of:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="12" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
    <TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Foreign taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Domestic taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Aggregate taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>30.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>37.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A reconciliation of the income tax expense to the amount computed by applying the statutory income
tax rate to income before income tax expense is summarized below:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="12" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
    <TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income before taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>328.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>287.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>180.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Enacted tax rates in India</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33.66</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33.66</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">36.59</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Computed tax expense</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>110.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>96.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>65.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect due to non-taxable export income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(98.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Difference arising from different tax rates in other tax jurisdictions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Difference arising from different tax rates on gain on sale of
investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock- based compensation (non-deductible)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in valuation allowance, including losses of subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of tax rate change</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income taxes recognized in the statement of income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>30.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>37.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The current provision for income taxes, net of payments, were US$15.5&nbsp;million and US$8.5&nbsp;million as
of March&nbsp;31, 2007 and 2006 respectively. The foreign taxes are 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 tax incentive provided to software entities as an exemption
from payment of Indian corporate income taxes for a period of ten consecutive years of operations
of software development facilities designated as &#147;Software Technology Parks&#148; (&#147;STP units&#148;). The
benefit of this tax incentive has historically resulted in an effective tax rate for Satyam
Computer Services well below statutory rates. In case of Satyam Computer Services for various
registered STP units these exemptions expire starting from fiscal
2006 through fiscal 2009. Satyam
Computer Services subsidiaries are subject to income taxes of the countries in which they operate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has not recognized deferred income taxes arising on income of Satyam Computer Services
due to the tax benefit available to it in the form of a exemption from taxable income, except to
the extent of timing differences which reverse after the tax holiday period or unless they reverse
under foreign taxes. However, Satyam Computer Services earns certain other income and domestic
income, which are taxable irrespective of the tax holiday as stated above.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Significant components of activities that gave rise to deferred tax assets and liabilities
included in the financial statements are as follows:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="8" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
    <TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Deferred tax assets:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating loss carry forwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for accounts receivable, advances and investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD style="border-bottom: 1px solid #000000"><DIV style="margin-left:15px; text-indent:-15px">Provision for gratuity and unutilized leaves</DIV></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">12.8</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">6.5</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Gross deferred tax assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total deferred tax assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Deferred tax liabilities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for accounts receivable and advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in associated companies and gain on dilution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total deferred tax liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(14.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(11.7</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net deferred tax assets/ (liabilities)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has not provided for any deferred income taxes on undistributed earnings of foreign
subsidiaries due to the losses incurred by them since their inception. These losses aggregated to
approximately US$39.8&nbsp;million and US$37.8&nbsp;million as of March&nbsp;31, 2007 and 2006 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Operating loss carry forwards for tax purposes of Satyam amounts to approximately US$26.6&nbsp;million
and US$24.0 as of March&nbsp;31, 2007 and 2006 respectively and are available as an offset against
future taxable income of such entities. These carry forwards expire at various dates primarily over
8 to 20&nbsp;years. Realization is dependent on such subsidiaries generating sufficient taxable income
prior to expiration of the loss carry forwards. A valuation allowance is established attributable
to deferred tax assets and loss carry forwards in subsidiaries where, based on available evidence,
it is more likely than not that they will not be realized. Currently,
a full valuation allowance has been made for such losses since we
believe that our subsidiaries will not generate sufficient taxable
income prior to expiration of carry forwards and under Indian
regulations we are not allowed to file a consolidated tax return.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net deferred tax asset/ (liabilities)&nbsp;included in the consolidated balance sheets are as follows:
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD colspan="8" align="right" style="border-bottom: 1px solid #000000">(US$ in millions)</TD>
    <TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets &#151; deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current assets &#151; other assets*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities &#151; accrued expenses and other liabilities*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term liabilities &#151; deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net deferred tax asset/ (liabilities)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 3pt; width: 18%; border-top: 1px solid #ffffff">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><I>*</I></TD>
    <TD>&nbsp;</TD>
    <TD><I>Included in &#147;other assets&#148; and &#147;accrued expenses and other liabilities&#148; respectively.</I></TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12. Borrowings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Short-term debt</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Short-term debt amounted to US$10.5&nbsp;million and US$4.1&nbsp;million as of March&nbsp;31, 2007 and 2006
respectively. Short-term debt represents overdraft facility of Nipuna at floating rate of interest
of LIBOR&#043;0.25% which is secured by a charge on book debts, accounts receivable and other moveable
assets. The weighted-average interest rate on this borrowing was 6.71% and 5.33% for the years
ended March&nbsp;31, 2007 and 2006 respectively.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Long-term debt</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Long-term debt outstanding comprise of:

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Secured debts, </B>representing obligation principally to banks and financial
institutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; 10.25% Rupee loans of SC-Trust, maturing serially through fiscal 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; 0.95% above 6&nbsp;month LIBOR working capital term loan maturing serially through
fiscal 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#151; 0.95% above 6&nbsp;month LIBOR external commercial borrowing maturing serially
through fiscal 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hire Purchase Loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Debt</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>23.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Long-term debt, net of current portion</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>22.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Rupee loans as of March&nbsp;31, 2006 were secured by equity shares of Satyam Computer Services&#146;
held by the SC-Trust and had an interest rate of 10.25%. These rupee loans have been repaid during
the year ended March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Working capital term loan and external commercial borrowing have been taken by Nipuna. Satyam
Computer Services has given a corporate guarantee to the bank for these borrowings. These
borrowings are repayable in 3&nbsp;years from each draw down date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Aggregate maturities of long-term debt subsequent to March&nbsp;31, 2007, are US$1.6&nbsp;million in fiscal
2008, US$21.6&nbsp;million in fiscal 2009, US$0.4&nbsp;million in fiscal 2010 and US$0.2&nbsp;million in fiscal
2011.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Unused lines of credit</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unused lines of credit comprise of:

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-fund facilities &#151; Bank Guarantees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Unused lines of credit</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>25.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>12.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-24<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. Employee Benefits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>The Gratuity Plan</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth the status of the Gratuity Plan of Satyam, and the amounts
recognized in Satyam&#146;s consolidated balance sheets and statements of income.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accumulated benefit obligation</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>7.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>5.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in projected benefit obligation</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Projected benefit obligation at beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actuarial loss/(gain)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Projected benefit obligation at end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in plan assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employer contribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefits paid from plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fair value of plan assets at end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Funded status of the plans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(10.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5.2</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized net actuarial loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accrued benefit cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(10.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(6.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(4.8</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="11" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>The components of net gratuity costs are reflected below:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net gratuity costs</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The assumptions used in accounting for the gratuity plan for the years ended March&nbsp;31, 2007,
2006 and 2005 are set out below:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Weighted-average assumptions used to determine benefit obligations:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term rate of compensation increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Weighted-average assumptions used to determine net periodic benefit cost:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term rate of compensation increase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-25<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam expects to contribute US$2.1&nbsp;million to its Gratuity plan during the year ending March&nbsp;31,
2008. The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Expected</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>For the financial year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>contribution</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2013 &#151; 2016</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effective March&nbsp;31, 2007, Satyam adopted the provisions of SFAS No.&nbsp;158. The following table
presents the incremental effect of applying SFAS No.&nbsp;158 on the Consolidated Statement of Financial
Position:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Before</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>After</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>application of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>application of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>SFAS 158</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>SFAS 158</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets &#151; Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current assets &#151; Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,623.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,624.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities &#151; Accrued expenses and other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term liabilities &#151; Gratuity, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>251.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>253.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Shareholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,372.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,371.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As at March&nbsp;31, 2007, Satyam recorded unrecognized net gains/(losses) amounting to US$(1.2)
million in the Stockholders&#146; equity section as part of Accumulated Other Comprehensive Income, net
of tax, of US$0.6&nbsp;million.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Provident Fund</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s contribution towards the Provident Fund amounted to US$14.7&nbsp;million, US$10.7&nbsp;million and
US$6.8&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Superannuation Plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services&#146; contribution towards the Superannuation Plan maintained by LIC amounted
to US$1.9&nbsp;million, US$1.2&nbsp;million and US$0.9&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and
2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. Earnings per Share</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Basic earning per share is computed on the basis of the weighted average number of shares
outstanding (weighted average number of shares issued less unallocated, unvested and unexercised
shares held by the SC &#151; Trust). Allocated but unvested or unexercised shares not included in the
calculation of weighted-average shares outstanding for basic earnings per share were 146,200 and
106,600 as of March&nbsp;31, 2007 and 2006 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 &#147;treasury stock&#148; method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the above, the unallocated shares held by SC &#151; Trust, which are by definition
unvested, have been excluded from all earnings per share calculations. Such shares amounted to
2,149,680 and 2,279,680 as of March&nbsp;31, 2007 and 2006 respectively.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-26<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited </B><br>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The components of basic and diluted earnings per share were as follows:
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #000000"><I>(US$ in millions except per share data and as stated otherwise)</I></TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>298.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>249.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>153.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Equity Shares:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average outstanding shares (in millions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">652.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dilutive effect of Associate Stock Options (in millions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Share and share equivalents </B>(in millions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>666.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>662.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>647.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Stock-based Compensation Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>ASOP plan</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;1998, Satyam Computer Services established its Associate Stock Option Plan (the &#147;ASOP
plan&#148;), which provided for the issue of 26,000,000 shares, as adjusted to eligible associates.
Satyam Computer Services issued warrants to purchase these shares to a controlled associate welfare
trust called the Satyam Associate Trust (the &#147;SC-Trust&#148;). In December&nbsp;1999 the SC- Trust exercised
all its warrants to purchase Satyam Computer Services shares prior to the stock split using the
proceeds obtained from bank loans. The warrants vest immediately or vest over a period ranging
from one to three years. Upon vesting, associates have 30&nbsp;days in which to exercise these warrants.
As of March&nbsp;31, 2007, warrants (net of lapsed and cancelled) to purchase 23,829,720 equity shares
have been granted to associates pursuant to ASOP since inception.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>ASOP B plan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2000, Satyam Computer Services established its Associate Stock Option Plan B (the &#147;ASOP
B&#148;) and reserved warrants for 83,454,280 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% in
second year, 30% in the third year and 50% in the fourth year. Upon vesting, associates have 5
years to exercise these warrants. As of March&nbsp;31, 2007, options (net of lapsed and cancelled) to
purchase 54,582,747 equity shares have been granted to associates under this plan since inception.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>ASOP ADS plan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2000, Satyam Computer Services established its Associate Stock Option Plan (ADS) (the &#145;ASOP
(ADS)&#146;) to be administered by the Administrator of the ASOP (ADS)&nbsp;which is a committee appointed by
the Board of Directors of Satyam Computer Services and reserved 5,149,330 ADSs (10,298,660 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 NYSE on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the grant date. These warrants
vest over a period of 1-10&nbsp;years from the grant date. As of March&nbsp;31, 2007, warrants (net of lapsed
and cancelled) for 3,215,800 ADSs representing 6,431,600 equity shares have been granted to
associates under the ASOP ADS since inception.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Associate Stock Option Plan &#151; Restricted Stock Units (ASOP &#151; RSUs)</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2007, Satyam Computer Services has established a scheme &#147;Associate
Stock Option Plan &#151; Restricted Stock Units (ASOP &#151; RSUs)&#148; to be administered by the Administrator
of the ASOP &#151; RSUs, a committee appointed by the Board of Directors of the Company. Under the
scheme 13&nbsp;million equity shares are reserved to be issued to eligible associates at a price to be
determined by the Administrator which shall not be less than the face value of the share. ASOP RSUs
vest over a period of 1-4&nbsp;years from the date of the grant. Upon vesting, associates have 5&nbsp;years
in which to exercise these warrants. As of March&nbsp;31, 2007, warrants for 3,293,140 shares have been
granted under the ASOP &#151; RSUs.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Associate Stock Option Plan &#151; RSUs (ADS) (ASOP &#151; RSUs (ADS))</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2007, Satyam Computer Services has established a scheme &#147;Associate
Stock Option Plan &#151; RSUs (ADS)&#148; to be administered by the Administrator of the ASOP &#151; RSUs (ADS),
a committee appointed by the Board of Directors of the Company. Under the scheme 13&nbsp;million equity
shares minus the number of shares issued from time to time under the Associate Stock Option Plan &#151;
RSUs are reserved to be issued to eligible associates at a price to be determined by the
Administrator not less than the face value of the share. These RSUs vest over a period of 1-4&nbsp;years
from the date of the grant. Upon vesting, associates have 5&nbsp;years in which to exercise these
warrants. As of March&nbsp;31, 2007, warrants for 236,620 ADS representing 473,240 shares have been
granted under the ASOP &#151; RSUs (ADS).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Warrant grants</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2007, the SC-Trust issued immediately vesting warrants for 39,000
shares and warrants for 91,000 (net of Nil warrants cancelled) shares with longer vesting periods
to the associates under the ASOP plan. Further, during the year ended March&nbsp;31, 2007, under the
ASOP B plan, Satyam Computer Services issued warrants for Nil (net of 8,180,519 warrants cancelled)
shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer Services
issued warrants for 20,000 ADS representing 40,000 shares, warrants for 126,142 ADS representing
252,284 shares were cancelled. Further, during the year ended
March&nbsp;31, 2007, under the ASOP &#151; RSUs plan, Satyam Computer Services issued warrants for 3,293,140 shares to the associates. During
the same period, under the ASOP &#151; RSUs (ADS)&nbsp;plan, Satyam Computer Services issued warrants for
236,620 ADS representing 473,240 shares to associates under the ASOP &#151; RSUs (ADS)&nbsp;plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2006, the SC-Trust issued immediately vesting warrants for 26,400
shares and warrants for 61,600 (net of Nil warrants cancelled) shares with longer vesting periods
to the associates under the ASOP plan. Further, during the year ended March&nbsp;31, 2006, under the
ASOP B plan, Satyam Computer Services issued warrants for 984,362 (net of 5,595,190 warrants
cancelled) shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer
Services issued warrants for 139,986 ADS representing 279,972 (net of warrants for 180,444 ADS
representing 360,888 shares cancelled) shares to associates under the ASOP (ADS)&nbsp;plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2005, the SC-Trust issued immediately vesting warrants for 101,680
and warrants for 769,000 (net of Nil warrants cancelled) shares with longer vesting periods to the
associates under the ASOP plan. Further, during the year, under the ASOP B plan, Satyam Computer
Services issued warrants for 23,914,466 (net of 4,497,048 warrants cancelled) shares to the
associates. During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
529,120 ADS representing 1,058,240 (net of warrants for 204,328 ADS representing 408,656 shares
cancelled) shares to associates under the ASOP (ADS)&nbsp;plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Changes in number of equity shares representing stock options outstanding for each of the plans
were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>ASOP Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>106,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.42</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>481,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.18</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>116,400</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.00</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">870,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(90,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(462,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(506,080</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>146,200</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.69</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>106,600</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.42</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>481,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.18</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate grant date intrinsic value of stock options outstanding under ASOP Plan was
US$2.6&nbsp;million, US$0.2&nbsp;million and US$0.3&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005
respectively. As of March&nbsp;31, 2007 options vested and expected to vest are 146,200 with an aggregate grant date intrinsic
value of US$2.6&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>ASOP B</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>45,605,388</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.74</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,660,630</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.57</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>35,020,962</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.03</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,579,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,411,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,448,659</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,039,604</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,274,798</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,180,519</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,595,190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,497,048</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19,976,210</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.89</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>45,605,388</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.74</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,660,630</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.57</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,001,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,248,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,390,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007 options vested and expected to vest are 16,780,016 with an aggregate
grant date intrinsic value of US$Nil.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>ASOP (ADS)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,982,684</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4.12</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,031,604</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.71</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4,725,728</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.96</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,466,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(848,272</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,328,892</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(752,364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(252,284</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(360,888</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(408,656</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,922,128</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4.89</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,982,684</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>4.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5,031,604</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.71</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,985,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,865,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.72</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2007 options vested and expected to vest are 2,600,294 with an aggregate grant
date intrinsic value of US$Nil.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-29<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>RSU Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,293,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,293,140</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.05</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate grant date intrinsic value of stock options outstanding under ASOP RSU Plan was
US$31.1&nbsp;million, US$Nil and US$Nil for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
As of March&nbsp;31, 2007 options vested and expected to vest are 2,852,518 with an aggregate grant date
intrinsic value of US$28.0&nbsp;million.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>RSU ADS Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>473,240</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.05</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate grant date intrinsic value of stock options outstanding under ASOP RSU ADS Plan
was US$4.9&nbsp;million, US$Nil and US$Nil for the years ended March&nbsp;31, 2007, 2006 and 2005
respectively. As of March&nbsp;31, 2007 options vested and expected to vest are 426,910 with an
aggregate grant date intrinsic value of US$4.6&nbsp;million.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-30<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<BR>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Information about number of equity shares representing stock options outstanding as on March
31, 2007:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Exercisable</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of equity</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="5"><B>Range of Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price (per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares arising out</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price (per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares arising out</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="5" style="border-bottom: 1px solid #000000"><B>Price (per equity share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>equity share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>contractual life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>equity share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of options</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.2.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.2.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.4.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7.23 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,766,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
<!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.70.57</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.148.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.135.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.172.68</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.49 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,149,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,593,992</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
<!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.172.69</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.204.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.214.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.430.68</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.72 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,237,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,511,728</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
<!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs.430.69</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.521.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Rs.504.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rs. 863.67</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5.84 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,657,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880,980</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px; background: 0000000">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The US$ numbers in the above tables have been translated using the closing exchange rate as
of March&nbsp;31, 2007 1US$= Rs43.10</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>There
are no grants with the exercise price in the range of Rs.4.01 &#151; Rs.70.56 (US$0.10 &#151; US$1.63).</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock-based compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s Consolidated Financial Statements as of and for the year ended March&nbsp;31, 2007 reflect the
impact of SFAS 123R. In accordance with the modified prospective transition method, Satyam&#146;s
Consolidated Financial Statements for the prior periods have not been restated to reflect, and do
not include, the impact of SFAS 123R. As required by SFAS 123(R), management has made an estimate
of expected forfeitures and is recognizing compensation costs only for those equity awards expected
to vest. Upon adoption of SFAS 123R, Satyam had no cumulative adjustment on account of expected
forfeitures for stock-based awards granted prior to April&nbsp;1, 2006. During the year ended March&nbsp;31,
2007, Satyam recorded stock-based compensation related to stock options of US$15.7&nbsp;million on
graded vesting basis for all unvested options granted prior to and options granted after the
adoption of SFAS 123(R). As of March&nbsp;31, 2007, there was US$45.3&nbsp;million of unrecognized
compensation cost related to unvested options which is expected to be recognized over a weighted
average period of 3.84&nbsp;years. Satyam issues new shares to satisfy share option exercise. Cash
received from option exercises amounted to US$64.4&nbsp;million, US$31.0&nbsp;million and US$15.4&nbsp;million for
the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of each option award is estimated on the date of grant using the Black Scholes
option-pricing model. The following table gives the weighted-average assumptions used to determine
fair value:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3" style="border-bottom: 1px solid #000000"><B>Year ended</B></TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31, 2007</B></TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.78</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term (in years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Expected Term: </I>The expected term represents the period that the Company&#146;s stock-based awards are
expected to be outstanding and was determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Risk-Free Interest Rate: </I>The risk-free interest rate is based on the applicable rates of government
securities in effect at the time of grant.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-31<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<BR></div>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Expected Volatility: </I>The fair values of stock-based payments were valued using a volatility factor
based on the Company&#146;s historical stock prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Expected Dividend: </I>The Black Scholes option-pricing model calls for a single expected dividend
yield as an input.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Estimated Pre-vesting Forfeitures: </I>When estimating forfeitures, the Company considers voluntary
termination behavior. Estimated forfeiture rates are trued-up to actual forfeiture results as the
stock-based awards vest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock based compensation plan of Nipuna</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2004, Nipuna established its Employee Stock Option Plan (the &#147;ESOP&#148;). As per the ESOP, the
options were granted at fair value as determined by an independent valuer as on the date of the
grant and hence no compensation cost has been recognized. These options vest starting with 33.33%
at the end of the second year, 33.33% at the end of the third year and remaining 33.34% at the end
of the fourth year from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Changes in number of equity shares representing stock options outstanding were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>

    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>ASOP Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<tr>
<td>&nbsp;</td>
</tr>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,215,506</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.80</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>813,578</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.83</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">813,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.78</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(540,804</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(253,072</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lapsed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>998,702</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.86</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,215,506</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.80</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>813,578</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.83</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of
options granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16. Segmental Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has adopted SFAS 131; <I>&#147;Disclosures about Segments of an Enterprise and Related Information&#148;</I>
which requires disclosure of financial and descriptive information about Satyam&#146;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. The executive management evaluates Satyam&#146;s operating segments based on the
following two business groups:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I> IT services</I>, providing a comprehensive range of services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, infrastructure management services. Satyam provides its customers the
ability to meet all of their information technology needs from one service provider. Satyam&#146;s
eBusiness services include designing, developing integrating and maintaining Internet-based
applications, such as eCommerce websites, and implementing packaged software applications,
such as customer or supply chain management software applications. Satyam also assists its
customers in making their existing computing systems accessible over the Internet. The segment
information includes the results of Citisoft and Knowledge Dynamics which were acquired during
last year.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD> <I>Business Process Outsourcing</I>, providing BPO services covering HR, Finance &#038; Accounting,
Customer Contact (Voice, Mail and Chat), and Transaction Processing (industry-specific
offerings).</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-32<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements<BR></div>
<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>




<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s operating segment information for the years ended March&nbsp;31, 2007, 2006 and 2005 are as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business Segments</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="3" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>IT Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>BPO</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Elimination</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Consolidated totals</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>For the year ended March&nbsp;31, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; External customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,432.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,461.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,433.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>38.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(9.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,461.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income / (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/(losses) of associated
companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income / (loss)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,605.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,624.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures for long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>For the year ended March&nbsp;31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; External customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,083.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(7.2</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1096.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income / (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/(losses) of associated
companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income / (loss)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">259.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,170.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,181.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures for long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>For the year ended March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; External customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>787.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(3.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>793.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income / (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/(losses) of associated
companies, net of taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">885.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">884.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures for long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><i>The capital expenditures for long-lived assets in the above table represent the additions to
premises and equipment (fixed assets) of each segment.</i>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-33<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited<br></B>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Geographic Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The revenues that are attributable to countries based on location of customers and long-lived
assets are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="4" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revenues from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revenues from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revenues from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>external customers</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>external customers</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>external customers</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived assets</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">United States</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">924.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">711.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">542.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Europe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">India</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Japan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rest of the World</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">164.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,461.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>203.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1,096.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>140.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>793.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>99.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The long-lived assets in the above table represent premises and equipment and intangible assets of
each segment.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Related party transactions comprise of
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="4" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Infrastructure and other services provided by Satyam to</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sify, its subsidiaries and associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Short term advance provided by Satyam to</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Infrastructure and other services received by Satyam from</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sify, its subsidiaries and associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>8.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>11.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>8.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The balances receivable from and payable to related parties are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="4" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Amount due from/(to) associated companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.7</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. Shareholders&#146; Equity and Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Increase in authorized share capital</I></B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;21, 2006, the shareholders of Satyam Computer Services approved for increase in
authorized capital of the Company from 375&nbsp;million equity shares to 800&nbsp;million equity shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Stock Split (in the form of stock dividend)</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On August&nbsp;21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock split
(in the form of stock dividend) which was effective on October&nbsp;10, 2006. Consequently, Satyam
capitalized an amount of US$17.7&nbsp;million from its retained earnings to common stock. All references
in the financial statements to number of shares, per share amounts, stock option data, and market
prices of Satyam Computer Services&#146; equity shares have been retroactively restated to reflect the
stock split unless otherwise noted.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-34<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><br>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><B><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Dividends</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. The Board of Directors declares interim dividends without
the need for shareholders&#146; approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 retained
earnings available for distribution to equity shareholders was US$1,062.6&nbsp;million, US$786.9&nbsp;million
and US$559.8&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>19. Contingencies and Commitments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a) Funding and Warrant commitments &#151; Nipuna</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services has guaranteed payment of all sums payable by Nipuna to the Investors on
redemption of the 0.05% cumulative convertible redeemable preference shares. Satyam Computer
Services, Nipuna and the investors had also entered into a warrant agreement whereby Nipuna agreed
to issue to the Investors, one warrant in consideration of and based upon every US$0.1&nbsp;million
referral revenues received by Nipuna or its subsidiaries. As of March&nbsp;31, 2007, there were no
referral revenues and hence no warrants have been issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>b) Citisoft Plc and Knowledge Dynamics Pte Ltd.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For commitments relating to Citisoft and Knowledge Dynamics refer note 3.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>c) Bank guarantees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Bank guarantees outstanding are US$23.1&nbsp;million and US$13.4&nbsp;million as of March&nbsp;31, 2007 and 2006
respectively. Bank guarantees are generally provided to government agencies, 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>d) Capital commitments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Contractual commitments for capital expenditure pending execution were US$38.2&nbsp;million and US$26.7
million as of March&nbsp;31, 2007 and 2006 respectively. Contractual commitments for capital
expenditures are relating to acquisition of premises and equipment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>e) Operating leases</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has certain operating leases for land, office premises and guesthouses. Rental expenses for
operating leases are accounted for on a straight line method. Rental expense amounted to US$23.7
million, US$17.5 and US$12.5&nbsp;million for the years ended March&nbsp;31, 2007, 2006 and 2005
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future minimum annual lease commitments for non-cancelable lease arrangements, including those
leases for which renewal options may be exercised as of March&nbsp;31, 2007 are US$4.6&nbsp;million in fiscal
2008, US$2.7&nbsp;million in fiscal 2009, US$1.0&nbsp;million in fiscal 2010, US$0.6&nbsp;million in fiscal 2011
and thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>f) Venture Global Engineering LLC, USA</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services had filed a request for arbitration with the London Court of International
Arbitration (&#147;LCIA&#148;) naming Venture Global Engineering LLC, USA (&#147;VGE&#148;) as respondent. The
Arbitration concerned a dispute between Satyam Computer Services and VGE in connection with their
joint venture Satyam Venture Engineering Services Private Limited (&#147;SVES&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The LCIA Arbitrator issued his Final Award on April&nbsp;3, 2006 in favour of Satyam Computer Services.
Satyam Computer Services has filed a petition to recognize and enforce the Award in the United
States District Court in Michigan. VGE has separately filed a declaratory judgment action seeking
to refuse enforcement of the Award in the United States District Court in Illinois. Management
believes that this will not have any adverse effect upon Satyam&#146;s results of operations, financial
condition and cash flows.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-35<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited<br></B>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="center" style="font-size: 10pt"><B><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20. Concentration of Credit Risk</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. The following table
gives details in respect of percentage of revenues generated from top two and top five customers:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenues generated from top two customers</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer I</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.34</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.80</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.81</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer II</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.41</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.14</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues from top five customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">21.04</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">24.21</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">29.21</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>21. Financial Instruments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Forward and options contracts</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services enters into foreign exchange forward and options contracts where the
counter party is generally a bank. Satyam Computer Services considers the risks of non-performance
by the counter party as not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables give details in respect of our outstanding foreign exchange forward and
options contracts:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="4" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate contracted principal amounts of contracts outstanding:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>452.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>216.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance sheet exposure:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>4.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.4</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The outstanding foreign exchange forward and options contracts as of March&nbsp;31, 2007 mature
between one to fourteen months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gains/(losses)
on foreign exchange forward and options contracts are included under
the heading other
income/(expense) in the statement of income are as stated below:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="right" colspan="4" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>6.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.3</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Fair value</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The carrying amounts reported in the balance sheets for cash and cash equivalents, trade and other
receivables, investments, amounts due to or from related parties, short-term debts, accounts
payable and other liabilities approximate their respective fair values due to their short maturity
and due to no change in the interest rates for bank deposits. The approximate fair value of
long-term debts, as determined by using current interest rates was US$23.8&nbsp;million and US$20.3
million as of March&nbsp;31, 2007 and 2006 respectively as compared to the carrying amounts of US$23.8
million and US$20.3&nbsp;million as of March&nbsp;31, 2007 and 2006 respectively.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-36<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>22. Schedules of Balance sheet</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash and Cash Equivalents</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The cash and cash equivalents consist of:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and bank balances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">138.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">258.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>152.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>292.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accounts receivable and allowance for doubtful debts</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accounts receivable consist of:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customers (trade)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">386.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">238.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Allowance for doubtful debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accounts receivable, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>364.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>220.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The allowance for doubtful debt is established at amounts considered to be appropriate based
primarily upon Satyam&#146;s past credit loss experience and an evaluation of potential losses on the
outstanding receivable balances.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>c)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Prepaid Expenses and Other Receivables</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prepaid expenses and other receivables consist of:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest accrued on bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Directors liability insurance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advance for expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans and advance to employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other advances and receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Allowance for doubtful advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Prepaid expenses and other receivables</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>37.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>48.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prepaid expenses principally include the un-expired portion of annual rentals paid for use of
leased telecommunication lines, satellite link charges, and insurance premiums.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Others advances and receivables include the current portion of the restricted cash in the form of
deposits placed with banks to obtain bank guarantees amounted to US$2.1&nbsp;million and US$0.4&nbsp;million
as of March&nbsp;31, 2007 and 2006 respectively.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>d)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Assets</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other assets consist of:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest accrued on bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans and advances to employees due after one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred taxes on income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Allowance for doubtful advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>39.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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$0.3&nbsp;million and US$0.7&nbsp;million as of March&nbsp;31,
2007 and 2006 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.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-37<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited </B><br>
Notes to the Consolidated Financial Statements<DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>e)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accrued Expenses and Other Current Liabilities</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accrued expenses and other current liabilities consist of:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="8" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unclaimed dividend</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for taxation, net of payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for gratuity and unutilised leave</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred taxes on income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accrued expenses and other current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>148.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>104.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-38<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B><BR>
Financial Statement Schedule <DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Financial Statement Schedule -Valuation and qualifying accounts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>1. Change in valuation allowance on deferred tax assets:</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="12" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>26.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>21.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Allowance for doubtful accounts on trade accounts receivable:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="12" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>22.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Allowance for doubtful advances:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Prepaid Expenses and Other Receivables</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="12" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Assets</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="12" style="border-bottom: 1px solid #000000"><I>(US$ in millions)</I></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
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SATYAM COMPUTER SERVICES LTD.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2007
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number 001-15190
Satyam Computer Services Limited
(Exact Name of Registrant as Specified in Its Charter)
N/A
Republic of India
(Translation of Registrant's Name Into English)
(Jurisdiction of Incorporation or Organization)
Satyam Technology Center
Bahadurpallay Village
Qutbullapur Mandal, R.R. District — 500855
Hyderabad, Andhra Pradesh
India
(91) 40 3063 3535
(Address and Telephone Number of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
American Depositary Shares,
The New York Stock Exchange
each represented by two equity shares
,
par value Rs. 2.0 per share
(Title of Class)
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report.
667,196,009 equity shares, including 130,209,472 underlying equity shares for 65,104,736
ADSs, were issued and outstanding as of March 31, 2007.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes
þ
No
o
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes
o
No
þ
Note – Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under
those Sections.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated
filer" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17
o
Item 18
þ
If this report is an annual report, indicate by check mark if the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
þ
TABLE OF CONTENTS
SATYAM COMPUTER SERVICES LIMITED
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
4
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
4
ITEM 3. KEY INFORMATION
4
ITEM 4. INFORMATION ON THE COMPANY
22
ITEM 4A. UNRESOLVED STAFF COMMENTS
36
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
36
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
60
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
69
ITEM 8. FINANCIAL INFORMATION
70
ITEM 9. THE OFFER AND LISTING
70
ITEM 10. ADDITIONAL INFORMATION
72
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
89
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
90
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
90
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
90
ITEM 15. CONTROLS AND PROCEDURES
90
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
91
ITEM 16B. CODE OF ETHICS
91
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
91
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
92
ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
92
ITEM 17. FINANCIAL STATEMENTS
92
ITEM 18. FINANCIAL STATEMENTS
93
ITEM 19. EXHIBITS
93
EX-4.5 ASSOCIATE STOCK OPTIONS PLAN - RSUs.
EX-8.1 LIST OF SIGNIFICANT SUBSIDIARIES
EX-12.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EX-12.2  CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANE OXLEY ACT OF 2002.
EX-13.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
EX-13.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
EX-15.1 CONSENT OF PRICE WATERHOUSE, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
2
Table of Contents
CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
Unless otherwise stated in this Annual Report on Form 20-F, or "Annual Report," or unless the
context otherwise requires, references in this Annual Report to "we," "our," "us," "Satyam,"
"Satyam Computer Services" and "our company" are to Satyam Computer Services Limited and its
consolidated subsidiaries and other consolidated entities.
In this Annual Report, references to "US" 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.
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 30, 2007 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 30, 2007 was Rs. 43.10 per
$1.00.
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
We have included statements in this Annual Report 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 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 periodic reports and other
documents filed with the United States Securities and Exchange Commission, or SEC, from time to
time. Our filings with the SEC are available on its website, www.sec.gov.
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 are not required to update any of the forward-looking statements after the date of this Annual
Report to conform such statements to actual results or to reflect events or circumstances that
occur after the date the statement is made or to account for unanticipated events.
3
Table of Contents
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 five
years ended March 31, 2007 and the balance sheet data as of March 31,2007, 2006, 2005, 2004, and
2003 are derived from our consolidated audited financial statements including the notes, which have
been prepared and presented in accordance with U.S. GAAP. As of December 9, 2002, we ceased to hold
a controlling interest in Sify Limited, or Sify, and subsequently changed the method of accounting
for our interest in Sify from the consolidated accounting method to the equity method. On May 12,
2005, we acquired a 75% interest in Citisoft Plc and on October 1, 2005, we acquired 100% of the
shares of Knowledge Dynamics Pte Ltd. On November 9, 2005, we sold our entire 31.6% stake in Sify
as a result of which Sify ceased to be our associate company. Further during June 2006 we acquired
the balance 25% interest in Citisoft Plc. As a result of the above, financial data as of March 31,
2007 and for the year ended March 31, 2007 are not comparable to financial data as of and for the
years ended March 31, 2006, 2005, 2004 and 2003.
Year Ended March 31,
2007
2006
2005
2004
2003
(dollars in millions, except per share and per ADS data, or as stated otherwise)
Statement of operations data
Revenues:
IT services
$
1,432.5
$
1,082.7
$
786.7
$
565.1
$
459.2
BPO
28.9
13.6
6.9
1.3
—
Total revenues
$
1,461.4
$
1,096.3
$
793.6
$
566.4
$
459.2
Cost of revenues
(1)
(937.6
)
(689.0
)
(506.8
)
(343.6
)
(275.2
)
Gross profit
523.8
407.3
286.8
222.8
184.0
Operating expenses:
Selling, general and
administrative expenses
(2)
(232.2
)
(187.6
)
(124.3
)
(101.7
)
(116.9
)
Amortization of goodwill
—
—
—
—
—
Impairment of goodwill
—
—
—
—
—
Impairment of other
non-marketable investments
—
—
—
—
(3.3
)
Reversal of put option charge
—
—
—
—
19.8
Total operating expenses
(232.2
)
(187.6
)
(124.3
)
(101.7
)
(100.4
)
Operating income/(loss)
291.6
219.7
162.5
121.1
(83.6
)
Interest income
37.3
26.3
22.3
20.3
7.2
Interest expense
(3.6
)
(1.3
)
(0.4
)
(0.5
)
(0.8
)
Gain on sale of shares in
associated companies/ other
investments
—
43.6
—
2.7
0.8
4
Table of Contents
Year Ended March 31,
2007
2006
2005
2004
2003
(dollars in millions, except per share and per ADS data, or as stated otherwise)
Gain/(loss) on foreign
exchange transactions
(3.3
)
0.3
(4.6
)
(8.9
)
(4.8
)
Other income/(expenses), net
6.2
(0.8
)
0.4
2.3
(1.7
)
Income/(loss) before income
taxes, minority interest and
equity in earnings/ (loss) of
associated companies
328.2
287.8
180.2
137.0
84.3
Income taxes
(30.6
)
(37.7
)
(25.3
)
(22.5
)
(9.8
)
Minority interest
—
0.1
—
—
11.1
Income before equity in
earnings/(losses) of
associated companies
297.6
250.2
154.9
114.5
85.6
Equity in earnings/ (losses)
of associated companies, net
of taxes
0.8
(0.8
)
(1.1
)
(2.6
)
(3.3
)
Net income (loss)
$
298.4
$
249.4
$
153.8
$
111.9
$
82.3
Year Ended March 31,
2007
2006
2005
2004
2003
(dollars in millions,
except per share and per ADS data, or as stated otherwise)
Earnings (loss) per share:
Basic
$
0.46
$
0.39
$
0.24
$
0.18
$
0.26
Diluted
0.45
0.38
0.24
0.18
0.26
Earnings (loss) per ADS:
Basic
0.92
0.78
0.48
0.36
0.52
Diluted
0.90
0.75
0.48
0.36
0.52
Weighted average equity
shares used in computing
earnings per shares (in
millions):
Basic
652.5
641.2
632.4
626.4
623.6
Diluted
666.0
662.8
647.2
634.2
637.4
Weighted average equity
shares used in computing
earnings per ADS:
Basic
326.3
320.6
316.2
313.2
311.8
Diluted
333.0
331.4
323.6
317.1
318.7
Cash dividend per equity share
0.13
0.11
0.12
0.08
0.03
Cash dividend per ADS
0.26
0.22
0.24
0.17
0.06
(1)
Inclusive of stock-based compensation expense of
$12.8 million,
$Nil, $0.8 million, $0.9 million and $1.6 million
in fiscal 2007, 2006, 2005, 2004 and 2003 respectively.
5
Table of Contents
(2)
Inclusive of stock-based compensation expenses of $2.9
million, $0.8 million, $1.1 million, $0.8 million and $2.9 million
during the years ended March 31, 2007, 2006, 2005, 2004 and
2003 respectively.
As at March 31,
2007
2006
2005
2004
2003
(dollars in millions)
Balance sheet data
Cash and cash equivalents
$
152.2
$
292.8
$
129.8
$
86.7
$
62.2
Investments in bank deposits
767.6
403.7
411.6
332.1
259.4
Total assets
1,624.1
1,181.2
884.1
713.8
561.7
Total long-term debt, excluding current
portion
22.2
17.9
1.2
1.8
1.7
Preferred stock of subsidiary
(1)
—
20.0
20.0
10.0
—
Total shareholders' equity
1,371.0
994.4
767.9
633.9
487.7
Capital stock
(2)
587.2
481.5
449.5
431.7
421.6
(1)
In fiscal 2007, 50% of preferred stock of subsidiary has become mandatorily
redeemable at the target date of May 21, 2007 and the balance 50% got converted into equity
shares of Nipuna based on the terms of the existing subscription agreement.
(2)
Includes common stock and additional paid-in capital but excludes shares held by
Satyam Associate Trust or SC Trust
Risk Factors
The following factors
,
together with the other information contained in this Annual Report and
other reports and documents submitted to, or filed with, the SEC, could affect our results. If any
of the following risks actually occur, our company could be seriously harmed, and the market price
of our ADSs could decline.
Risks Related to Our Overall Operations
Our revenues and profitability are difficult to predict and can vary significantly from period to
period which could cause our share price to decline significantly.
Our revenues and profitability have grown rapidly in recent years and may fluctuate
significantly in the future from period to period. Therefore, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and should not be relied
upon as an indication of our future performance. The quarterly fluctuation of revenues is primarily
because we derive our revenues 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 several
people for only 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. Furthermore,
increasing wage pressures, employee attrition, pressure on billing rates, the time and expense
needed to train and productively utilize new employees and changes in the proportion of services
rendered offshore can affect our profitability in any period. There are also a number of factors,
other than our performance, that are not within our control that could cause fluctuations in our
operating results from period to period. These include (i) the duration of tax holidays or tax
exemptions and the availability of other Government of India or GoI incentives; (ii) currency
fluctuations, particularly when the rupee appreciates in value against the U.S. dollar, since the
majority of our revenues are in U.S. dollars and a significant part of our costs are in rupees; and
(iii) other general economic and political factors. 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. If this were to occur,
6
Table of Contents
the share price of our equity shares and our ADSs would likely decline significantly.
Any inability to manage our rapid growth could disrupt our business and reduce our profitability.
We have
experienced significant growth in recent periods. In fiscal 2007, our total revenues
increased by 33.3% as compared to fiscal 2006, and in fiscal 2006, our total revenues increased by
38.1% as compared to fiscal 2005. As of March 31, 2007, we had 39,018 employees, whom we refer to
as associates, worldwide as compared to 28,624 associates as of March 31, 2006. In addition, we are
continuing our geographical expansion. We have offshore facilities in India and overseas facilities
located in Australia, Canada, China, Hungary, Japan, Malaysia, Singapore, United Arab Emirates,
United Kingdom and United States. In addition, we have sales and marketing offices located in
Canada, Germany, Italy, the Netherlands, Spain, Sweden, United Kingdom and United States and sales
and marketing offices located in the rest of the world. We have
incurred $81.5 million of capital expenditures in fiscal
2007 and in fiscal 2008 we expect to incur capital expenditure of approximately $100.0 million to finance
the construction of new facilities and the expansion of our existing facilities in our offshore
centers and to establish offsite centers outside of India.
We expect our growth to place significant demands on our management and other resources and to
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;
•
preserving our culture and values and our entrepreneurial environment; and
•
developing and improving our internal administrative infrastructure, particularly our
financial, operational, communications and other internal systems
Our inability to manage our growth effectively could disrupt our business and reduce our
profitability.
The current economic environment, pricing pressure and rising wages in India have negatively
impacted our revenues and operating results.
Spending
on information technology, or IT, in most parts of the world has been increasing after a two-year decreasing
trend due to a challenging global economic environment. We do experience pricing pressures from our
customers, which can negatively impact our operating results. If economic growth slows, our
utilization and billing rates for our associates could be adversely affected which may result in
lower gross and operating profits.
Wage costs in India, including in the IT services industry, have historically been significantly
lower than wage costs in the United States and Europe for comparably skilled professionals, which
has been one of our competitive advantages. However, large companies are establishing offshore
operations in India, resulting in wage pressures for Indian companies, which may prevent us from
sustaining this competitive advantage and may negatively affect our profit margins. Wages in India
are increasing at a faster rate than in the United States, which could result in increased cost of
IT professionals, particularly project managers and other mid-level professionals. We may need to
increase the levels of our employee compensation more rapidly than in the past to remain
competitive with other employers, or seek to recruit in other low labor cost jurisdictions to keep
our wage costs low. Compensation increases may result in a material adverse effect on our financial
performance.
7
Table of Contents
Our business will suffer if we fail to anticipate and develop new services and enhance existing
services in order to keep pace with rapid changes in technology and the industries on which we
focus.
The IT services market is characterized by rapid technological change, evolving industry standards,
changing customer preferences and new product and service introductions. Our future success will
depend on our ability to anticipate these advances and develop new product and service offerings to
meet customer needs and complement our offerings of end-to-end IT services. For example, we have
invested significant resources in research and development efforts, such as in our enterprise
business solution laboratory and grid computing laboratory, in order to continually develop
capabilities to provide new services to our customers. Should we fail to develop such capabilities
on a timely basis to keep pace with the rapidly changing IT market or if the services or
technologies that we develop are not successful in the marketplace, our business and profitability
will suffer and it is unlikely that we would be able to recover our research and development costs.
Moreover, products, services or technologies that are developed by our competitors may render our
services non-competitive or obsolete.
Our revenues are highly dependent on customers primarily located in the United States and customers
concentrated in certain industries, and economic slowdowns or factors that affect the economic
health of the United States and our customers' industries may affect our business.
In fiscal 2007, fiscal 2006 and fiscal 2005, approximately 63.2%, 64.9%, and 68.3% respectively, of
our total revenues were derived from the United States. For the same periods, we earned 27.0%,
28.6%, and 29.2% of our IT revenues from the manufacturing industry and 17.5%, 18.5%, and 17.8% of
our IT revenues from the banking and finance industry respectively.
If the growth in the United States does not continue, our customers may reduce or postpone their
technology spending significantly, which may in turn lower the demand for our services and
negatively affect our revenues and profitability. Further, any significant decrease in the growth
of the manufacturing or banking and finance industries, or significant consolidation in these
industries, or other industry segments on which we focus, may reduce the demand for our services
and negatively affect our revenues and profitability.
Recently, some countries and organizations have expressed concerns about a perceived
association between offshore outsourcing and the loss of jobs. In the United States, in particular,
there has been increasing political and media attention on these issues following the growth of
offshore outsourcing. Any changes in existing laws or the enactment of new legislation restricting
offshore outsourcing may adversely impact our ability to do business in the United States, which is
the largest market for our services. In the recent past, some U.S. states have proposed legislation
restricting government agencies from outsourcing their back office processes and IT solutions work
to companies outside the United States or have enacted laws that limit or to discourage such
outsourcing. Such laws restrict our ability to do business with U.S. government- related entities.
It is also possible that U.S. private sector companies working with these governmental entities may
be restricted from outsourcing projects related to government contracts or may face disincentives
if they outsource certain projects. Any of these events could adversely affect our revenues and
profitability. Similarly, legislation came into effect in the United Kingdom in April 2006
requiring offshore outsourcing providers in certain circumstances to compensate U.K. employees
for loss of jobs arising from the offshore migration of business processes.
We face intense competition in the IT services and BPO markets which could prevent us from
attracting and retaining customers and could reduce our revenues.
The markets for IT services and business process outsourcing, or BPO, are rapidly evolving and
highly competitive, and we expect that competition will continue to intensify. We face
competition in India and elsewhere from a number of companies, including:
•
consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;
•
divisions of large multinational technology firms such as Hewlett-Packard and IBM;
•
IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM Global Services; and
•
offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy Services Limited and Wipro Limited
We also compete with software firms such as Oracle and SAP, service groups of computer equipment
companies, in-house IT
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departments of large corporations, programming companies and temporary staffing firms. Nipuna
Services Limited or Nipuna, our majority-owned subsidiary, through which we provide BPO services, faces competition from firms
like Infosys BPO Limited formerly known as Progeon Limited and Wipro BPO, formerly known as Wipro
Spectramind.
In addition, we have agreed not to compete with Nipuna as part of the investor rights and
securities subscription agreements which we have entered into with Nipuna's two other investors.
Pursuant to these agreements, we and our affiliates are restricted from engaging in activities that
are or could directly or indirectly be competitive with the business of Nipuna. Such activities
include among others providing BPO services, soliciting existing or prospective customers of Nipuna
to obtain the services offered by Nipuna from other service providers and investing in companies
engaged in the same or similar business as Nipuna. These non-compete restrictions apply until the
investors redeem all of their preference shares in Nipuna or their equity interest in Nipuna upto 5%.
As a consequence, we currently offer and plan to continue to offer BPO services only through
Nipuna. We cannot assure you that these non-compete restrictions will not adversely affect our
ability to attract and retain customers in this competitive market or that they will not adversely
affect our revenues.
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 than we have and
generate greater revenues than we do, and we cannot
assure you that we will be able to compete 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.
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 2007, fiscal 2006 and fiscal 2005, our largest customer together with its affiliates,
accounted for 6.3% 8.8%, and 10.8% respectively, of our total revenues. In fiscal 2007, fiscal 2006
and fiscal 2005, our second largest customer accounted for 4.4%, 5.1% and 7.4% respectively, of our
total revenues. In fiscal 2007, fiscal 2006 and fiscal 2005, our five largest customers accounted
for 21.0%, 24.2% and 29.2% 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.
There are a number of factors other than our performance that could cause the loss of a
customer and that may not be predictable. In certain cases, we have significantly reduced the
services provided to a customer when the customer either changed its outsourcing strategy by moving
more work in-house or replaced its existing software with packaged software supported by the
licensor. Some customers could also potentially develop competing offshore IT centers in India and
as a result, work that may otherwise be outsourced to us may instead be performed in-house. Reduced
technology spending in response to a challenging economic or competitive environment may also
result in lower revenues or loss of a customer. If we lose one of our major customers or one of our
major customers significantly reduces its volume of business with us, our revenues and
profitability could be reduced.
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 offer a portion of our services on a fixed-price
basis, along-with a time-and-materials basis. In fiscal 2007, fiscal 2006 and fiscal 2005, we
derived 39.0%, 35.1%, and 34.2% respectively, of our 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. We
may also have to pay damages to our customers for completion delays. Many of these project risks
may be beyond our control. Our failure to accurately estimate the resources and time required for a
project, future 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.
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Our customers may terminate projects before completion or choose not to renew contracts, many of
which are terminable at will, which could adversely affect our profitability.
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. Any failure to meet a customer's expectations could result in a
cancellation or non-renewal of a contract. Additionally, our contracts with customers are typically
limited to a specific project and not any future work. Our multi-year contracts will be due for
renewal from time to time, and we cannot assure you that our customers will choose to renew such
contracts for a similar or longer duration, on terms as favorable as their current terms or at all.
Other than our performance, there are also a number of factors 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 to one of our competitors, or replace their existing
software with packaged software supported by licensors, any of which could reduce our revenue and
profitability.
A number of our customer contracts are conditioned upon our performance, which, if unsatisfactory,
could result in less revenue than previously anticipated.
We have not yet offered any performance-based or variable pricing terms to our customers,
however we continue to consider the viability of introducing performance-based or variable-pricing
contracts. Should we use value-based pricing terms, it will become more difficult for us to predict
the revenues we will receive from our customer contracts, as such contracts would likely contain a
higher number of contingent terms for payment of our fees by our customers. Our failure to meet
contract goals or a customer's expectations in such performance-based contracts may result in lower
revenues, and a less profitable or an unprofitable engagement.
Some of our multi-year customer contracts contain certain provisions which, if triggered, could
result in lower future revenues and profitability under the contract.
Some of our multi-year customer contracts contain benchmarking provisions, most favored customer
clause and/or provisions restricting personnel from working on projects of our customers'
competitors. Benchmarking provisions allow a customer in certain circumstances to request a
benchmark study prepared by an agreed upon third-party comparing our pricing, performance and
efficiency gains for delivered contract services with that of an agreed list of other service
providers for comparable services. Based on the results of the benchmarking study and depending on
the reasons for any unfavorable variance, we may be required to make improvements in the services
we provide or to reduce the pricing for services to be performed under the balance term of the
contract, which may result in lower future revenues and profitability under the contract.
Most favored customer clauses generally provide that if, during the term of the contract, we were
to offer similar services to any other customers on terms and conditions more favorable than those
provided in such contract, we would be obligated to offer equally favorable terms and conditions to
the customer. As pricing pressures increase, some customers may demand price reductions or other
pricing incentives. Any pricing reduction agreed to in a subsequent contract may require us to
offer equally favorable terms to other customers with whom we have a most favored contract under
the remaining term of contracts with those customers which may result in lower future revenues and
profitability.
The contracts containing benchmarking provisions/most favored customer/and other similar clauses
impact new projects or future services on existing projects and do not impact the terms of
previously delivered projects/services. The most favored customer clause provides that the Company
will offer the best pricing to a new customer if they are identified as a most favored customer. If
an existing customer is granted a most favored customer status, the revised terms would apply to
the services rendered to such customer after the grant of the most favored customer status. This
clause is triggered if a similar contract is negotiated at a lower rate with a new / existing
customer having similar volume, skill set, services offered, geography and domain. The reduction in
the rates for a most favored customer would be applicable only from the time the Company offers a
lower rate to any other customer who enters into a contract similar in nature to the most favored
customer.
Historically no delivery / price adjustments have been required to be made on account of any of
these clauses and we do not anticipate that these clauses will have a material future effect on our
financial condition and results of operations.
A number of our customer contracts provide that, during the term of the contract and for a certain
period thereafter ranging from six to
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twelve months, we may not provide similar services to any of their competitors using the same
personnel. This restriction may hamper our ability to compete for and provide services to customers
in the same industry, which may result in lower future revenues and 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 largely 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 that 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 2007, fiscal 2006 and fiscal 2005, we experienced associate attrition in the
IT services segment at a rate of 15.7%, 19.2%, and 16.5% respectively. Any increase in our
attrition rates, particularly the attrition rate of experienced software engineers, project
managers and project leaders, could 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 retrain our technical associates to keep pace with continuing
changes in evolving technologies and changing customer preferences. Should we be unable to
successfully recruit, retain, redeploy or retrain our technical associates, we may become less
attractive to potential customers and may fail to satisfy the demands of existing customers, which
would result in a decrease in revenues and profitability.
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 IT centers in Australia,
Canada, China, Hungary, Japan, Malaysia, Singapore, United Arab Emirates, United Kingdom and United
States and plan to open additional international facilities. Because of our limited experience in
managing and operating facilities outside of India, we are subject to additional risks related to
our international expansion strategy, including risks related to complying with a wide variety of
national and local laws, restrictions on the import and export of certain technologies and multiple
and possibly overlapping tax structures. In addition, we may face competition in other countries
from companies that may have more experience with local conditions or with international operations
generally. We may also face difficulties integrating new facilities in different countries into our
existing operations, as well as integrating employees that we hire in different countries into our
existing corporate culture.
We are investing substantial cash assets in new facilities and physical infrastructure and our
profitability could be reduced if our business does not grow proportionately.
As of March 31, 2007, we had contractual commitments of approximately $38.2 million for capital
expenditures, and we estimate spending a further $100.0 million in fiscal 2008. We may encounter
cost overruns or project delays in connection with new facilities. These expansions will
significantly increase our fixed costs. If we are unable to grow our business and revenues
proportionately, our profitability will be reduced.
Restrictions on immigration may affect our ability to compete for and provide services to customers
in the United States and in other countries, which could hamper our growth and cause our revenues
to decline.
The vast majority of our associates are Indian nationals. Most of our projects require a portion of
the work to be completed at the customer's location which is typically outside India. The ability
of our associates to work in the United States, Europe and in other countries outside India depends
on the ability to obtain the necessary visas and work permits. As of March 31, 2007, the majority
of our associates located outside India was in the United States and held either H-1B visas or L-1
visas, allowing the employee to remain in the United States during the term of the work permit only
temporarily. Although there is no limit to new L-1 visas, there is a limit to the aggregate number
of new H-1B visas that the U.S. Citizenship and Immigration Services, or CIS, may approve in any
government fiscal year. The 2005 Appropriations Bill further precludes foreign companies
from obtaining L-1 visas for employees with specialized knowledge: (1) if such employees will be
stationed primarily at the worksite of another company in the U.S. and the employee will not be
controlled and supervised by his employer, or (2) if the placement is essentially an arrangement to
provide labor for hire rather than in connection with the employee's specialized knowledge. The CIS
has also issued new guidelines to more closely verify the qualifying criteria to restrict the
liberal usage of L1visas. Immigration laws in the United States may also require us to meet certain
levels of compensation and to comply with other legal requirements including labor certifications
as a condition to obtaining or
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maintaining work visas for our associates working on H1B in the United States. The CIS announced on
April 3, 2007 that it had received sufficient applications to fill up all 65,000 visas that were
available for the year.
Immigration laws in the United States and in other countries are subject to legislative change, as
well as to variations in standards of application and enforcement due
to political forces and labor
and economic conditions. It is difficult to predict the political and economic events that could
affect immigration laws, or the restrictive impact they could have on obtaining or monitoring work
visas for our employees. Our reliance on work visas for a significant number of associates makes us
particularly vulnerable to such changes and variations as it affects our ability to staff projects
with associates who are not citizens of the country where the work is to be performed. As a result,
we may not be able to obtain a sufficient number of visas for our associates or may encounter
delays or additional costs in obtaining or maintaining the condition of such visas.
We may engage in acquisitions, strategic investments, strategic partnerships or alliances or other
ventures that may or may not be successful.
We may acquire or make strategic investments in complementary businesses, technologies,
services or products, or enter into strategic partnerships or alliances with third parties in order
to enhance our business. It is possible that we may not be able to identify suitable acquisitions
targets and candidates for strategic investments or partnerships, or if we do identify such targets
or candidates, we may not be able to complete those transactions on terms commercially acceptable
to us, or at all. The inability to identify suitable acquisition targets or investments or the
inability to complete such transactions may affect our competitiveness and our growth prospects. As
of the date of this document, we have no agreements or understanding to enter into any material
acquisition, investment, partnership, joint venture or alliance.
If we acquire a company, we could have difficulty in assimilating that company's personnel,
operations, technology and software. In addition, the key personnel of the acquired company may
decide not to work for us. In some cases, we could have difficulty in integrating the acquired
products, services or technologies into our operations. These difficulties could disrupt our
ongoing business, distract our management and employees and increase our expenses.
We may make strategic investments in early-stage technology start-up companies in order to gain
experience in or exploit niche technologies. However, our investments may not be successful. The
lack of profitability of any of our investments could have a material adverse effect on our
operating results.
System failure could disrupt our business.
To deliver our services to our customers, we must maintain a high speed network of satellite, fiber
optic and land lines and an active voice and data communications 24 hours a day between our main
offices in Hyderabad, our other IT centers in India and globally and the offices of our customers
worldwide. Any systems failure or a significant lapse in our ability to transmit voice and data
through satellite and telephone communications could result in lost customers and curtailed
operations which would reduce our revenue and profitability.
We may be liable to our customers for damages caused by disclosure of confidential information or
system failure.
We are often required to collect and store sensitive or confidential customer and consumer
data. Many of our customer agreements do not limit our potential liability for breaches of
confidentiality. If any person, including any of our employees, penetrates our network security or
misappropriates sensitive data, we could be subject to significant liability from our customers or
from our customers' clients for breaching contractual confidentiality provisions or privacy laws.
Unauthorized disclosure of sensitive or confidential customer and consumer data, whether through
breach of our computer systems, system failure or otherwise, could damage our reputation and cause
us to lose customers. Many of our contracts involve projects that are critical to the operations of
our customers' businesses and provide benefits which may be difficult to quantify. Any failure in a
customer's system or breaches of security could result in a claim for substantial damages against
us, regardless of our alleged responsibility for such failure. Generally, we attempt to limit our
contractual liability for consequential damages in rendering our services; however these
limitations on liability may be unenforceable in some cases, or may be insufficient to protect us
from liability for damages. In respect of some of our contracts, we
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sub-contract a part of the work to certain sub-contractors. We are liable to our customers for any
breach or non-performance by our sub-contractors under the sub-contracts. We maintain general
liability insurance coverage, including coverage for errors and omissions; however this coverage
may not continue to be available on reasonable terms and may be unavailable in sufficient amounts
to cover one or more large claims. Further, an insurer might disclaim coverage as to any future
claim. A successful assertion of one or more large claims against us that exceeds our available
insurance coverage or results in changes in our insurance policies, including premium increases or
the imposition of a large deductible or co-insurance requirement, could adversely affect our
operating results and profitability.
Our success depends in large part upon our management team and key personnel and our ability to
attract and retain them.
We are highly dependent on the senior members of our management team. Our future performance
will be affected by any disruptions in the continued service of these persons. We do not maintain
key man life insurance for any of the senior members of our management team or other key personnel,
except for our chief executive officer. Competition for senior management in our industry is
intense, and we may not be able to retain such senior management personnel or attract and retain
new senior management personnel in the future. The loss of any member of our senior management team
or other key personnel may have a material adverse effect on our business, results of operations
and financial condition.
Our insiders are significant shareholders, are able to influence the election of our board and
may have interests which conflict with those of our shareholders or holders of our ADSs.
Our executive officers and directors, together with members of their immediate families,
beneficially owned, in the aggregate approximately 0.39% of our outstanding equity shares as of
March 31, 2007. In addition, two of our executive directors control SRSR Holdings Private Limited,
which holds approximately 8.38% of our outstanding equity shares as of March 31, 2007. As a
result, acting together, this group has the ability to exercise influence over most matters
requiring our shareholders' approval, including the election and removal of directors and
significant corporate transactions. These insider shareholders may exercise influence even if they
are opposed by our other shareholders. Without the consent of these insider shareholders, we could
be delayed or prevented from entering into transactions (including the acquisition of our company
by third parties) that may be viewed as beneficial to us and our shareholders.
Our financial results are impacted by the financial results of entities that we do not control.
As of March 31, 2007, we have a significant non-controlling interests in Satyam Venture Engineering
Services Private Limited, or Satyam Venture, and CA Satyam ASP Private Limited, or CA Satyam, that
are accounted for under U.S. GAAP using the equity method of accounting. Under this method, we are
obligated to report as "Equity in earnings (losses) of associated companies, net of taxes" a
pro-rata portion of the financial results of any such company in our statement of operations even
though we do not control such company but have the ability to exercise certain influence over their
operating and financial policies. Thus, our reported results of operations can be higher or lower
depending on the results of Satyam Venture and CA Satyam or other companies in which we may make
similar investments even though we may have only a limited ability to influence their activities.
We may also be required to record additional impairment charges in their carrying value if we deem
the investment to be impaired due to adverse events, many of which are outside of our control, on
their business, results of operations and financial condition in future periods. Currently, we make
estimates in the preparation of financial statements including assessing goodwill for impairment.
Changes in such estimates resulting from events, many of which are outside of our control, may
result in the impairment of goodwill which would negatively impact our net income. Such impact on
net income may result in a reduction of the market value of our shares.
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The value of our interest in our subsidiaries may decline.
Nipuna, our subsidiary, has experienced losses during each year since its inception and it is
likely that it will continue to experience such losses in the future. Our recently acquired
subsidiaries, Citisoft and Knowledge Dynamics have also experienced losses since our acquisition
and they may also incur losses that might have an adverse effect on our operating results in future
periods.
Stock-based compensation expenses may significantly reduce our net income.
Although we have suspended, except in certain cases, new grants of stock options under ASOP – B and
ASOP – ADS as of April 1, 2005, our reported net income 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, some of which have outstanding obligations to grant options in future,
employees are typically granted warrants or options to purchase equity shares at a substantial
discount to the current market value. Effective April 1, 2006, we adopted the fair value
recognition provisions of Statement of Financial Accounting Standards
or SFAS No. 123 (revised
2004), "Share-Based Payment" or SFAS 123R. We adopted SFAS 123R using the modified prospective
transition method, which required the application of the accounting standard as of April 1, 2006,
the first day of our fiscal year 2007. Under this transition method, stock-based compensation
expensed for the year ended March 31, 2007 includes
a)
compensation expense for all stock-based
compensation awards granted prior to, but not yet vested as of April 1, 2006, based on the
grant-date fair value estimated in accordance with the original provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" or SFAS 123 and
b)
Stock-based compensation expenses
for all stock-based compensation awards granted after April 1, 2006 is based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified
prospective transition method, our consolidated financial statements for the prior periods have not
been restated to reflect, and do not include, the impact of SFAS 123R. Depending on the grant date
fair value and future grants are made, amortization of deferred stock-based compensation may
contribute to reducing our operating income and net income. Our subsidiaries also have stock option
schemes which may generate stock-based compensation expenses and
which have and in the past reduced, and may in the future reduce our operating
income and net income.
Compliance with new and changing corporate governance and public disclosure requirements adds
uncertainty to our compliance policies and increases our costs of compliance.
Changing laws, regulations and standards relating to accounting, corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002, the SEC, regulations, the New York Stock Exchange or NYSE, rules, the Securities and
Exchange Board of India, or SEBI, rules, and Indian stock market listing regulations are creating
uncertainty for companies like ours. These new or changed laws, regulations and standards may lack
specificity and are subject to varying interpretations. Their application in practice may evolve
over time, as new guidance is provided by regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher costs of compliance as a result of
ongoing revisions to such corporate governance standards.
In
particular, our efforts to continue to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and
the related regulations regarding our required assessment of our internal controls over financial
reporting and our external auditors' audit of that assessment requires the commitment of
significant financial and managerial resources. We consistently assess the adequacy of our internal
controls over financial reporting, remediate any control deficiencies that may be identified, and
validate through testing that our controls are functioning as documented. While currently we do not
have any material weaknesses there can be no assurance that future tests will not result in our
independent auditors being unable to issue unqualified attestation reports on management's
assessment on the operating effectiveness of our internal controls over financial reporting.
Additionally, under revised corporate governance standards adopted by the Bombay Stock
Exchange Ltd, or BSE, and the National Stock Exchange of India Limited, or NSE, which we
collectively refer to as the Indian Stock Exchanges, we have been required to comply with
additional standards from December 31, 2005. These standards include a certification by our chief
executive officer and chief financial officer that they have evaluated the effectiveness of our
internal control systems and that they have disclosed to our auditors and our audit committee any
deficiencies in the design or operation of our internal controls of which they may become aware, as
well as any steps taken or proposed to resolve the deficiencies.
We are committed to maintaining high standards of corporate governance and public disclosure,
and our efforts to comply with evolving laws, regulations and standards in this regard have
resulted in, and are likely to continue to result in, increased general and
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administrative expenses and a diversion of management time and attention from revenue-generating
activities to compliance activities. In addition, the new laws, regulations and standards regarding
corporate governance may make it more difficult for us to obtain director and officer liability
insurance. Further, our board members, chief executive officer and chief financial officer could
face an increased risk of personal liability in connection with their performance of duties. As a
result, we may face difficulties attracting and retaining qualified board members and executive
officers, which could harm our business. If we fail to comply with new or changed laws, regulations
or standards of corporate governance, our business and reputation may be harmed.
As a foreign private issuer, we are subject to different U.S. securities laws and rules than a
domestic issuer, which may, among other things, limit the information available to holders of our
securities.
As a foreign private issuer, we are subject to requirements under the Securities Act of 1933, as
amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the
Exchange Act, which are different from the requirements applicable to domestic U.S. issuers. For
example, our officers, directors and principal shareholders are exempt from the reporting and
"short-swing" profit recovery provisions of Section 16 of the Exchange Act and the rules there
under with respect to their purchases and sales of our equity shares and/or ADSs. The periodic
disclosure required of foreign private issuers is more limited than the periodic disclosure
required of domestic U.S. issuers and therefore there may be less publicly available information
about us than is regularly published by or about U.S. public companies in the United States.
Terrorist attacks or a war could adversely affect our business, results of operations and financial
condition.
Terrorist attacks, such as the attacks of September 11, 2001 in the United States, and other acts
of violence or war, such as the continuing conflict in Iraq, have the potential to have a direct
impact on our customers. To the extent that such attacks affect or involve the United States, our
business may be significantly impacted, as the majority of our revenues are derived from customers
located in the United States. In addition, such attacks may make travel more difficult, may make it
more difficult to obtain work visas for many of our associates who are required to work in the
United States, and may effectively curtail our ability to deliver our services to our customers.
Such obstacles to operate our business may increase our expenses and negatively affect the results
of our operations. Many of our customers visit several IT services firms, including their offshore
facilities, prior to reaching a decision on vendor selection. Terrorist threats, attacks or war
could make travel to our facilities more difficult for our customers and may delay, postpone or
cancel decisions to use our services.
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, GoI policies, including
taxation policies, as well as political, social and economic developments affecting India.
The GoI has recently taken actions to curtail or eliminate tax benefits that we have historically
benefited from.
The statutory corporate income tax rate in India is currently 30.0%. This tax rate is presently
subject to a 10.0% surcharge. The amount of tax and surcharge payable is further subject to a 2.0%
education cess, resulting in an effective tax rate of 33.66%. We benefit from tax incentives
provided to software entities such as an exemption from payment of Indian corporate income taxes
until the earlier of fiscal 2009 or 10 consecutive years of operations for software development
facilities designated as "Software Technology Parks," or STP units. The benefits of this tax
incentive have historically resulted in our effective tax rate being well below statutory rates.
The exemption for our STP units was reduced from 100.0% to 90.0% for fiscal 2003. The exemption
for two of our STP units in Hyderabad and one of our STP units in Bangalore and one each in Hyderabad,
Chennai, Pune and Bhubaneswar expired at the end of fiscal 2005, fiscal 2006 and fiscal 2007
respectively and the exemption for the balance STP units will expire in fiscal 2008 and fiscal
2009. We also earn certain other foreign income and domestic income, which is taxable irrespective
of the above tax exemption.
When our tax holidays expire or terminate, our tax expense will materially increase, reducing our
profitability. We cannot assure you as to what action the present or future governments of India
will take regarding tax incentives for the IT industry.
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Foreign investment restrictions under Indian law may adversely impact the value of our ADSs,
including, for example, restrictions that limit your ability to reconvert equity shares into ADSs,
which may cause our equity shares to trade at a discount or premium to the market price of our
ADSs.
Our equity shares are listed and traded on the Indian Stock Exchanges, and they may trade on these
stock exchanges at a discount or premium to the ADSs traded on the NYSE, in part because of
restrictions on foreign ownership of the underlying shares.
Our ADSs are freely convertible into our equity shares under the deposit agreement governing their
issuance, or the Deposit Agreement. The Reserve Bank of India, or RBI, prescribes fungibility
regulations permitting, subject to compliance with certain terms and conditions, the recon version
of equity shares to ADSs provided that such equity shares are purchased from an Indian Stock
Exchange through stock brokers and the actual number of ADSs outstanding after such recon version
is not greater than the original number of ADSs outstanding. If you elect to surrender your ADSs
and receive equity shares, you will only be able to trade those equity shares on an Indian Stock
Exchange and, under present law, it is unlikely you will be permitted to reconvert those equity
shares to ADSs. Additionally, investors who exchange ADSs for the underlying equity shares and are
not holders of record will be required to declare to us details of the holder of record, and the
holder of record will be required to disclose the details of the beneficial owner. Any investor who
fails to comply with this requirement may be liable for a fine of up to Rs.1,000 for each day such
failure continues. Such restrictions on fungibility of the underlying equity shares to ADSs may
cause our equity shares to trade at a discount or premium to the ADSs.
The sale of equity shares underlying the ADSs by a person not resident in India to a resident
of India does not require the prior approval of the RBI, provided such sales are effected through
the Indian Stock Exchanges. Any sale of such underlying equity shares by a person not resident in
India to a resident of India outside of the Indian Stock Exchanges can, however, be completed
without prior RBI approval, provided such equity shares are transferred based on a pricing formula
established by the Indian foreign exchange laws which set a maximum price requirement for sale of
such equity shares.
Regional conflicts or natural disasters in South Asia and elsewhere could adversely affect the
Indian economy, disrupt our operations and cause our business to suffer.
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 there have been
military confrontations between India and Pakistan that have occurred in the region of Kashmir and
along the India-Pakistan border. There has also been a recent increase in the incidence of
terrorist attacks in India, including bombings at Delhi and Mumbai. Military activity or terrorist
attacks in the future could influence the Indian economy by disrupting communications and making
travel more difficult and such political tensions could create a perception that investments in
Indian companies involve higher degrees of risk. This, in turn, could have a material adverse
effect on the market for securities of Indian companies, including our equity shares and our ADSs,
and on the market for our services. In addition, as an international company, our offshore and
onsite operations may be impacted by natural disasters such as earthquakes, tsunamis, floods,
disease and health epidemics. In December 2004, certain parts of India were severely affected by a
tsunami triggered by an earthquake in the Indian Ocean, and in October 2005, certain parts of
northern India, Pakistan and Afghanistan were severely devastated by a major earthquake. Though our
operations were not affected by these disasters, we cannot guarantee that in the future our
operations will not be affected by the effect such natural disasters may have on the economies of
India and other countries in the region.
Political instability could seriously harm business and economic conditions in India generally and
our business in particular.
During the past decade, the GoI 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. The general elections in 2004 for the lower house of the Indian Parliament
resulted in no party winning an absolute majority and a coalition government has been formed. We
cannot assure you that these liberalization policies will continue in the future. Government
corruption scandals and protests against privatization could slow down the pace of liberalization
and deregulation. 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.
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Currency exchange rate fluctuations may affect the value of our ADSs and our financial condition.
Our functional currency is the Indian rupee, although we transact a major portion of our
business in U.S. dollars and several other currencies and accordingly face foreign currency
exposure through our sales in the United States and elsewhere and purchases from overseas suppliers
in U.S. dollars and other currencies. Historically, we have held a substantial majority of our cash
funds in rupees. Accordingly, changes in exchange rates may have a material adverse effect on our
revenues, other income, cost of services sold, gross margin and net income, which may in turn have
a negative impact on our business, operating results and financial condition.
The exchange rate between the rupee and the U.S. dollar has changed substantially in recent years
and may fluctuate substantially in the future. In fiscal 2007, fiscal 2006, and fiscal 2005, our
U.S. dollar-denominated revenues represented 74.7%, 77.6%, and 81.8% 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, if any.
We have sought to reduce the effect of exchange rate fluctuations on our operating results by
entering into foreign exchange forward and options contracts to cover a portion of outstanding
accounts receivable of Satyam Computer Services. As of March 31, 2007 and 2006, we had outstanding
forward and options contracts in the amount of $ 452.6 million, and $216.0 million respectively.
We may not be able to purchase contracts adequate to insulate ourselves from foreign exchange
currency risks. Additionally, the policies of the RBI may change from time to time which may limit
our ability to hedge our foreign currency exposures adequately.
Fluctuations in the exchange rate between the rupee and the U.S. dollar will also affect the
U.S. dollar conversion by our 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 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 our 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.
Our ability to acquire companies organized outside India as part of our growth strategy depends on
the approval of the GoI and/or the RBI and failure to obtain this approval could negatively impact
our business.
We have developed a growth strategy based on, among other things, expanding our presence in
existing and new markets and selectively pursuing joint venture and acquisition opportunities.
Foreign exchange laws in India presently permit Indian companies to acquire or invest in foreign
companies without any prior governmental approval if the transaction amount does not exceed 200.0%
of the net worth of the foreign company as of the date of its most recent audited balance sheet. If
consideration for the transaction is paid out of the proceeds of an American Depositary Receipt, or
ADR, or Global Depositary Receipt, or GDR, sale, Indian exchange control laws do not impose any
investment limits. Acquisitions in excess of the 200% net worth threshold require prior RBI
approval. It is possible that any required approval from the RBI may not be obtained. Our failure
to obtain approvals for acquisitions of companies organized outside India may restrict our
international growth, which could negatively affect our business and prospects.
If we are unable to protect our intellectual property rights, or if we infringe on the intellectual
property rights of others, our business may be harmed.
The laws of India do not protect intellectual property rights to the same extent as the laws in the
United States. Further, the global nature of our business makes it difficult for us to control the
ultimate destination of our products and services. 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
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by or assigned to our customers, and we do not retain an interest in such software and
deliverables.
We have registered "Satyam" and other related marks in India and the United States under certain
classes and have applied for the registration of such marks in other jurisdictions where we
carry on business. 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 confidential and
proprietary information. We cannot assure you that the steps taken by us in this regard will be
adequate to prevent misappropriation of confidential and 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 reasonable commercial 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 the 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.
Indian laws limit our ability to raise capital outside India and may limit the ability of others to
acquire us, which could prevent us from operating our business or entering into a transaction that
is in the best interests of our shareholders.
Presently, Indian technology companies such as ours are able to raise capital outside of India
without the prior approval of any Indian governmental authority through an ADR or GDR issuance or
an issuance of convertible debt securities, subject with respect to convertible debt issuances to a
limit of $500 million in any fiscal year. Changes to Indian foreign exchange laws may create
restrictions on our capital raising abilities. For example, a limit on the foreign equity ownership
of Indian technology companies may constrain our ability to seek and obtain additional equity
investment by foreign investors. In addition, these restrictions, if applied to us, may prevent us
from entering into certain transactions, such as an acquisition by a non-Indian company, which
might otherwise be beneficial for us and the holders of our equity shares and ADSs.
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. The high and low prices of our shares on the BSE
from fiscal 2003 until the
latest practicable date are set forth in the table below.
High
Low
Fiscal Year
Rs.
$ Equivalent
Rs.
$ Equivalent
2003
145.9
3.1
87.6
1.8
2004
195.5
4.5
63.7
1.5
2005
221.0
5.1
125.0
2.9
2006
431.0
9.7
182.2
4.1
2007
524.9
12.2
270.5
6.3
2008(Through April
20, 2007)
495.9
11.9
435.0
10.2
On April 20, 2007
,
the closing price of our shares on the BSE was Rs.476.20. For comparison
purposes, these prices have been adjusted to give effect to our October 10, 2006 two-for-one stock
split (in the form of stock dividend). The prices of our shares have been translated into U.S.
dollars based on the noon-buying rate as certified by the Federal Reserve Bank of New York on the
last date of each period presented.
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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. Moreover, 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.
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. 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, 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, may 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 was founded on a claim which breached the laws of India.
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 from 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
NSE on the date the Depositary advises the custodian to exchange receipts 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 our Depositary to
the custodian. With effect from October 1, 2004, any gains realized on the sale of listed equity
shares held for more than 12 months to an Indian resident, or a non-resident investor in India,
will not be subject to Indian capital gains tax if the securities transaction tax has been paid on
the transaction. Investors are advised to consult their own tax advisors 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 other 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. 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.
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Risk Related to our ADSs and our Trading Market
Historically, our ADSs have traded at a significant premium to the trading prices of our underlying
equity shares, a situation which may not continue.
Historically, our ADSs have traded on the NYSE at a substantial premium to the trading prices of
our underlying equity shares on the Indian Stock Exchanges. We believe that this price premium has
resulted from the relatively small portion of our market capitalization represented by ADSs,
restrictions imposed by Indian law on the conversion of equity shares into ADSs, and an apparent
preference for some investors to trade U.S. dollar-denominated
securities. Over time, some
of the restrictions on the issuance of the ADSs imposed by Indian law have been relaxed and we
expect that other restrictions may be relaxed in the future. As a result, the historical premium
enjoyed by ADSs as compared to equity shares may be reduced or eliminated due to our sponsored ADS
offering or similar transactions in the future, a change in Indian law permitting further
conversion of equity shares into ADSs or changes in investor preferences.
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. You may be unable to
exercise preemptive rights for equity shares underlying ADSs unless a registration statement under
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 relating 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.
Holders of ADSs may be restricted in their ability to exercise voting rights.
At our request, our Depositary will mail to you any notice of shareholders' meeting received from
us together with information explaining how to instruct our Depositary to exercise the voting
rights of the securities represented by ADSs. If our Depositary 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 our Depositary 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 our Depositary in a timely manner. Securities for which no voting instructions have
been received will not be voted.
Under Indian law, subject to the presence in person at a shareholder meeting of persons holding
equity shares representing a quorum, all resolutions proposed to be approved at that meeting are
voted on by a 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. Equity shares not represented in person at the meeting,
including equity shares underlying ADSs for which a holder has provided voting instructions to our
Depositary, are not counted in a vote by show of hands. As a result, only in the event that a
shareholder present at the meeting demands that a poll be taken will the votes of ADS holders be
counted. Securities for which no voting instructions have been received will not be voted on a
poll.
As a foreign private issuer, we are not subject to the SEC's proxy rules, which regulate the form
and content of solicitations by U.S.-based issuers of proxies from their shareholders. To-date, our
practice has been to provide advance notice to our ADS holders of all shareholder meetings and to
solicit their vote on such matters through our Depositary, and we expect to continue this practice.
The form of notice and proxy statement that we have been using does not include all of the
information that would be provided under the
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SEC's proxy rules.
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 NYSE and this may cause our share 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.
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 our 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 March 31, 2007, we had an aggregate of equity shares
outstanding of 664,900,129 (excluding 2,295,880 equity shares held by the Satyam Associate Trust),
which includes underlying equity shares of 130,209,472 represented by 65,104,736 ADSs. In addition,
as of March 31, 2007 we had outstanding options to purchase approximately 7,986,700 of our equity
shares. 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.
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ITEM 4. INFORMATION ON THE COMPANY
Business Overview
We were incorporated under the laws of the Republic of India in June 1987. Our principal executive
office is located at Satyam Technology Center, Bahadurpallay Village, Qutbullapur Mandal, R.R.
District – 500855, Hyderabad, Andhra Pradesh, India. Our telephone number at this address is (91)
40-3063-3535. Our website address is
www.satyam.com
and information contained on our website does
not constitute a part of this Annual Report.
We are a global IT solutions provider, offering a comprehensive range of IT services to our
customers including, application development and maintenance services, consulting and enterprise
business solutions, extended engineering solutions and infrastructure management services. We also
offer BPO services through our majority-owned subsidiary company, Nipuna. We began providing IT
services to businesses in 1988 and were the fourth largest Indian IT software and services
company, based on the amount of export revenues generated during fiscal 2006. Our revenues grew to
$1,461.4 million in fiscal 2007 from $566.4 million in fiscal 2004, representing a compound annual
growth rate, or CAGR of 37.2%. For the same period, our net income grew from $111.9 million to $298.4
million. The number of our employees, whom we refer to as associates, grew from 14,456 as of March
31, 2004 to 39,018 as of March 31, 2007.
We provide services to customers from various industries including manufacturing, banking and
financial services, insurance, telecommunications, infrastructure media and entertainment and
semiconductors or TIMES, healthcare, retail and transportation. We believe we have the ability to
develop large, long-term customer relationships, by demonstrating an understanding of our
customers' business requirements through our industry expertise and by continually providing high
quality services in a cost effective manner. As of March 31,
2007, we had 558 active customers,
including 163 Fortune Global 500 or Fortune U.S. 500 companies and 57 companies that generated more
than $5.0 million in annual revenues in fiscal 2007. 86.7% of our revenues for fiscal 2007 and 90.6%
of our revenues for fiscal 2006 were from repeat business given by our existing customers.
In June 2002, we established our majority-owned BPO subsidiary, Nipuna, which offers back-office
transaction processing services, customer care services and product support and technical help desk
services in the areas of finance and accounting, human resources, claims administration and
document management. Nipuna has added services such as research, analytics and animation to its
portfolio of service offerings. As of March 31, 2007, Nipuna had 2,916 associates and 33 customers,
of which 13 are Fortune Global 500 and Fortune U.S. 500 companies.
On May 12, 2005, we acquired a 75.0% interest in Citisoft Plc or Citisoft, a specialist business
and systems consulting firm that has focused on the investment management industry since 1986.
Citisoft is a UK-based firm, with operating presences in London, Boston and New York. On June 29,
2006, we exercised the call option and acquired the remaining 25.0% equity interest in Citisoft,
making Citisoft our wholly-owned subsidiary from that date. The operating results of Citisoft are
evaluated by the management under IT services segment.
On July 21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics Pte Ltd, Singapore, ("Knowledge Dynamics"), a leading Data Warehousing and
Business Intelligence Solutions provider. The transaction was consummated on October 1, 2005, the
date of transfer of shares to Satyam Computer Services and Satyam Computer Services has
consolidated Knowledge Dynamics Pte Ltd, Singapore, from October 1, 2005. The acquisition has been
accounted for by following the purchase method of accounting.
On November 7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing our
entire investment of 31.61% of the outstanding equity shares of Sify. The sale transaction was
consummated on November 9, 2005 at a sale price of $5.60 per equity share aggregating to $62.3
million. We accounted for our share of equity in earnings/(losses) of Sify under equity method of
accounting upto November 9, 2005. The excess of sale proceeds (net of transaction costs) over the
carrying value of investment in Sify as on the date of sale amounting to $43.6 million has been
recognized as gain in the statement of income during the year ended March 31, 2006.
On August 21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock
split (in the form of stock dividend) which was effective on October 10, 2006. Consequently,
Satyam capitalized an amount of $17.7 million from its retained
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earnings to common stock. All references to number of shares, per share amounts, stock option
data, and market prices of Satyam Computer Services' equity shares have been retroactively
restated to reflect the stock split unless otherwise noted.
On November 20, 2006, a Share Purchase, Redemption and Amendment Agreement ("SPRA Agreement") was
entered into between Satyam, the investors and Nipuna. Out of the total preference shares, 50% of
the preference shares ($ 10 million) would be redeemed for $ 13.6 million at the target date on
May 21, 2007 and the balance 50% would get converted into equity shares of Nipuna based on the
terms of the existing subscription agreement. Since 50% of the
preference shares are mandatorily
redeemable. We have reclassified 50% of the preference shares as a current liability measured
at fair value and accrued redemption premium amounting to $3.6 million up to March 31, 2007.
The
investors gave Nipuna a notice of conversion of preference shares and in January 2007
preference shares amounting to $10 million have been converted into 6,422,267 equity shares of
Nipuna. Due to the issue of shares by Nipuna, Satyam Computer Services' ownership interest in
Nipuna was reduced from 100.0% as at March 31, 2006 to 74.0% as at March 31, 2007. The shares
issued to the investors are at amounts per share higher than Satyam Computer Services' average cost
per share. With respect to this transaction, the resulting gain of US$7.9 million, net of taxes
during the year ended March 31, 2007 has been recorded as an increase in additional paid in
capital. Since the losses applicable to the minority interest in Nipuna exceeded the minority
interest in the equity capital of Nipuna, such excess and further losses have been charged in
Satyam's consolidated statement of income.
During 2007, we have also established the following schemes "Associate Stock Option Plan -
Restricted Stock Units (ASOP – RSUs)" and "Associate
Stock Option Plan — RSUs (ADS)". See "Item 6.
Directors, Senior Management and Employees — Employee
Benefit Plans" — for more information.
We filed a request for arbitration with the London Court of International
Arbitration, or LCIA, naming Venture Global Engineering LLC, USA, VGE, as respondent. The
Arbitration concerned a dispute between us and VGE in connection with their
joint venture, Satyam Venture Engineering Services Private Limited. The LCIA Arbitrator
issued his Final Award on April 3, 2006 in our favour. We have
filed a petition to recognize and enforce the award in the United States District
Court in Michigan. VGE has separately filed a declaratory judgment action seeking to refuse
enforcement of the Award in the United States District Court in
Illinois. Our management believes that
this will not have an adverse effect upon our results of operations, financial condition and
cash flows.
Industry Overview
Global IT Services Overview
Global IT
services spending has been estimated to have totalled $444 billion in fiscal 2005. The global IT services spending remained strong in fiscal
2006 with the aggregate total of $470 billion which increased by 5.9% with respect to 2005.
We believe the growth of global IT services spending is driven by the following factors and trends:
•
I
ncreased importance of IT to businesses.
In today's increasingly competitive business
environment, companies have become dependent on information technology not only to conduct
day-to-day operations, but also as a strategic tool to enable them to re-engineer business
processes, restructure organizations and react quickly to competitive, regulatory and technological
changes. As information systems continually become more complex with the use of multiple
applications and rapidly changing technologies, companies are increasingly turning to external IT
service providers to develop and implement new technologies and integrate them with existing
applications in which they may have already made considerable investments.
•
I
mpact of the Internet and other new technologies on business.
Businesses are increasingly using
the Internet to interact with new and existing customers and create new revenue opportunities.
Businesses conducted electronically over the Internet extend beyond Internet-based applications to
include packaged software tools, such as customer and supply chain management software, that need
to be integrated with a company's enterprise systems. These initiatives are often large and
difficult to manage in-house and need to keep pace with constantly evolving business processes and
technological innovations leading to demand for IT services companies.
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•
Managing and upgrading existing systems.
Managing and upgrading existing systems has become
critical given the importance of IT and related systems to new business initiatives. Internal IT
departments often do not have the appropriate resources or breadth of skills necessary to manage or
upgrade existing systems. As a result, companies are increasingly looking to external service
providers to design, integrate, implement and maintain their applications based on new
technologies.
•
Increasing trend towards offshore outsourcing.
The increasing complexities and costs of IT
services, together with an increasing need for highly skilled technology professionals and
tightening IT budgets for companies, are driving demand for professional IT services companies who
are able to provide a cost effective, high quality, comprehensive range of services. The offshore
delivery model is enabling companies to increasingly outsource complex assignments and generate not
only cost savings in IT services but also greater efficiencies in their business processes. In
addition, companies are increasingly using the "utility computing" or "pay for what you use", model
for infrastructure, data- warehousing and IT system usage, which is further fueling growth in
infrastructure, network outsourcing and network management services.
Indian IT Services Industry Overview
As organizations realize the cost effectiveness of off shoring their outsourced services, they are
increasingly making off shoring a part of their business strategy.
India is considered to be the most favored destination for offshore IT service delivery. According
to the National Association of Software and Services Companies, or NASSCOM strategic review 2007,
the export revenue generated from the software and service industry (IT-BPO) in India was
approximately $17.7 billion in fiscal 2005. In fiscal 2006, the export revenue increased by 33.3%
to $23.6 billion. The projected export revenue for 2007 is approximately $31 billion and which
is likely to increase to $60 billion by the end of 2010. The key factors that are expected to
contribute to this growth are:
•
High quality delivery record.
Indian companies have developed high quality delivery processes. A
2004 NASSCOM survey of international quality standards of the top 275 Indian IT services companies
reported that 195 companies had acquired International Standards Organization, or ISO, 9000 quality
certification. According to NASSCOM, during 2004, 74 Indian companies received a level five
assessment under 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.
•
L
arge supply of English-speaking IT professionals.
We believe that India ranks second only to the
United States as the country with the largest population of English-speaking IT professionals.
According to the NASSCOM strategic review 2007, educational institutes in India will produce
approximately 500,000 technically trained graduates (Engineering degree/Diploma/MCA)
by the end of 2007. Given the shortage
of technical labor in the United States and other developed economies, the availability of
technically skilled personnel is proving to be a competitive advantage for Indian IT service
companies.
•
Significant cost advantage.
We believe that the cost of employing IT professionals in India is
significantly lower than in developed countries such as the United States. The use of high quality,
low cost resources provides a significant opportunity for companies to realize cost savings by offshoring IT services to India.
Trends
The Indian IT services industry has been witnessing changes in customer demands and we believe that
service providers who are best able to adapt to these changes will succeed in the long run. Some
key emerging industry trends are described below:
•
Enhanced expectations.
Increasingly, companies are expecting more value from their IT service
providers than just the traditional cost advantages derived by offshoring the delivery of IT
services. Companies increasingly prefer service providers that can provide strategic advice related
to designing and increasing efficiencies of business processes and also assist in implementing
their recommendations. Also, service providers with strong industry expertise are favored over
those who can only provide strong technical skills.
•
Large, multi-year, end-to-end contracts.
Companies are increasingly looking for IT service
providers that can provide end-to-end solutions over a long period of time. In addition, companies,
which have a presence across various geographies, need IT support on a
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global scale and often seek a single service provider that can offer a comprehensive range of
services on a long-term basis across the world, and understand and integrate a wide spectrum of
emerging technologies with existing systems.
•
Relationships with customers' key senior management.
As outsourcing contracts increasingly gain
strategic importance to businesses, customers' senior management teams have become more involved in
outsourcing contract negotiation and monitoring. As a result, IT service providers need to ensure
that their senior account managers develop strong and lasting working relationships with customers'
senior management.
•
Performance measurement.
Companies are increasingly demanding transparency in performance
measurement. IT service providers with their own well developed benchmarks, frameworks and models
to measure performance or demonstrate potential benefits are likely to have significant advantage
over their competitors who offer more generic IT services.
Our Competitive Strengths
We believe that we are strongly placed to consolidate our market position as a leading IT
service provider due to our competitive strengths which include:
•
Comprehensive range of services combined with specialized industry expertise.
Our comprehensive
range of end-to-end technology-based services encompasses application development and maintenance
services, consulting and enterprise business solutions, extended engineering solutions,
infrastructure management services and BPO services. Our comprehensive range of services enables us
to broaden our dialogue with potential customers, deepen our relationships with existing customers
and diversify our revenue base. Our services are built on a foundation of a rich understanding of
the industries in which our customers operate and the underlying technologies that drive those
industries. Our industry-focused business units such as manufacturing, banking and financial
services, insurance, TIMES, healthcare, retail and transportation, allow us to understand the
strategic issues facing our customers. At the Gartner Global Sourcing Summit 2004, we were adjudged
the winner of the "Risk Management Award", a prestigious award that recognizes effectiveness in
managing risk and were also declared a joint winner of the "Solution Delivery Award" which
recognizes creativity in enhancing customers' business competitiveness. The voting for these awards
was done solely by the business executives attending the summit. Our dedicated technology
competency centers, which we refer to as "centers of excellence," track trends in key technologies,
which facilitates creation of solutions based on these technologies. Our centers of excellence work
closely with the industry-focused business units in areas such as business intelligence, data
warehousing, customer relationship management, product life cycle management and supply chain
management to ensure that our services fulfill our customers' business objectives and IT
requirements.
•
Flexible, highly evolved delivery model.
We provide our services through 29 offsite centers in
locations in Australia
,
Brazil, Canada, China
,
Germany, Hungary, Japan, Korea, Malaysia, Singapore,
South Africa, Thailand, United Arab Emirates
,
the United Kingdom and United States and our onsite
teams operating at our customers' premises. Over the past decade, we have made substantial
investments in our infrastructure, processes and systems allowing us to evolve our global delivery
model to effectively integrate offshore, offsite, near shore and onsite services and perform a
greater volume of work at our offshore development centers. This delivery model seeks to provide
customers with seamless solutions in reduced timeframes, enabling them to achieve operating
efficiencies and realize significant cost savings. It also enables us to deliver the most
appropriate mix of resources and services on a 24/7 basis. Furthermore, our robust delivery model
is flexible, so that it can be adapted to respond to customer objectives relating to critical
issues such as scalability and security. We continue to evolve our delivery model and believe that
our customer-oriented approach and ongoing refinements represent an important competitive
advantage.
•
Established leadership position in consulting and enterprise business solutions.
Our consulting
and enterprise business solutions help customers optimize their operating costs, enhance the
efficiency of their business processes and improve their overall competitiveness. These solutions
span the development, implementation, integration and maintenance of various enterprise-wide
applications. Our solutions are enhanced by our strategic alliances with more than 60 leading
technology providers such as SAP and Oracle. Our highly evolved delivery model, coupled with our
industry expertise and center of excellence-driven technology competencies, allows us to provide
customers with a value proposition in consulting and enterprise solutions. Over the past few years,
we have made strategic investments to augment our capabilities in this area which is reflected in
the growing revenues from this business. During fiscal 2007 and fiscal 2006 39.7% and 39.2%
respectively, of our revenues, was generated from consulting and enterprise business solutions.
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•
Strong relationships with blue chip customers.
We have long-standing relationships with large
multinational corporations built on our successful execution of prior engagements. We believe we
have significantly more Fortune Global 500 or Fortune U.S. 500 corporations as customers, relative
to scale of revenue, as compared to other leading Indian IT services companies. As of March 31,
2007, we had 558 active customers, including 163 Fortune Global 500 or Fortune U.S. 500 companies.
Our track record of delivering comprehensive solutions based on demonstrated industry and
technology expertise has helped in forging strong relationships with our major customers and
gaining increased business from them. We have a history of high customer retention and derive a
significant proportion of our revenue from repeat business. During fiscal 2007 and fiscal 2006,
86.7% and 90.6%, respectively, of our revenues, was generated from existing customers.
•
Track record of high quality execution
.
We are committed to achieving operational excellence in
our processes, people and infrastructure. Our quality assurance programs form an integral part of
our project management methodology and seek to ensure that we consistently deliver high quality
services to our customers. For instance, we have a company-wide quality management system, which
satisfies the ISO 9001:2000 TickIT standard. We have been assessed at CMMI Level 5, the highest
level possible, and have implemented the Six Sigma processes for application development and
maintenance. We have also achieved domain specific certifications like AS9100/EN9100 for ES group –
Aerospace domain, PCMM Level 5 Assessment for Pune Location, S15000/ISO20000 certification for N&S
across India and BS15000 Global Certification for IMS business.
We have a large pool of highly skilled, well-trained technical associates spanning 60
nationalities. As of March 31, 2007, we employed 36,997 technical associates in the IT services
area. Each new technical associate participates in an intensive 12 week initial training program
and a minimum of 40 hours training each year on development and leadership. We continue to develop
our infrastructure to make it more resilient. For instance, we have implemented ISO 27001, the
internationally recognized global upgrade from BS7799 standard, which delivers a high level of
information security to protect our customers' intellectual property. We have also established a
comprehensive disaster recovery and business continuity model to ensure uninterrupted service
availability from our global delivery network. We constantly benchmark our processes, people and
infrastructure against globally recognized standards.
•
Culture of innovation.
We have a history of innovation that is facilitated by our
entrepreneurial culture and our management's willingness to make strategic investments in growth
markets. We believe we were one of the pioneers in the delivery of India-based IT services. For
example, we believe that we were among the earliest Indian IT service companies to set up in 1992 a
dedicated satellite link between a customer's facilities and our India operations. Our technology
laboratories continue to develop and bring to market new solutions based on new technologies. For
instance, we are one of the few companies in India to offer utility and grid computing services to
customers. We have also been innovative in our internal organization and have introduced industry
leading practices in hiring, resource planning and knowledge sharing. These accomplishments and
initiatives have further enhanced our brand and reputation in the marketplace.
Our Growth Strategy
Our goal is to be a leading global provider of comprehensive IT solutions and services. We
intend to accomplish our goal by:
•
Building on our long-standing customer relationships to cross-sell our comprehensive range of
services.
Our goal is to build long-term sustainable business relationships with our customers to
generate consistent revenues. We plan to continue to expand the scope and range of services
provided to our existing customers by continuing to build our expertise in major industries and
extending our capabilities into new and emerging technologies. For example, we intend to capitalize
on the BPO services offered by Nipuna by cross-selling these services to our existing customers,
which will enable us to secure a higher share of our customers' spending. To further strengthen our
relationships and broaden the scope and range of services we provide to existing customers, our
senior corporate executives have specific account management and relationship responsibilities. We
have successfully established strong relationships with our customers' chief information officers
and are continuing to strengthen our relationships with other key members of our customers'
management teams. These strong relationships have helped us to better understand our customers'
business needs and enabled us to provide effective solutions to meet these needs.
•
Continuing to focus on enterprise-wide business solutions and high quality value-added services.
To better serve our customers in key industry segments, we intend to continue to focus on providing
end-to-end enterprise-wide business solutions and increasing our share of value-added services,
such as data warehousing and business intelligence, application portfolio management, process and
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quality consulting, business performance management, industry and regulatory specific solutions and
grid computing solutions. To continue to differentiate our services and achieve recognition as a
leading global provider of comprehensive IT services, we intend to continually invest in research
and development and broaden our range of solution offerings as new technologies become available.
•
Expanding our presence in existing markets and penetrating new geographic markets.
We plan to
expand our presence in our existing markets and establish a presence in new geographic markets
throughout North America, Europe, Latin America, and the Asia-Pacific region. We intend to
accomplish this by increasing our brand visibility and leveraging our global development centers to
extend our services to customers located in these geographies. We also plan to continue to hire
local associates to staff and manage our global development centers and to strengthen our sales and
marketing functions to facilitate building strong relationships. We believe that the use of locally
hired technical associates and managers working from our global development centers will enable us
to increase our market share in the local markets and compete effectively by combining local
expertise with our global delivery capabilities. We expect that a wider geographical presence will
also facilitate revenue generation in multiple currencies, reduce our exposure to volatility in a
particular currency, and help hedge against margin erosion due to currency fluctuations.
•
Continuing to enhance our industry expertise.
We aim to have an in-depth understanding of
targeted industries including manufacturing, banking and financial services, insurance, TIMES,
healthcare, retail and transportation, which will help us identify and understand customer needs
and proactively design and offer customized IT solutions to address those needs. By focusing on
targeted industries, we believe we can develop industry-specific solutions and services that can be
leveraged effectively to deliver services within the same industry, thereby lowering our cost of
delivering those services. We intend to enhance our business knowledge and competencies in the
various industries that we service by hiring additional specialists with deep industry knowledge
and expertise.
•
A
ttracting 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 performance-linked incentives. We also intend to continue to devote significant resources
to train our technical associates in a variety of software languages and computer platforms through
our Satyam Learning Center.
•
Enhancing our capabilities through technology alliances and acquisitions.
We intend to
continue to explore the formation of new alliances as well as strengthen existing partnerships with
key technology vendors to enable us to leverage our partners' strengths. We will also consider
acquisitions to gain access to specific technologies and exploit synergies with our existing
business. We regularly engage in discussions and negotiations in the ordinary course of our
business relating to potential investment, technology alliances and acquisitions that would achieve
these objectives.
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:
Application development and maintenance services
Application development
We design, develop and implement customized IT solutions software for a variety of business
processes and requirements. Our solution implementations range from single-platform, single-site
systems to multi-platform, multiple-site systems. A project may involve the development of a new
application, customizing packaged software, enhancing the capabilities of existing software
applications, upgrading a legacy solution both to suit the newer technology environments and to
enhance the lifetime of such applications. Each development project typically involves the full
life-cycle of software development, including, definition, prototyping, architecting, designing,
piloting, programming, testing, installing and subsequent maintenance.
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Application maintenance
We provide maintenance services for large software systems, including modifications and
enhancements to the business functionality as well as providing production support to facilitate
around the clock availability of applications spread across multiple geographies encompassing
diverse technologies. We interact with the business users to map new functionalities and enhance
the application systems to cater to new set of business rules. We also assist customers in
migration or re-hosting to new technologies, such as Microsoft and Open systems, to extend the
useful life of existing systems. We perform most of the maintenance work at our offshore global
development centers using satellite links to our customers' systems. In addition, we maintain a
small team on our customers' premises to coordinate support functions. In certain instances, we
utilize our offsite and nearshore development centers to coordinate these support functions with
either no or minimal work at the customer's site.
Consulting and enterprise business solutions
Leveraging our alliances with independent software vendors such as Oracle, SAP and Informatica, we
offer an extensive portfolio of consulting and enterprise business solutions to enhance our
customers' business competitiveness. We provide solutions and services in the areas of enterprise
resource planning, customer relationship management and supply chain management, data warehousing
and business intelligence, knowledge management, document management and enterprise application
integration to address the customer's needs and to integrate systems and processes across the
organization for optimized business performance. These solutions enable our customers to strengthen
relationships with their customers and business partners, create new revenue opportunities, enhance
operating efficiencies and improve communication.
Extended engineering solutions
We provide extended engineering solutions to industries such as the automotive, aerospace,
industrial equipment, consumer appliances and telecommunications, using computer aided design,
modeling and engineering tools. Our services include mechanical designing, embedded and electronic
designing, product and process analysis, product life-cycle management and range from handling
basic drawing changes to delivering complex designs. Our focus is to enable our customers to
realize significant cost benefits and to enable them to compete effectively in their product design
and development functions.
Infrastructure management services
To address our customers' specific requests to provide infrastructure and technology support,
we provide solutions and services which range from routine maintenance of hardware and software to
complex security solutions. Our services include administration, infrastructure management,
migration, upgrades, configuration, backup, security management, performance management, operations
monitoring and consolidation services for a variety of operating systems and platforms, data, voice
and video networks and mail servers. We offer services which cover a range of hardware platforms
(IBM, HP and Sun) and environments (UNIX, AIX, Solaris, HP-UX and Windows). We have also built
alliances with over seven infrastructure and technology product vendors to enhance our
capabilities. We leverage our data center facility in Columbus, Ohio, in the United States to
provide various hosting services to our customers.
Delivery of IT Services
We leverage our integrated global delivery model, which we refer to as the "Right Sourcing
Model," to provide flexible service delivery alternatives to our customers through our offshore
centers located in India, offsite centers established in our major markets, nearshore centers
located geographically near our customers' premises and through our onsite teams operating at our
customers' premises. Our offshore, offsite and nearshore centers are linked to our customer's
onsite system through a high performance communication network, enabling us to provide integrated
services from each delivery location. Our global delivery model allows us the flexibility to
transition onsite IT services seamlessly to our offsite, nearshore or offshore centers, which
benefits our customers and provides us with greater returns.
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Offshore centers
We typically assign a team of technical associates to visit a customer's premises to 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, approximately 20% of a project team is onsite but the ratio can vary based on
the nature and complexity of the project.
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, such offshore centers have equipment specific to the customer, or have a
designated work area with its own security protocols. In such cases, the customer agrees to regular
periodic billing regardless of the work performed.
Offsite centers
We believe that a key success factor in meeting our customers' needs is our physical proximity to
the customer. Accordingly, we have expanded and improved our offshore development model by
establishing offsite centers in our major markets. We have 29 offsite centers in locations in
Australia, Brazil, Canada, China, Germany, Hungary, Japan, Korea, Malaysia, Singapore, South
Africa, Thailand, United Arab Emirates, the United Kingdom and United States.
In addition, many of our existing customers are expanding into new geographic markets and are
requiring us to serve them in these new locations. This trend has led us to increase the number of
offsite centers as a part of our "Follow the Customer" strategy. We believe that these offsite
centers, apart from serving our existing customers, also help us generate new business in these
geographic locations. 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. We staff our offsite centers with locally-hired managers, marketers
and technical associates which we believe enable us to compete more effectively with local IT
service providers.
Nearshore centers
For some of our customers, especially in the United States, we have leveraged Canada as a
nearshore center because of its proximity to the customer and the advantages of providing services
from centers in the same time zone as the customer. Instead of using only our offshore and onsite
locations for the solution delivery, we utilize these nearshore centers to perform a variety of
life cycle activities. For example, for certain development projects, we have created prototypes of
the solution in these nearshore centers. Since the development of prototypes typically involve a
high level of interaction with the customer and our onsite teams, the nearshore centers facilitate
quick turnaround times.
We use our China development center as a nearshore center for the Asia-Pacific region to leverage
the language capability and also multi-byte data for Asian languages. Similarly, we intend to use
our Hungary development center for the European and North and South American markets.
Onsite teams
Some customers require the presence of our project teams at their premises, particularly for
mission critical or higher involvement projects. The customer's team and our project team
collaborate to develop IT services that meet the customer's specifications.
Quality and Project Management
Critical elements for the success of our global delivery model are well established
quality management systems and sophisticated project management techniques. As an integral part of
our processes, we have established a strict quality assurance and control program. We are certified
under the ISO 9001 TickIT standard. Each of our business units that qualify for an assessment on
the CMMI model have been assessed at CMMI Level 5 resulting in Satyam being a CMMI Level 5 company.
We have also achieved AS9100/EN9100 certification – Quality Systems requirements for aerospace
suppliers, PCMM Level 5 Assessment for Pune Location. We have adopted Six Sigma as a way of
improving our processes and providing the highest levels of quality to our customers. Our
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quality management system involves, among other things, a rigorous review of software development
processes, review and testing of work product and regular internal quality audits.
We have been certified under ISO 27001 — Information Security Management model. This model governs
our information security activities and helps us manage security, business continuity and disaster
recovery requirements of our customers. We are also certified for ISO20000 — IT Service Management
standard for seamlessly providing IT Service to customers.
Maintaining a high level of customer satisfaction requires sophisticated project management
techniques to deliver services seamlessly across multiple locations and time zones. Further, to
keep pace with high growth and deliver value proposition to customers, we have implemented
an enterprise wide project management tool, Optima (Operational Projects Real Time Management).
Optima is based on cProjects, a new Enterprise Project Management solution from SAP. cProjects has
been customized to meet our specific needs and has been implemented across the organization.
Customers
We market our services primarily to companies in the United States, Europe, the Middle East and the
Asia-Pacific region. We have a global customer base which, as of March 31, 2007, consisted of 558
customers including 163 Fortune Global 500 and Fortune U.S. 500 companies.
While we derive a significant proportion of our revenues from a limited number of customers,
our strategy is to seek new customers and at the same time secure additional engagements from
existing customers by providing high quality services and cross-selling new services. The strength
of our relationships has resulted in significant recurring revenue from existing customers. Our
business from existing customers in fiscal 2007, fiscal 2006 and fiscal 2005 accounted for 86.7%,
90.6% and 92.1% of IT services revenues, respectively. In fiscal 2007, fiscal 2006 and fiscal 2005,
our largest customer, together with its affiliates, accounted for 6.3%, 8.8% and 10.8%,
respectively, of our total revenues. In fiscal 2007, fiscal 2006 and fiscal 2005, our second
largest customer accounted for 4.4%, 5.1% and 7.4% respectively, of our total revenues. Our top
five customers accounted for 21.0%, 24.2% and 29.2% of our total revenues in fiscal 2007, fiscal 2006 and
fiscal 2005 respectively.
The following is a distribution of our customers by our revenues on a trailing 12-month basis
or for the fiscal indicated:
Fiscal
2007
2006
2005
No. of $1+ million customers
116
101
109
No. of $5+ million customers
26
22
30
No. of $10+ million customers
31
23
19
Our customers are from diverse industry segments, including from the manufacturing, banking and
finance, insurance, and telecom segments. The manufacturing segment accounts for the highest
contribution of our revenues followed by the banking and finance segment. We continue to witness
accelerated growth in the healthcare segment, while customers have been increasing in newer
segments such as retail, energy and utilities.
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The following is a distribution of our IT revenues across our industry segments for the three most
recent fiscal years:
Fiscal
2007
2006
2005
Manufacturing
27.0
%
28.6
%
29.2
%
Banking and Finance
17.5
18.5
17.8
Insurance
8.8
8.8
11.4
TIMES
20.3
18.4
17.3
Healthcare
7.2
6.1
6.0
Retail
3.5
3.1
2.8
Transportation
2.3
2.6
2.7
Others
13.4
13.9
12.8
Total
100.0
%
100.0
%
100.0
%
Sales and Marketing
Our sales operations comprise a Sales team, Account management team, Pre-Sales support team, and
our Strategic Deals Group. Sales associates work solely on acquiring new customers. The second
group consists of relationship managers who cross-sell services to existing customers and are
responsible for building long-term relationships with such customers. The Pre-Sales group supports
the business development efforts for prospects and existing accounts. Satyam has also invested in a
strategic deals group, which focuses on acquiring large strategic deals.
In markets such as the United States and the United Kingdom, we have an industry-focused sales
operation, while in other markets we have regional heads who oversee the sales activity.
In order to create greater visibility and recognition of our Satyam brand, we continue to invest in
focused programs to enhance customer intimacy. These programs include holding annual customer
summits to facilitate customer interaction, organizing forums, and participating in and sponsoring
industry events to position Satyam as a thought leader.
As of March 31, 2007, we employed 268 marketing and sales associates.
BPO Services and Nipuna
Nipuna, our majority-owned subsidiary, offers BPO services including product support, technical
help desk, back-office transaction processing and customer care services in the areas of finance
and accounting, human resources, claims administration and document management. Nipuna has recently
added services such as research, analytics and animation to its portfolio of service offerings.
Nipuna also offers industry specific services to customers in the manufacturing, banking and
financial services, insurance, TIMES, healthcare, retail and transportation industries.
Nipuna was established in fiscal 2002. To promote Nipuna's business, we entered into an agreement
with two investors, Olympus BPO Holdings Limited and Intel Capital Corporation Services Limited,
which restricts Satyam from engaging in activities that are or could directly or indirectly be
competitive with the business of Nipuna. Such activities include among others providing BPO,
soliciting existing or prospective customers of Nipuna to obtain the services offered by Nipuna
from other service providers and investing in companies engaged in the same or similar business as
Nipuna. These non-compete restrictions apply until the investors redeem all of their preference
shares in Nipuna or their equity interest in Nipuna up to 5%. See "Item 3. Key Information —
Risk Factors — Risks Related to Our Overall Operations — We face intense competition in the IT
services and BPO markets which could prevent us from attracting and retaining customers and could
reduce our revenues."
As of March 31, 2007, Nipuna had 33 customers including 13 Fortune Global 500 and Fortune U.S.
500 companies. For fiscal 2007, fiscal 2006 and fiscal 2005, Nipuna had revenues of $38.1 million,
$20.0 million and $10.0 million respectively. Nipuna handles more than 64 business processes for
its customers, a majority of which are also customers of Satyam. Majority of Nipuna's customers are
Fortune Global 500 and Fortune U.S. 500 companies, who have offshored their critical business
processes to Nipuna.
The services offered by Nipuna include:
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Claims administration and transaction processing services
Nipuna offers transaction processing services such as data management and claims administration to
its customers. For example, Nipuna provides dental and medical claims administration support by
facilitating data entry of the claims received, for one of the largest insurance companies in the
United States. Its services have resulted in significant costs savings for the customer besides
providing the customer with increased flexibility to manage workload during the peak and off-peak
periods.
Customer care services
Nipuna provides customer care services to customers in different industries. For example, it
provides inbound and outbound support for dial-up and digital subscriber line or DSL customers of a
Fortune 100 communications services company.
Nipuna also provides IT help desk support to its customers.
Engineering services
Nipuna handles assembly plant management for one of the world's largest engine manufacturers. It
also manages other processes such as quality compliance and management, engineering change
management, AIS documentation, new product introduction and warranty claims processing. Nipuna also
manages data entry of contact information for potential customers into a single database for one of
the world's largest automobile manufacturers.
Strategic Alliances
We have in the past entered into, and plan to continue to enter into, strategic alliances with
leading technology vendors and system integrators where both parties invest to develop innovative
solutions and build competencies. We have partnered with some of the leading names in key
application areas such as Enterprise Resource Planning (SAP &
Oracle), Customer Relationship Management, Integration Middleware, Business Intelligence
(Business Objects and Informatica) and Infrastructure Management. Some of our other prominent
alliance partners include JDA, Dassault Matrix One, Documentum, Hummingbird and Hyperion. We
believe that our existing alliances with over 60 leading technology vendors spanning distinct parts
of our customers' value chain have enhanced our ability to offer packaged solutions across a wide
array of technologies and platforms to our customers. We work closely with our alliance partners
who provide assistance in technology evaluation and selection, product support and product
enhancements. We also have alliances with education and research
institutions (Indian Institute of Science, Carnegie
Mellon University) to facilitate research and develop solutions to business problems. None of these
alliances are exclusive in nature and some of the alliance agreements need to be renewed each year.
Our joint venture with Venture Engineering Global LLC, Satyam Venture, is engaged in providing
engineering solutions, software development, and customization services specifically for the
automotive industries worldwide. See "Item 8 – Financial information – Legal Proceedings." See also
note 19(f) consolidated financial statements included in this Annual Report. In addition, our
joint venture with Computer Associates International, Inc., or CA Satyam, is engaged in the
business of hosting, delivering and administering selective applications consisting of software
products licensed by Computer Associates International, Inc. These two joint ventures are accounted
using equity method of accounting.
Employees
We refer to our employees as "associates." Our success depends in large part on our ability to
attract, develop, motivate and retain highly skilled technical associates. Besides competitive
salaries and incentive pay, we also offer extensive training, an entrepreneurial work environment
and opportunities to work overseas. Since May 1998, we have offered stock options to our
associates. but, subject to certain exceptions, have decided to stop all stock based compensation
with effect from October 1, 2004. As of March 31, 2007, we had 39,018 associates including Nipuna's
2,916 associates representing a compound annual growth rate in the number of our associates of
40.5% since fiscal 2000. None of our associates are represented by a union. We believe that our
relationship with our associates is good.
Our growth has been driven by our ability to attract top quality talent and effectively engage
them. We strongly believe in caring for
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our associates' welfare and were selected as one of the Top 3 Best Employers in India by
BT-TNS-Mercer in 2006.
Recruiting
We recruit graduates from the engineering departments of India's leading universities, engineering
and technical colleges and management institutes. India has over 1,500 such institutions 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 rigorous selection process involving a series of tests
and interviews. We also hire professionals who have relevant prior experience from working in India
and outside India.
Learning and Developmental Training
We devote significant resources for training our associates. We established the Satyam Learning
Center & Satyam School of Leadership, which promotes our culture of learning and serves as a
catalyst for us to sustain our technological, managerial and leadership edge. We require all
associates to undergo a minimum of 40 hours of learning per year. We have qualified full-time
faculty at our learning center that provides ongoing training to our associates at all levels,
through which we build competencies in emerging disciplines necessary to meet our customers' needs.
Our training initiatives provide us with a pool of qualified associates which in turn provides us
the flexibility to ramp up resources to meet the demands of particular projects and to redeploy our
personnel across projects according to our business needs. Apart from technical oriented learning,
we also provide leadership training, language training and training on cultural sensitization. SLC
has launched the "Satyam Learning World" a new learning management system procured by SLC,
technology assisted learning hass gained significant momentum this year. Satyam Learning World
(SLW) is a unique and first of its kind Virtual Learning Environment (VLE) in India. Satyam School
of Leadership offers a plethora of learning initiatives for the leaders of organization. This is
aimed at broadening our leadership bandwidth and developing our associates into business leaders
for critical business areas such as program management and relationship management. These leaders
grow other leaders by teaching and contributing to learning in the organization Trainers for our
leadership training include professors from the Harvard Business School. 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.
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. In fiscal 2007, 2006 and 2005, we experienced
associate attrition in IT services at a rate of 15.7% 19.2%, and 16.5% respectively, which included
involuntary attrition ranging from 3% to 5% as part of our systematic quality campaign.
Our human resources policies and practices are oriented towards enhancing associate engagement
levels by proactively addressing the factors that impact retention. Several learning and
development opportunities are provided to ensure that associates not only upgrade their skills and
competencies but are also able to keep pace with cutting edge technologies and prepare themselves
to take up challenging roles. Through our comprehensive rewards and recognitions programs and
opportunities for job rotation across technologies, industries and locations, we ensure that our
associates are motivated and performance oriented.
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
deploying personnel to the United States for onsite work, and L-1 visas are typically used for
intra-company transfers of employees. 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. Our internal
processes enable us to anticipate the amount and type of visas we need for our associates and to
plan our resources in advance to meet our project needs.
Competition
We operate in a highly competitive and rapidly changing market and compete primarily with:
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•
consulting firms such as Accenture, Bearing Point, Capgemini and Deloitte Consulting;
•
divisions of large multinational technology firms such as Hewlett-Packard and IBM;
•
IT outsourcing firms such as Computer Sciences Corporation, Electronic Data Systems and IBM
Global Services; and
•
offshore IT services firms such as Infosys Technologies Limited, Tata Consultancy
Services Limited and Wipro Limited.
We also compete with software firms such as Oracle and SAP, service groups of computer equipment
companies, in-house IT departments of large corporations and programming companies and temporary
staffing firms. In addition, Nipuna faces competition from firms like Infosys BPO, formerly known
as Progeon Ltd. and Wipro BPO, formerly known as Wipro Spectramind.
In the future, we expect competition from firms establishing and building their offshore presence
and firms in countries with lower personnel costs than those prevailing in India. However, we
recognize that price advantage alone cannot be a sustainable competitive advantage. We believe that
the principal competitive factors in our business include our range of services offered, our level
of technical expertise and industry knowledge, our responsiveness to customers' business needs and
the perceived value added. We believe we compete favorably with respect to these factors.
Communications Infrastructure
A key component of our IT services delivery model is our ability to connect the customer's system
with our offsite and offshore centers through a robust and high performance communications network.
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. SatyamNet provides flexibility
for the projects to operate from any of the development facilities inside Satyam providing for
seamless integration.
We have
dedicated telecommunication network based on Multi Protocol Label
Switching, or MPLS, technology and leased lines from reputed
service providers such as Orange Business Services (formally known as Equant Inc.) for global
connectivity, Sify Ltd for India domestic connections, VSNL, Bharti, Reliance and BSNL for
intra-city communications in India. This network permits data communication between our facilities
in India and our customers' facilities abroad. In the United States, we have communication hubs in
Vienna, Virginia and Parsippany, New Jersey to connect to our customers' sites. Our other network hubs
are Melbourne in Australia, London for the UK and rest of Europe.
We monitor the network performance and continually upgrade SatyamNet to enhance and optimize
network efficiency across all operating locations. We currently have 109 Mbps commulative bandwidth
for International data communication and 161Mbps Internet bandwidth globally. In addition, we have
81 Mbps of bandwidth on India MPLS connecting various cities, with our intra-city links
being connected by multiple 10 Mbps lines totaling to 510Mbps across the country. We upgrade the
bandwidth based on our requirements.
Our network has surplus capacity available to service new customers in the immediate future and to
permit sudden bursts of data transfer and other contingent uses. We use voice over Internet
protocols (VoIP) for our voice communication. We have created a
resilient network through redundancy in the network and keep adequate stock of spares to ensure
high availability and reliability of our networks.
SatyamNet has extensive security and virus protection capability built to conform to stringent
customer and international standards to protect Satyam from virus attacks and provide the necessary
security to customers' data. We have created plans for business continuity and disaster recovery by
defining multiple sites across India and other development centers as backup centers for continuity
of work.
Facilities
Our corporate headquarters, the Satyam Technology Center, is located in Hyderabad, India. We own
this facility, which provides a modern workspace for approximately 4,000 software associates in two
buildings covering an aggregate area of approximately 676,000 square feet, which are linked to
our other facilities through SatyamNet. The Satyam Technology Center also has recreational
facilities and housing for up to 750 associates which covers an area
of approximately 285,000
square feet. This center also houses learning facilities covering an area of approximately 115,000
square feet to train 1440 associates.
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We also have additional offshore software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad, Vizag and Pune in India with facilities aggregating approximately
2,408,000 square feet. We own some of the facilities while others are leased by us on a long-term
basis ranging from six 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 and nearshore centers in major markets to establish a
local presence closer to our customers. We lease all of our offsite and nearshore centers for
durations ranging from two years to seven years.
We have incurred $81.5 million in fiscal 2007 and in fiscal 2008 we expect capital expenditure of
approximately $100.0 million to finance the construction of new facilities and the expansion of our
existing facilities in our offshore centers and to establish offsite centers outside of India.
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 registered "Satyam" and other related marks in India
and the United States under certain classes and have applied for the registration of such marks in
other jurisdictions where we carry on business. 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.
Seasonality
Our business is not affected by seasonality.
Government Regulation
Regulation of our business by the Indian government affects our business in several ways. We
benefit from certain tax incentives promulgated by the GoI, including a 10-year tax holiday from
Indian corporate income taxes for the operation of most of our Indian facilities and a partial
taxable income deduction for profits derived from exported IT services under Indian tax laws. As a
result of these incentives, our operations have been subject to relatively insignificant Indian tax
liabilities. We have also benefited from the liberalization and deregulation of the Indian economy
by the successive Indian governments since 1991. Further, there are restrictive parts of Indian law
that effect our business, including the fact that we are generally required to obtain approval from
the RBI and/or the Ministry of Finance of the GoI to acquire companies organized outside India, and
we are generally required, subject to some exceptions, to obtain approval from relevant government
authorities in India in order to raise capital outside India. Finally, the conversion of our equity
shares into ADSs is governed by guidelines issued by the RBI.
Please see "Item 10. Additional Information", as well as "Item 3. Key Information—Risk
Factors" for additional information on the effects of governmental regulation of our business.
Research and Development
Our research and development efforts are focused on developing services required by our existing
customers, to attract new customers and developing competencies and leadership in our service
offerings. We have established close alliances with U.S. and Indian institutions such as Carnegie
Mellon University and Indian Institute of Technology, Madras to strengthen our technology
competencies. We have set up an enterprise business solution laboratory where latest versions of
products are evaluated, business solution scenarios are created and validated. We have set up a
grid computing laboratory which simulates a live grid environment for testing sample applications
on the grid. We have also established a data warehousing and business intelligence center which has
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developed proprietary business intelligence architectural platform which enables us to build large
scale data warehousing and business intelligence solutions. We are also working with major
technology providers in the areas of technology architectures for .NET for solutions for various
industries. In the embedded systems space, we have created an environment to simulate various
operating conditions and validate the solutions we build. We have an applied research group which
focuses on creating IP in the areas of competition, communication, networking and information
processing algorithms. In addition to presenting papers at international conferences and publishing
in referenced journals, this group has over 16 United States patent applications in various stages
of registration. In fiscal 2007 and 2006, we spent 0.03% and 0.05% of our total revenues on R&D
activities.
ITEM 4A. UNRESOLVED STAFF COMMENTS
As of the date of filing of this Annual Report, we do not have any unresolved written comments
from the Commission staff regarding our periodic reports under the Exchange Act.
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. Key Information—Risk Factors"
Overview
We are a global IT solutions provider, offering a comprehensive range of IT services to our
customers, including application development and maintenance services, consulting and enterprise
business solutions extended engineering solutions, infrastructure management services. We also
offer BPO services through our majority-owned subsidiary, Nipuna. We are the fourth largest Indian
IT software and services company, based on the amount of export revenues generated during our
fiscal year ended March 31, 2006. Our total revenues for fiscal 2007 were $1,461.4 million and over
the past three fiscal years our revenues have grown at a compound annual growth rate of 37.2%.
On May 12, 2005, we acquired a 75% interest in Citisoft Plc or Citisoft, a specialist business and
systems consulting firm that has focused on the investment management industry since 1986. Citisoft
is a UK-based firm, with operating presences in London, Boston and New York. On June 29, 2006, we
exercised the call option and acquired the remaining 25% equity interest in Citisoft, making
Citisoft our wholly-owned subsidiary from that date. The operating results of Citisoft are
evaluated by the management under IT services segment.
In May 2005, we completed a sponsored ADS offering of 15,000,000 ADSs representing 30,000,000
equity shares including the green-shoe option. The offering was priced at $21.5 per ADS. The net
proceeds after expenses of the offering were returned to all the selling shareholders. We did not
receive any proceeds of the offering.
On October 1, 2005, we acquired 100% of the shares of Knowledge Dynamics, a leading data
warehousing and business intelligence solutions provider. The operating results of Knowledge
dynamics are evaluated by the management under IT service segment.
On November 7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing
our entire investment of 31.6% of the outstanding equity shares of Sify. The sale transaction was
consummated on November 9, 2005 at a sale price of $5.60 per equity share aggregating to $62.3
million.
On August 21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock
split (in the form of stock dividend) which was effective on October 10, 2006. Consequently,
Satyam capitalized an amount of $17.7 million from its retained earnings to common stock. All
references to number of shares, per share amounts, stock option data, and market prices of Satyam
Computer Services' equity shares have been retroactively restated to reflect the stock split
unless otherwise noted.
On November 20, 2006, a Share Purchase, Redemption and Amendment Agreement ("SPRA Agreement") was
entered into between
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Satyam,
the investors and Nipuna. Out of the total preference shares, 50% of the preference
shares ($ 10 million) would be redeemed for $ 13.6 million at the target date on May 21, 2007 and
the balance 50% would get converted into equity shares of Nipuna based on the terms of the
existing subscription agreement. Since 50% of the preference shares are mandatorily redeemable,
Satyam has reclassified 50% of the preference shares as a current liability measured at fair value
and accrued redemption premium amounting to $3.6 million up to March 31, 2007.
The
investors gave Nipuna a notice of conversion of preference shares and in January 2007
preference shares amounting to $10 million have been converted into 6,422,267 equity shares of
Nipuna. Due to the issue of shares by Nipuna, Satyam Computer Services' ownership interest in
Nipuna was reduced from 100.0% as at March 31, 2006 to 74.0% as at March 31, 2007. The shares
issued to the investors are at amounts per share higher than Satyam Computer Services' average cost
per share. With respect to this transaction, the resulting gain of US$7.9 million, net of taxes
during the year ended March 31, 2007 has been recorded as an increase in additional paid in
capital. Since the losses applicable to the minority interest in Nipuna exceeded the minority
interest in the equity capital of Nipuna, such excess and further losses have been charged in
Satyam's consolidated statement of income.
During 2007, we have also established the following schemes "Associate Stock Option Plan -
Restricted Stock Units (ASOP – RSUs)" and "Associate
Stock Option Plan — RSUs (ADS)". See "Item 6.
Directors, Senior Management and Employees — Employee
Benefit Plans" — for more information.
We believe customers are increasingly demanding full-service IT providers that have expertise in
both existing systems and new technologies, access to a large pool of highly-skilled technical
personnel and the ability to service customers globally at competitive rates. To meet these
requirements, we offer our customers an integrated global delivery model, which we refer to as the
"Right Sourcing Model," to provide flexible delivery alternatives to our customers through our
offshore centers located in India, offsite centers which we have established in our major markets,
nearshore centers located geographically near our customers' premises and through our onsite teams
operating at our customers' premises. In addition, we use the expertise resident in our focused
industry groups to provide specialized services and solutions to our customers in the
manufacturing, banking and financial services, insurance, TIMES, healthcare, retail and
transportation industries.
Our revenues and profitability have grown significantly in recent years. Our total revenues
increased by 33.3% to $1,461.4 million in fiscal 2007 as compared to $1,096.3 million in fiscal
2006. Our net income increased by 19.6% to $298.4 million in fiscal 2007 from $249.4 million in
fiscal 2006. Our total revenues increased by 38.1% to $1,096.3 million in fiscal 2006 as compared
to $793.6 million in fiscal 2005. Our net income increased by 62.2% to $249.4 million in fiscal
2006 from $153.8 million in fiscal 2005. Our revenue and profitability growth is attributable to a
number of factors related to the expansion of our business, including increase in the volume of
projects completed for our widening customer base, increase in our associate numbers, increased
growth in our consulting and enterprise business solutions business and a strengthening of our
customer base in United States and Europe. Our growth has continued despite increasing pressure for
higher wages for our associates coupled with pressure for lower prices for our customers. In fiscal
2007, fiscal 2006 and fiscal 2005, our five largest customers accounted for 23.3%, 24.2% and 29.2%
respectively, of our total revenues. As of March 31, 2007, we had 39,018 employees (including
employees of our subsidiaries), whom we refer to as associates, worldwide as compared to 28,624
associates as of March 31, 2006. With our continuing geographical expansion we now have offshore
facilities in India and overseas facilities located in Australia, Canada, China, Hungary, Japan,
Malaysia, Singapore, United Arab Emirates, United Kingdom and United States. We also have sales and
marketing offices located in Brazil, Canada, Germany, Italy, the Netherlands, Saudi Arabia, Spain,
Sweden, United Kingdom and United States and sales and marketing offices in the rest of the world.
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. The executive management evaluates Satyam's operating segments based on the
following two business groups:
•
IT services:
We provide a comprehensive range of IT services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, and infrastructure management services. We seek to be the single
service provider capable of servicing all of our customers' IT requirements. Our consulting
and enterprise business solutions includes services in the area of enterprise resource
planning, customer relationship management
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and supply chain management, data warehousing and business intelligence, knowledge
management, document management and enterprise application integration. We also assist our
customers in making their existing computing systems accessible over the Internet. The
segment information includes the results of Citisoft and Knowledge Dynamics Pte Ltd,
Singapore, or Knowledge Dynamics which were acquired during 2005.
•
BPO:
We provide outsourced BPO services in areas such as human resources, finance and
accounting, customer care (such as voice, email and chat) besides also providing
industry-specific transaction processing services. We target our BPO services at the
insurance, healthcare, banking and financial services, transportation, tourism,
manufacturing, automotive, telecommunications, media, utilities and retail industries.
Revenues from this business segment currently do not constitute a significant proportion of
our total revenues; however, we anticipate that this proportion will increase over time. Our
BPO services are offered through our majority-owned subsidiary, Nipuna. As part of the
investor rights and securities subscription agreements which we have entered into with
Nipuna's two other investors, we have agreed not to compete with Nipuna. Pursuant to these
agreements, we and our affiliates are restricted from engaging in activities that are or
could directly or indirectly be competitive with the business of Nipuna. Such activities
include among others providing BPO, soliciting existing or prospective customers of Nipuna
to obtain the services offered by Nipuna from other service providers and investing in
companies engaged in the same or similar business as Nipuna. These non-compete restrictions
apply until the investors redeem all of their preference shares in Nipuna or their equity
interest in Nipuna up to 5%.
Revenues
We generate revenues through fees for professional services rendered in our two segments, namely,
IT services and BPO services.
The following table sets forth the total revenues (excluding inter-segment revenues) for our
business segments            for fiscal 2007, 2006 and 2005:
Year ended March 31,
2007
2006
2005
Segment
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
IT services
$
1,432.5
98.0
%
$
1,082.7
98.8
%
$
786.7
99.1
%
BPO
28.9
2.0
13.6
1.2
%
6.9
0.9
Total
$
1,461.4
100.0
%
$
1,096.3
100.0
%
$
793.6
100.0
%
We discuss below the components of our IT services revenues by technology type, contract type,
offshore or onshore designation, top customers and customer geography:
Revenues by technology
The vast majority of our revenues are generated from our various IT service offerings. The
following table presents our IT services revenues (excluding inter-segment revenues) by type of
service offering for the periods indicated:
Year ended March 31,
2007
2006
2005
Technology type
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Application development and maintenance services
$
675.2
47.1
$
541.4
50.0
%
$
429.5
54.6
Consulting and enterprise business solutions
599.8
41.9
429.5
39.7
269.7
34.3
Extended engineering solutions
93.5
6.5
70.2
6.5
55.2
7.0
Infrastructure management services
64.0
4.5
41.6
3.8
32.3
4.1
Total
$
1,432.5
100.0
%
$
1,082.7
100.0
%
$
786.7
100.0
%
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Revenues by contract type
Our IT services are provided on a time-and-material basis or on a fixed-price basis. Revenues from
IT services provided on a time-and-material basis are recognized in the period that the services
are performed. Revenues from IT services provided on a fixed-price basis are recognized under the
percentage of completion method of accounting and are recorded when we can reasonably estimate the
time period to complete the work. 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 to us. Although we have
revised our project completion estimates from time to time, such revisions have not materially
affected our reported revenues to date. In recent years, we have experienced some pricing pressure
from our customers, which has had a negative impact on margins. In response to current market
trends, we are considering the viability of introducing performance-based or variable-pricing
contracts. In the near term, we expect that revenue from fixed-price contracts will continue to
increase as current market trends indicate a customer preference towards fixed-price contracts.
The following table presents our IT services revenues (excluding inter-segment revenues) by type of
contract for the periods indicated:
Year ended March 31,
2007
2006
2005
Contract type
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Time-and-material basis
$
873.2
61.0
%
$
702.8
64.9
%
$
517.3
65.8
%
Fixed-price basis
559.3
39.0
379.9
35.1
269.4
34.2
Total
$
1,432.5
100.0
%
$
1,082.7
100.0
%
$
786.7
100.0
%
Revenues based on offshore and onsite/offsite
We provide our IT services through a combination of (i) offshore centers located throughout India,
(ii) teams working onsite at a customer's location, (iii) nearshore centers located in Canada,
China and Hungary to service U.S.-based, Asia Pacific based and Europe based customers,
respectively, and (iv) 29 offsite centers in locations in Australia, Brazil, Canada, China,
Germany, Hungary, Japan, Korea, Malaysia, Singapore, South Africa, Thailand, United Arab Emirates,
the United Kingdom and United States.. Offshore IT services revenues consist of revenues earned
both from IT services work conducted at our offshore centers in India as well as onsite work
conducted at customers' premises which is related to offshore work. Offshore IT services revenues
do not include revenues from our offsite or nearshore centers located outside of India or revenues
from onsite work which is not related to any offshore work. These later revenues are included in
onsite/offsite revenues.
We generally charge higher rates and incur higher compensation expenses for work performed by our
onsite teams at our customer's premises or at our offsite and nearshore centers, as compared to
work performed at our offshore centers in India. Services performed by 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.
The following table presents our IT services revenues (excluding inter-segment revenues) based on
the location where services are performed for the periods indicated:
Year ended March 31,
2007
2006
2005
Location
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Offshore
$
704.1
49.2
%
$
496.0
45.8
%
$
327.1
41.6
%
Onsite/Offsite
728.4
50.8
586.7
54.2
459.6
58.4
Total
$
1,432.5
100.0
%
$
1,082.7
100.0
%
$
786.7
100.0
%
Revenues by top customers
Our top two customers accounted for 11.0% of our IT services' revenues in fiscal 2007, as compared
to 14.1% and 18.3% of IT services' revenues in fiscal 2006 and 2005 respectively. Our top five
customers accounted for 21.5% of IT services' revenues in fiscal
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2007, as compared to 24.5% and 29.5% of IT services' revenues in fiscal 2005, respectively.
Revenues based on customer location
We have experienced increasing volumes of business from customers located in United States and
Europe, attributable to both new customers and additional business from existing customers. We
expect that most of our revenues will be generated in United States followed by Europe in fiscal
2007. The following table gives the composition of our IT services revenues (excluding inter-segment
revenues) based on the location of our customers for the periods indicated:
Year ended March 31,
2007
2006
2005
Geographic location
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
United States
$
908.7
63.4
%
$
699.0
64.6
%
$
538.2
68.4
%
Europe
274.7
19.2
204.8
18.9
130.7
16.6
Japan
20.8
1.5
15.5
1.4
13.9
1.8
India
63.4
4.4
45.2
4.2
25.5
3.2
Rest of the world
164.9
11.5
118.2
10.9
78.4
10.0
Total
$
1,432.5
100.0
%
$
1,082.7
100.0
%
$
786.7
100.0
%
Expenses
Cost of revenues
Our cost of revenues consists primarily of the compensation cost of technical staff, depreciation
on dedicated assets and system and application software costs, amortization of intangibles, travel
costs, data communication expenses and other expenses incurred that are related to the generation
of revenue.
The principal component of our cost of revenues is the wage cost of our technical associates. Wage
cost in India, including in the IT services industry, have historically been significantly lower
than wage cost in the United States and Europe for comparably skilled professionals. However, as
wages in India increase at a faster rate than in the United States, we may experience increase in
our costs of personnel, particularly project managers and other mid-level professionals.
The utilization levels of our technical associates also affect our revenue and gross profits. We
calculate utilization levels on a monthly basis, 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 or she works 157 hours per
month. We manage utilization by monitoring project requirements and timetables. The number of
associates assigned to a project will vary according to size, complexity, duration, and demands of
the project. Associate utilization levels for IT services were 83.8%, 85.0% and 82.1% in fiscal
2007, 2006 and 2005 respectively.
Selling, general and administrative expenses
Selling, general and administrative expenses generally include the compensation costs of sales,
management and administrative personnel, travel costs, advertising, business promotion,
depreciation on assets, rent, repairs, electricity and other general expenses not attributable to
cost of revenues.
Subsidiaries
As of March 31, 2007, we have four wholly-owned subsidiaries, Satyam Technologies Inc., or
STI, Satyam Computer Services (Shanghai) Company Limited, or Satyam Shanghai, Citisoft and
Knowledge Dynamics as well as one majority owned subsidiary, Nipuna. These five subsidiaries have been consolidated in our consolidated financial
statements for the year ended March 31, 2007.
Citisoft
On May 12, 2005, Satyam Computer Services acquired a 75% interest in Citisoft Plc or Citisoft, a
specialist business and systems
40
Table of Contents
consulting firm located in the United Kingdom that has focused on the investment management
industry since 1986. The results of Citisoft's operations have been consolidated by Satyam
Computer Services from the consummation date of May 12, 2005. The acquisition has been accounted
for by following the purchase method of accounting.
The consideration for the 75% equity interest in Citisoft amounted to $17.4 million comprising of
an initial consideration of $14.3 million (including direct acquisition costs of $0.9 million) and
deferred consideration (non-contingent) of $3.1 million. Deferred consideration for the acquisition
of the 75% equity interest was accounted for as part of the purchase consideration and disclosed as
a current liability in the consolidated balance sheet as of March 31, 2006 this has been paid
subsequently in June 2006. Satyam Computer Services is also required to pay a maximum earn out
consideration amounting to $3.9 million in May 2007 based on achievement of targeted revenues and
profits for the year ended April 30, 2007. The earn-out consideration will be accounted for as
additional purchase consideration when the contingency is resolved.
Satyam Computer Services had a call option and the minority shareholders had a put option to
acquire / sell the balance 25% equity shares in two tranches 12.5% on April 30, 2007 and 12.5% on
April 30, 2008. The consideration payable for the first tranche of 12.5% equity shares on April
30, 2007 would amount to $2.8 million and a maximum earn-out consideration amounting to $2.7
million based on achievement of targeted revenues and profits. The consideration payable for the
second tranche of 12.5% equity shares on April 30, 2008 would amount to $2.9 million and a maximum
earn-out consideration amounting to $4.2 million based on achievement of targeted revenues and
profits. Satyam Computer Services recorded 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
75.0% interest in Citisoft. The difference between the fair values at each valuation date was
charged to selling, general and administration expenses in statement of income. On the basis of an
independent valuation, the value of put option was $ Nil and $1.1 million as of May 12, 2005 and
March 31, 2006 respectively.
On June 29, 2006, Satyam Computer Services exercised the call option and acquired the remaining 25%
equity interest for a deferred consideration of $5.9 million payable on April 30, 2007 and a
maximum earn-out consideration of $2.7 million and $4.2 million payable in May 2007 and 2008
respectively based on achievement of targeted revenues and profits for the years ended April 30,
2007 and 2008. As a result Satyam reversed the put option liability during the year ended March 31,
2007. The acquisition was accounted for as a step purchase of the 25% equity interest, the deferred
consideration for the acquisition of the 25% equity interest was accounted for as part of the
purchase consideration and disclosed as a current liability in the consolidated balance sheet as of
March 31, 2007. The earn-out consideration will be accounted for as additional purchase
consideration when the contingency is resolved.
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Table of Contents
Satyam Computer Services is also required to fund an Employee Benefit Trust ("EBT") formed by
Citisoft for the purpose of providing additional incentive to employees to contribute to the
success of Citisoft. Satyam is required to fund a maximum of $3.4 million and $1.7 million on
April 30, 2007 and 2008 respectively, based on achievement of targeted revenues and profits. Satyam
Computer Services has recognized $1.7 million and $1.4 million in the consolidated statement of
income as part of cost of revenues in respect of the EBT contribution for the years ended March 31,
2007 and 2006 respectively. The unpaid EBT contribution (disclosed as a current liability) amounted
to $1.6 million and $1.4 million as of March 31, 2007 and 2006 respectively
The purchase consideration for acquisition of interest has been allocated to the assets acquired
and liabilities assumed as of the date of acquisition based on management's estimates and a
valuation done by an independent valuer in accordance with Statement of Financial Accounting
Standards No. 141, Business Combinations. The goodwill has been allocated to the IT services
segment. The purchase price allocation is as follows:
$ in millions
Acquisition of
Acquisition of
75% interest
25% interest
Purchase price
$
17.4
$
5.9
Allocated to:
Net current assets
$
2.2
0.7
Tangible assets
0.3
0.1
Customer Contracts related intangibles
0.8
0.3
Customer relationship related intangibles
5.4
0.7
Trade name
0.7
0.1
Goodwill
10.3
4.4
Deferred tax liability
(2.3
)
(0.4
)
Total
$
17.4
$
5.9
Pro forma disclosure regarding this acquisition has not been provided because it is not material to
the operations of the Company.
Knowledge Dynamics
On July 21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics, a leading Data Warehousing and Business Intelligence Solutions provider. The
transaction was consummated on October 1, 2005, the date of transfer of shares to Satyam Computer
Services and Satyam Computer Services has consolidated Knowledge Dynamics, from October 1, 2005.
The acquisition has been accounted for by following the purchase method of accounting.
The consideration for this acquisition amounted to $3.3 million comprising of initial consideration
of $1.8 million (including direct acquisition costs of $11 thousand) and deferred consideration
(non-contingent) of $1.5 million. The total deferred consideration for the acquisition of $1.5
million has been accounted for as part of the purchase consideration out of which $0.8 million has
been paid during the year ended March 31, 2007 and $0.7 million as current liability in the balance
sheet. Satyam Computer Services is also required to pay a maximum earn out consideration amounting
to $1.1 million and $1.1 million on April 30, 2007 and 2008 respectively based on the achievement
of targeted revenues and profits from the date of acquisition upto April 30, 2007 and 2008
respectively. The earn-out consideration will be accounted for as purchase consideration when the
contingency is resolved.
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Table of Contents
The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management's estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
$
in millions
Purchase price
$
3.3
Allocated to:
Net current assets
$
0.5
Customer Contracts and Related Relationships
1.0
Trade name
0.1
Goodwill
2.1
Deferred tax liability
(0.4
)
Total
$
3.3
Pro forma disclosure regarding this acquisition has not been provided because it is not material to
the operations of the Company.
Associate — Sify
On November 7, 2005, we offered to sell an aggregate of 11,182,600 equity shares, representing our
entire investment of 31.6% of the outstanding equity shares of Sify Limited., or Sify. The sale
transaction was consummated on November 9, 2005 at a sale price of $5.60 per equity share
aggregating to $62.3 million.
We accounted for our share of equity in earnings/(losses) of Sify under the equity method of
accounting up to November 9, 2005. The excess of sale proceeds (net of transaction costs) over the
carrying value of investment in Sify as on the date of sale amounting to $43.6 million has been
recognized as gain in the statement of income during year ended March 31, 2006.
Preferred Stock of Subsidiary
Nipuna issued 45,669,999 and 45,340,000 0.05% convertible redeemable cumulative preference shares
of par value Rs 10 ($0.23) per share in October 2003 and June 2004 respectively to the investors
at an issue price of Rs.10 ($0.23) per share, in exchange for an aggregate consideration of $20
million.
As per the agreement, these preference shares were mandatorily convertible into equity shares of
Nipuna no later than June 2006, if Nipuna achieved certain targets for revenues and profits earned
up to March 31, 2006. If these targeted revenues and profits were not achieved by Nipuna along
with other triggering events, the investors had an option to either redeem these preference shares
or convert them. Although certain triggering events for early redemption as per the agreement
occurred during the period January 2004 to December 2004 the investors waived the right of early
redemption. Further Nipuna has not achieved the targeted revenues and profits upto March 2006.
If not converted, early converted or redeemed, these convertible preference shares were redeemable
on maturity in June 2007 at a redemption premium, which could range between 7.5% to 13.5% p.a. The
Investors are entitled to receive dividends at the rate of 0.05% per cent per annum, on the face
value of Rs. 10 ($0.23) from the date of issuance of such Preference Shares. The dividends are
cumulative and payable in cash at the rate indicated above, whether or not they have been declared
and whether or not there are profits, surplus or other funds of Nipuna legally available for the
payment of dividends. These preference shares rank senior to all classes of Nipuna's currently
existing capital stock or established subsequently with respect to dividend distributions and
repayment of capital and premium upon a Bankruptcy Event or Change in Control with respect to
Nipuna, unless the terms and conditions of such class expressly provide that such class will rank
senior to or on parity with the convertible redeemable cumulative preference shares. The dividend
on the preference shares for the year ended March 31, 2007 is payable.
On November 20, 2006, a Share Purchase, Redemption and Amendment Agreement ("SPRA Agreement")
was entered into between Satyam, the Investors and Nipuna. Out of the total preference shares,
50% of the preference shares ($ 10 million) would be redeemed
43
Table of Contents
for $13.6 million at the target date on May 21, 2007 and the balance 50% would get converted into
equity shares of Nipuna based on the terms of the existing subscription agreement. Since 50% of
the Preference Shares are mandatorily redeemable, Satyam has reclassified 50% of the preference
shares as a current liability measured at fair value and accrued redemption premium amounting to
$3.6 million up to March 31, 2007.
Further as per the SPRA Agreement, Satyam agrees to purchase and the Investors agree to sell these
equity shares at an aggregate purchase price based on a formula. If the share purchase closing
occurs on or before the share purchase target date (May 21, 2007) then the purchase price would
range from a minimum of $35 million to maximum of $45 million, however if an acceleration event
occurs the purchase price would equal $45 million. If the share purchase closing occurs after the
share purchase target date then the purchase price shall not be less than $35 million however if
an acceleration event occurs the purchase price shall not be less than $45 million. This is
subject to fulfillment of terms and conditions specified in the agreement and obtaining necessary
approvals from appropriate authorities. As of March 31, 2007 an acceleration event has occurred.
The forward contract is freestanding and has been accounted for under SFAS 150 and hence the
issuance of Nipuna's equity shares has been considered as a minority interest. The Investors gave
Nipuna a Notice of Conversion of Preference Shares and in January 2007 preference shares amounting
to $10 million have been converted into 6,422,267 equity shares of Nipuna. Due to the issue of
shares by Nipuna Satyam Computer Services' ownership interest in Nipuna was reduced from 100.0% as
at March 31, 2006 to 74.0% as at March 31, 2007. The shares issued to the Investors are at
amounts per share higher than Satyam Computer Services' average cost per share. With respect to
this transaction, the resulting gain of $7.9 million, net of taxes during the year ended March 31,
2007 has been recorded as an increase in additional paid in capital. Since the losses applicable
to the minority interest in Nipuna exceeded the minority interest in the equity capital of Nipuna,
such excess and further losses have been charged in Satyam's consolidated statement of income.
The Investors holding in Nipuna has been accounted for as a minority interest.
The forward contract has a zero fair vale at inception and at balance sheet date since as per
regulatory requirements the transaction can take place only at fair value. Upon settlement of the
forward the acquisition of the minority interest would be reflected as a step acquisition with a
corresponding reduction in minority interest.
Income Taxes
The statutory corporate income tax rate in India is currently 30.0%. This tax rate is presently
subject to a 10.0% surcharge. The amount of tax and surcharge payable is further subject to a 2.0%
education cess, resulting in an effective tax rate of 33.66%. The provision for foreign taxes is
due to income taxes payable in overseas tax jurisdictions by our offsite, nearshore and onsite
centers, principally in the United States. We benefit from tax incentives provided to software
entities as an exemption from payment of Indian corporate income taxes until the earlier of fiscal
2009 or 10 consecutive years of operations of software development facilities designated as
"Software Technology Parks," or STP units. The benefits of this tax incentive have historically
resulted in our effective tax rate being well below statutory rates. The exemption for one of our
STP unit in Bangalore and one in Hyderabad, Chennai, Pune and Bhubaneswar expired at the beginning
of fiscal 2006 and fiscal 2007 respectively and the exemption for balance of our STP units will
expire in fiscal 2008 and fiscal 2009. We also earn certain other foreign income and domestic
income, which are taxable irrespective of the tax holiday as stated above.
Our subsidiaries are subject to income taxes of the countries in which they operate. Our
subsidiaries' operating loss carried forward for tax purposes amounted to approximately $39.8
million as of March 31, 2007, which is available as an offset against future taxable income of such
entities. These carried forward amounts expire at various dates primarily over eight to twenty
years. Realization is dependent on such subsidiaries generating sufficient taxable income prior to
expiration of the loss carried forward. A valuation allowance is established attributable to
deferred tax assets and losses carried forward in subsidiaries where, based on available evidence,
it is more likely than not that they will not be realized. Currently, a full valuation allowance
has been made for such losses since we believe that our subsidiaries will not generate sufficient
taxable income prior to expiration of carry forwards and under Indian regulations we are not
allowed to file a consolidated tax return.
44
Table of Contents
Results of Operations
The following table sets forth operating data in dollars and as a percentage of revenues for the
years indicated:
Year ended March 31,
2007
2006
2005
Statement of Operations data:
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Revenues:
IT services
$
1,433.2
98.1
%
$
1,083.5
98.8
%
$
787.4
99.2
%
BPO
38.0
2.6
19.9
1.8
10.0
1.3
Inter-segment
(9.8
)
(0.7
)
(7.1
)
(0.6
)
(3.8
)
(0.5
)
Total revenues
1,461.4
100.0
1,096.3
100.0
793.6
100.0
Cost of revenues: (1)
IT services
(920.0
)
(63.0
)
(678.1
)
(61.9
)
(502.2
)
(63.3
)
BPO
(26.9
)
(1.8
)
(17.6
)
(1.6
)
(7.9
)
(1.0
)
Inter-segment
9.3
0.6
6.7
0.6
3.3
0.4
Total cost of revenues
(937.6
)
(64.2
)
(689.0
)
(62.8
)
(506.8
)
(63.9
)
Gross profit:
IT services
513.2
35.1
405.4
37.0
285.2
35.9
BPO
11.1
0.8
2.3
0.2
2.1
0.3
Inter-segment
(0.5
)
(0.0
)
(0.4
)
(0.0
)
(0.5
)
(0.1
)
Total gross profit
523.8
35.8
407.3
37.2
286.8
36.1
Operating expenses:
Selling, general and administrative expenses: (2)
IT services
(219.0
)
(15.0
)
(176.8
)
(16.1
)
(113.4
)
(14.3
)
BPO
(13.7
)
(0.9
)
(11.2
)
(1.0
)
(11.4
)
(1.4
)
Inter-segment
0.5
0.0
0.4
0.0
0.5
0.1
Total selling, general and administrative expenses
(232.2
)
(15.9
)
(187.6
)
(17.1
)
(124.3
)
(15.7
)
Operating income/(loss):
IT services
294.2
20.1
228.6
20.9
171.8
21.7
BPO
(2.6
)
(0.2
)
(8.9
)
(0.8
)
(9.3
)
(1.2
)
Inter-segment
—
—
—
—
—
—
Total operating income/(loss)
291.6
20.0
219.7
20.0
162.5
20.5
Interest income
37.3
2.6
26.3
2.4
22.3
2.8
Interest expense
(3.6
)
(0.2
)
(1.3
)
(0.1
)
(0.5
)
(0.1
)
Gain on sale of shares in associated companies/ others
—
—
43.6
4.0
—
0.0
Gain/ (loss) on foreign exchange transactions
(3.3
)
(0.2
)
0.3
0.0
(4.6
)
(0.6
)
Other income/(expense), net
6.2
0.4
(0.8
)
(0.1
)
0.4
0.0
Income before income taxes and equity in earnings/(losses) of
associated companies
328.2
22.5
287.8
26.3
180.2
22.7
Income taxes
(30.6
)
(2.1
)
(37.7
)
(3.4
)
(25.3
)
(3.2
)
Minority interest
—
—
0.1
0.0
—
—
Equity in earnings/(losses) of associated companies, net of taxes
0.8
0.1
(0.8
)
(0.1
)
(1.1
)
(0.1
)
Net income
$
298.4
20.4
$
249.4
22.7
$
153.8
19.4
Depreciation
32.4
2.2
30.6
2.8
25.0
3.2
Stock-based compensation
15.7
1.1
0.8
0.1
1.9
0.2
(1)
Inclusive of stock-based compensation expenses of $12.8 million, $Nil and $0.8
million for the years ended March 31, 2007, 2006 and 2005 respectively in the IT services
segments.
(2)
Inclusive of stock-based compensation expenses of
$2.9 million, $0.8 million and $1.1 million for the
years ended March 31, 2007, 2006 and 2005 respectively, in the IT services
segments.
45
Table of Contents
Comparison of results for fiscal 2007 and fiscal 2006.
Revenues.
Our revenues increased by 33.3% to $1,461.4 million in fiscal 2007 from $1,096.3 million
in fiscal 2006. This revenue growth of $365.1 million in fiscal 2007 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 27.6% to $1,267.3 million in fiscal 2007 from $993.0 million in fiscal 2006.
Revenues from new customers increased by 87.9% to $194.1 million in fiscal 2007 from $103.3 million
in fiscal 2006. We added 138 and 120 customers including 7 and 12 from the Fortune Global 500 and
Fortune U.S. 500 list in fiscal 2007 and 2006, respectively.
During fiscal 2007, revenues (IT services excluding inter-segment revenues) from consulting and
enterprise business solutions increased by $170.5 million, revenues from application development
and maintenance increased by $133.7 million, followed by extended engineering solutions and
infrastructure management services, increased by $23.3 million and $22.3 million respectively. In
terms of percentage growth in fiscal 2007 over fiscal 2006, revenues from consulting and enterprise
solutions has grown by 39.7%, application development and maintenance services has grown by 24.7%,
extended engineering solutions and infrastructure management services have grown by 33.2% and
53.6%, respectively.
Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials basis
decreased to 61.0% in fiscal 2007 from 64.9% in fiscal 2006. Revenues from IT services provided on
a fixed-price basis increased to 39.0% in fiscal 2007 from 35.1% in fiscal 2006. The increase in
fiscal 2007 for fixed-price contracts is primarily due to the shift in customer preference
regarding type of contracts from time-and-material to fixed-price.
The onsite revenues increased as a result of new engagements in consulting and enterprise business
solutions in fiscal 2007, and the need for extensive interactions with customers in the early
stages of new engagements to understand their business needs and create the relevant processes
before we move the appropriate portion of the work offshore.
Of the total increase of $365.1 million in total revenues in fiscal 2007, $212.9 million is due to
increased business in United States, $70.2 million in Europe, $46.6 million in rest of the world,
$30.1 million in India and $5.3 million in Japan. Our increased business in United States and
Europe was due to new customers and additional business from existing customers.
Cost of Revenues.
Cost of revenues increased by 36.1% to $937.6 million in fiscal 2007 from $689.0
million in fiscal 2006. Cost of revenues represented 64.2% of revenues in fiscal 2007 and 62.8% in
fiscal 2006. This increase by $248.6 million was attributable primarily to increases in associate
compensation and benefits expenses, traveling expenses, communication expenses, depreciation and
other expenses, attributable largely to an overall increase in our business during this period.
Associate compensation and benefits expenses increased by 33.2% to $725.2 million, or 49.6% of
revenues, in fiscal 2007 from $544.4 million, or 49.7% of revenues, in fiscal 2006. The increase in
the associate compensation and benefits is due to: (i) revision of salaries on July 1, 2006 to the
associates (ii) increase in the total number of technical associates by 10,286 to 36,997 as of
March 31, 2007 from 26,711 as of March 31, 2006. (iii) increase in number of onsite technical
associates by 1,959 to 7,286 as of March 31, 2007 from 5,327 as of March 31, 2006, for which we pay
a higher compensation and (iv) salary incentives amounting to $22.9 million given to technical
associates in fiscal 2007 as compared to $20.9 million in fiscal 2006. Traveling expenses increased
by 73.7% to $82.7 million, or 5.7% of revenues, in fiscal 2007 from $47.6 million or 4.3% of
revenues, in fiscal 2006. This increase was primarily due to increase in the number of travels
resulting from increase in the number of technical associates. Communication expenses increased by
5.8% to $15.6 million or 1.1% of revenues in fiscal 2007 from $14.7 million, or 1.3% of revenues in
fiscal 2006. This increase was primarily due to increase in number of locations of operations, both
in India and abroad. Stock-based compensation expenses increased to $12.8 million, or 0.9% of
revenues, in fiscal 2007 from $8 thousand in fiscal 2006 due to adoption of SFAS 123R effective
from April 1, 2006. Depreciation expense increased by 10.0% to $28.7 million, or 2.0% of revenues,
in fiscal 2007 from $26.1 million, or 2.4% of revenues in fiscal 2006. Other expenses comprised
mainly of rent, power and fuel and maintenance expenses. Other expenses increased by 29.5% to $72.8
million, or 5.0% of revenues, in fiscal 2007 from $56.2 million, or 5.1% of revenues in fiscal
2006.
Selling, general and administrative expenses.
Selling, general and administrative expenses
increased by 23.7% to $232.2 million in fiscal 2007 from $187.6 million in fiscal 2006. Selling,
general and administrative expenses represented 15.9% of revenues in fiscal 2007 and 17.1% of
revenues in fiscal 2006. This increase of $44.6 million in fiscal 2007 was a result primarily of
increase in associate compensation and benefits for non-technical associates, communication
expenses, and traveling expenses. Associate compensation and benefits increased by 27.7% to $128.8
million, or 8.8% of revenues, in fiscal 2007 as compared to $100.9 million or 9.2% of
46
Table of Contents
revenues in fiscal 2006 primarily on account of (i) revision of salaries on July 1, 2006 to the
associates and (ii) increase in number of non-technical associates by 108 to 2,021 as of March 31,
2007 from 1,913 as of March 31, 2006. Traveling expenses increased by 36.4% to $25.5 million or
1.7% of revenues in fiscal 2007 from $18.7 million or 1.7% of revenues in fiscal 2006. Professional
charges increased by 11.7% to $13.4 million or 0.9% of revenues in fiscal 2007 from $12.0 million
or 1.1% of revenues in fiscal 2006. Communication expenses increased by 9.5% to $6.9 million or
0.5% of revenues in fiscal 2007 as compared to $6.3 million or 0.6% of revenues in fiscal 2006.
Stock-based compensation expenses increased to $2.9 million, or 0.2% of revenues, in fiscal 2007
from $0.8 million, or 0.1% of revenues in fiscal 2006 due to adoption of SFAS 123R effective from
April 1, 2006 Other expenses comprised primarily of power and fuel, rent, marketing, repairs and
maintenance and advertisement expenses. Other expenses increased by 11.9% to $54.5 million or 3.7%
of revenues in fiscal 2007 from $48.7 million, or 4.4% of revenues in fiscal 2006.
Operating income.
Our operating income was $291.6 million in fiscal 2007, representing an increase
of 32.7% over the operating income of $219.7 million in fiscal 2006. As a percentage of revenues,
operating income was 20.0% in fiscal 2007, as compared to 20.0% of revenues in fiscal 2006.
Interest income.
Interest income increased by 41.8% to $37.3 million in fiscal 2007 from $26.3 in
fiscal 2006. The increase is primarily due to additional bank deposits made in fiscal 2007
amounting to $745.6 million.
Gain on sale of investments.
Gain on sale of investments was $Nil in fiscal 2007 as compared to
$43.6 million in fiscal 2006. The gain of $43.6 million in fiscal 2006 was on account of the gain
on sale of 11,182,600 equity shares representing its entire 31.61% investment in Sify.
Gain/(loss) on foreign exchange transactions.
Our revenues generated in U.S. dollars were 74.7% and
77.6% of total revenues in fiscal 2007 and 2006, respectively. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2007 was Rs. 45.11 against Rs. 44.18 in fiscal 2006. As at March 31,
2007, the Indian rupee appreciated to Rs. 43.10 against Rs. 44.48 at March 31, 2006. As at March
31, 2006, the Indian rupee depreciated to Rs. 44.48 against 43.62 at March 31, 2005. As a result of
these fluctuations in exchange rates during fiscal 2007 and fiscal 2006, loss on foreign exchange
transactions was $3.3 million in fiscal 2007 as compared to a gain of $0.3 million in fiscal 2006.
Other income/(expenses), net.
Other income/ (expenses), net were $6.2 million in fiscal 2007, as
compared to other income /(expenses), net were $(0.8) million in fiscal 2006. The increase in the
other income is primarily on account of gain on forward and options contracts due to rupee
appreciation to Rs 43.10 as on March 31, 2007 from Rs 44.48 as on March 31, 2006.
Income taxes.
Income taxes were $30.6 million in fiscal 2007, representing a decrease of 18.8% from
$37.7 million in fiscal 2006. The decrease in income taxes is primarily on account of income taxes
on sale of shares in Sify amounting to $7.7 million in fiscal 2006. The expiry of tax exemption
benefit for three of our STP units resulted in increase in income taxes by $10.3 million in fiscal
2007 as compared to the expiry of tax exemption benefit for two of our STP units resulted in
increase in income taxes by $2.8 million in fiscal 2006, which is offset by decrease in income of
foreign branches primarily on account of rupee appreciation.
Equity in earnings/(losses) of associated companies, net of taxes.
Equity in earnings/(losses) of
associated companies was $0.8 million in fiscal 2007 as compared to $(0.8) million in fiscal 2006.
Equity in earnings/(losses) of Satyam Venture Engineering Services Private Limited, or Satyam
Venture, CA Satyam ASP Private Limited, or CA Satyam and Sify amounted to $0.6 million, $0.2
million and Nil, respectively, in fiscal 2007 as compared to $0.5 million, $(15) thousand and
$(1.3) million, respectively, in fiscal 2006.
Net income.
As a result of the foregoing, our net income was $298.4 million in fiscal 2007,
representing an increase of 19.6% over net income of $249.4 million in fiscal 2006. As a percentage
of total revenues, net income decreased to 20.4% in fiscal 2007 from 22.7% in fiscal 2006.
Comparison of results for fiscal 2006 and fiscal 2005.
Revenues.
Our revenues increased by 38.1% to $1,096.3 million in fiscal 2006 from $793.6 million in
fiscal 2005. This revenue growth of $302.7 million in fiscal 2006 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 35.8% to $993.0 million in fiscal 2006 from $731.2 million in fiscal 2005.
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Revenues from new customers increased by 65.9% to $103.5 million in fiscal 2006 from $62.4 million
in fiscal 2005. We added 120 and 108 customers including 12 and 17 from the Fortune Global 500 and
Fortune U.S. 500 list in fiscal 2006 and 2005, respectively.
During fiscal 2006, revenues (IT services excluding inter-segment revenues) from consulting and
enterprise business solutions increased by $159.8 million, revenues from application development
and maintenance increased by $111.9 million, followed by extended engineering solutions and
infrastructure management services, increased by $15.0 million and $9.3 million respectively. In
terms of percentage growth in fiscal 2006 over fiscal 2005, revenues from consulting and enterprise
solutions has grown by 59.3%, application development and maintenance services has grown by 26.1%,
extended engineering solutions and infrastructure management services have grown by 27.2% and 28.8%
respectively.
Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials basis
decreased to 64.9% in fiscal 2006 from 65.8% in fiscal 2005. Revenues from IT services provided on
a fixed-price basis increased to 35.1% in fiscal 2006 from 34.2% in fiscal 2005. The increase in
fiscal 2006 for fixed-price contracts is primarily due to the shift in customer preference
regarding type of contracts from time-and-material to fixed-price.
The onsite revenues increased as a result of new engagements in consulting and enterprise business
solutions in fiscal 2006, and the need for extensive interactions with customers in the early
stages of new engagements to understand their business needs and create the relevant processes
before we move the appropriate portion of the work offshore.
Of the total increase of $302.7 million in total revenue in fiscal 2006, $168.9 million was due to
increased business in United States, $74.6 million in Europe, $39.7 million in rest of the world,
$17.9 million in India and $1.6 million in Japan. Our increased business in United States and
Europe was due to new customers and additional business from existing customers.
Cost of Revenues.
Cost of revenues increased by 35.9% to $689.0 million in fiscal 2006 from $506.8
million in fiscal 2005. Cost of revenues represented 62.8% of revenues in fiscal 2006 and 63.9% in
fiscal 2005. This increase by $182.2 million was attributable primarily to increases in associate
compensation and benefits expenses, traveling expenses, communication expenses, depreciation and
other expenses, attributable largely to an overall increase in our business during this period.
Associate compensation and benefits expenses increased by 35.7% to $544.4 million, or 49.7% of
revenues in fiscal 2006 from $401.2 million, or 50.6% of revenues in fiscal 2005. The increase in
the associate compensation and benefits is due to: (i) increase in the total number of technical
associates by 7,471 to 26,711 in fiscal 2006 from 19,240 in fiscal 2005; (ii) increase in number of
onsite technical associates by 1,026 to 5,327 in fiscal 2006 from 4,301 in fiscal 2005 for which we
pay a higher compensation; (iii) salary incentives amounting to $20.9 million given to technical
associates in fiscal 2006 as compared to $7.9 million in fiscal 2005. Salary incentives increased
primarily due to introduction of new incentive scheme by the company in fiscal 2006, and (iv)
increase of approximately $1.5 million of the funding to Citisoft Employee Benefit Trust accounted
as compensation expense relating to employees of Citisoft. Traveling expenses increased by 21.7% to
$47.6 million, or 4.3% of revenues, in fiscal 2006 from $39.1 million, or 4.9% of revenues, in
fiscal 2005. This increase was primarily due to increase in the number of travels resulting from
increase in the number of technical associates. Communication expenses increased by 110.0% to $14.7
million or 1.3% of revenues in fiscal 2006 from $7.0 million, or 0.9% of revenues in fiscal 2005.
This increase was primarily due to increase in number of locations of operations, both in India and
abroad. Other expenses comprised mainly of rent, power and fuel and maintenance expenses. Other
expenses increased by 47.5% to $56.2 million, or 5.1% of revenues, in fiscal 2006 from $38.1
million, or 4.8% of revenues in fiscal 2005. Depreciation expense increased 26.7% to $26.1 million,
or 2.4% of revenues, in fiscal 2006 from $20.6 million, or 2.6% of revenues in fiscal 2005.
Selling, general and administrative expenses.
Selling, general and administrative expenses
increased 50.9% to $187.6 million in fiscal 2006 from $124.3 million in fiscal 2005. Selling,
general and administrative expenses represented 17.1% of revenues in fiscal 2006 and 15.7% of
revenues in fiscal 2005. This increase of $63.3 million in fiscal 2006 was a result primarily of
increase in associate compensation and benefits for non-technical associates, communication
expenses, traveling expenses and sales and marketing expenses. Associate compensation and benefits
increased by 91.1% to $100.9 million, or 9.2% of revenues, in fiscal 2006 as compared to $52.8
million or 6.7% of revenues in fiscal 2005 primarily on account of increase in number of
non-technical associates by 463 to 1,913 as of March 31, 2006 from 1,450 as of March 31, 2005, and
salary incentives amounting to $21.0 million given to non-technical associates in fiscal 2006 as
compared to $3.9 million in fiscal 2005. Salary incentives increased primarily due to introduction
of new incentive scheme by the company in fiscal 2006. Communication expenses decreased by 22.2% to
$6.3 million or 0.6% of revenues in fiscal 2006 as compared to $8.1 million or 1.0% of revenue in
fiscal 2005. Traveling expenses increased by 103.3% to $18.7 million or 1.7% of revenues in fiscal
2006 from $9.2 million or 1.2% of revenue in fiscal 2005. Traveling expenses
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increased primarily due to increase in travels by our non-technical associates. Depreciation
expenses increased by 4.5% to $4.6 million or 0.4% of revenues in fiscal 2006 from $4.4 million or
0.6% of revenue in fiscal 2005. Professional charges increased by 27.7% to $12.0 million or 1.1% of
revenues in fiscal 2006 from $9.4 million or 1.2% of revenues in fiscal 2005. Stock-based
compensation expense decreased by 27.3% to $0.8 million in fiscal 2006 from $1.1 million in fiscal
2005. Other expenses comprised primarily of marketing expense, rent, power and fuel and maintenance
expenses. Other expenses increased by 12.7% to $44.3 million or 4.0% of revenue in fiscal 2006
from $39.3 million, or 5.0% of revenues in fiscal 2005.
Operating income.
Our operating income was $219.7 million in fiscal 2006, representing an increase
of 35.2% over the operating income of $162.5 million for fiscal 2005. As a percentage of revenues,
operating income decreased to 20.0% in fiscal 2006, from 20.5% in fiscal 2005. This decrease in
operating income as a percentage of revenue was due to (i) increase in the associate compensation
and benefits expenses by $191.3 million to $645.3 million or 58.9% of revenue in fiscal 2006 from
$454.0 million, or 57.2% of revenues, in fiscal 2005 and (ii) offset by decrease in the traveling,
depreciation and other expenses.
Interest income.
Interest income increased to $26.3 million in fiscal 2006 representing an
increase of 17.9% from $22.3 million in fiscal 2005, primarily due to additional bank deposits
during the period.
Gain on sale of investments.
In fiscal 2006, gain on sale of investments was $43.6 million as
compared to $Nil in fiscal 2005. The gain of $43.6 million in fiscal 2006 was on account of the
gain on sale of 11,182,600 equity shares representing its entire 31.61% investment in Sify.
Gain/(loss) on foreign exchange transactions.
In fiscal 2006 and fiscal 2005, 77.6% and 81.8%
respectively, of our revenues were generated in U.S. dollars. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2006 was Rs. 44.18 against Rs. 44.85 in fiscal 2005. As at March
31, 2006, the Indian rupee depreciated to Rs. 44.48 against 43.62 at March 31, 2005. As at March
31, 2005, the Indian rupee depreciated to Rs. 43.62 against Rs. 43.40 as at March 31, 2004. As a
result of these fluctuations in exchange rates during fiscal 2006 and fiscal 2005, gain on foreign
exchange transactions was $0.3 million in fiscal 2006 as compared to a loss of $4.6 million in
fiscal 2005.
Other income/(expenses), net.
Other income/ (expenses), net were $(0.8) million in fiscal 2006, as
compared to other income /(expenses), net were $0.4 million in fiscal 2005. The decrease in the
other income is primarily on account of loss on forward and options contracts.
Income taxes.
Income taxes were $37.7 million in fiscal 2006, representing an increase of 49.0%
from $25.3 million in fiscal 2005. This increase was primarily due to increase in tax of $7.7
million relatable to sale of shares in Sify. The expiry of tax exemption benefit for two of our STP
units in Hyderabad resulted in increase in income taxes by $2.8 million in fiscal 2006.
Equity in earnings/(losses) of associated companies, net of taxes.
Equity in earnings/(losses) of
associated companies was $(0.8) million in fiscal 2006 as compared to $(1.1) million in fiscal
2005. Equity in earnings/(losses) of Satyam Venture, CA Satyam and Sify amounted to $0.5 million,
$(15) thousand and $(1.3) million, respectively, in fiscal 2006 as compared to $0.7 million, $(63)
thousand and $(1.7) million, respectively in fiscal 2005.
Net income.
As a result of the foregoing, our net income was $249.4million in fiscal 2006,
representing an increase of 62.2% over net income of $153.8 million in fiscal 2005. As a
percentage of total revenues, net income increased to 22.7% in fiscal 2006 from 19.4% in fiscal
2005.
Liquidity and Capital Resources
Net cash provided by operating activities
Net cash provided by operating activities was $261.5 million, $162.7 million and $171.3 million in
fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
In fiscal 2007, non-cash adjustments to reconcile the $298.4 million net income to net cash used in
operating activities consisted primarily of depreciation and amortization expense of $33.6 million,
stock-based compensation expense of $15.7 million and increase
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in net accounts receivable and unbilled revenues. Net accounts receivable and unbilled revenues
increased by $127.7 million primarily as a result of an increase in our revenues and increase in
collection period. Accounts payable and accrued expenses increased by $42.2 million primarily on
account of provision for gratuity and unutilized leave by $23.7 million and increase in provision
for taxation net of payments by $7.0 million.
In fiscal 2006, non-cash adjustments to reconcile the $249.4 million net income to net cash used in
operating activities consisted primarily of depreciation and amortization expense of $31.5 million, increase in net accounts receivable and unbilled revenues and gain on sale of investment of $43.6
million. Net accounts receivable and unbilled revenues increased by $81.9 million primarily as a
result of an increase in our revenues. Accounts payable and accrued expenses increased by $37.6
million primarily on account of accrued compensation and benefits of $7.7 million and increase in
provision for gratuity and unutilized leave by $5.7 million.
In fiscal 2005, non-cash adjustments to reconcile the $153.8 million net income to net cash
provided by operating activities consisted primarily of depreciation expense of $25.0 million and
increase in net accounts receivable and unbilled revenues. Net accounts receivable and unbilled
revenues increased by $40.7 million primarily as a result of an increase in our revenues. Accounts
payable and accrued expenses increased by $18.3 million primarily on account of an increase in
taxes by $2.1 million and an increase in sub-contracting charges payable by $5.0 million.
Net cash used in investing activities
Net cash used in investing activities was $422.7 million, $5.2 million and $115.5 million in fiscal
2007, fiscal 2006 and fiscal 2005, respectively.
Net cash used in investing activities in fiscal 2007 increased by $417.5 million to $422.7 million
from $5.2 million in fiscal 2006. This increase in net cash used in investing activities was
primarily due to investment in bank deposits amounting to $745.6 million and purchase of premises,
plant and equipment of $81.5 million during fiscal 2007 due to expansion of new facilities at
Bangalore, Chennai, Hyderabad and Visakhapatnam which is offset by receipt of proceeds from
maturity of bank deposits amounting to $408.0 million.
Net cash used in investing activities in fiscal 2006 decreased by $110.3 million to $5.2 million
$115.5 million in fiscal 2005. This decrease in net cash used in investing activities was
primarily due to proceeds from the sale of shares of Sify amounting to $62.3 million, offset by
(i) payment of consideration for the acquisition of Citisoft Plc amounting to $12.1 million net of
cash acquired,(ii) payment for acquisition of Knowledge Dynamics amounting to $1.6 million net of
cash acquired and (iii) increase in purchases of premises, plant and equipment to $54.1 million
in fiscal 2006 due to purchase of premises and equipment, primarily infrastructure, computers and
other equipment associated with the expansion of new facilities at Bangalore, Chennai, Hyderabad
and Visakhapatnam.
Net cash used in investing activities in fiscal 2005 increased by $55.5 million to $115.5 million
from $60.0 million in fiscal 2004. This increase was primarily due to increase in investments in
bank deposits amounting to $79.3 million and purchases of premises, plant and equipment to $39.0
million during fiscal 2005 due to the purchase of land by Nipuna and purchase of equipment,
primarily infrastructure, computers and other equipment associated with the expansion of new
facilities at Hyderabad, Bangalore and Chennai.
Net cash provided by/(used in) financing activities
Net cash provided by/(used in) financing activities was $16.1 million, $6.1 million and $(12.9)
million in fiscal 2007, fiscal 2006 and fiscal 2005, respectively.
Net cash provided by financing activities in fiscal 2007, increased by $10.0 million to $16.1
million from $6.1 million in fiscal 2006. We received cash from exercise of associate stock options
(including shares subscribed but unissued) of $66.2 million, $10.9 million from short term debt by
Nipuna and $4.3 million from long term debts by Nipuna. We used cash in repayment of loans
amounting to $8.6 million. Cash dividends paid amounted to $56.7 million in fiscal 2007.
Net cash provided by/(used in) financing activities in fiscal 2006, increased by $19.0 million to
$6.1 million from $(12.9) million in fiscal 2005. We received cash from exercise of associate
stock options of $31.0 million, $3.6 million from short term debt by our subsidiary and $16.3
million from long term debts by Nipuna. We used cash in repayment of loans amounting to $3.9
million. Cash
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dividends paid amounted to $41.3 million in fiscal 2006.
Net cash used in financing activities in fiscal 2005, increased by $1.3 million to $12.9 million
from $11.6 million in fiscal 2004. We received cash from issuance of preferred stock (net of
issuance costs) of $9.5 million by our subsidiary, $15.3 million by associate stock options and
$1.7 million from short-term debt by our subsidiary. Cash dividends paid amounted to $37.6
million in fiscal 2005.
As of March 31, 2007, we had cash and cash equivalents of $152.2 million, U.S. dollar denominated
loans of Nipuna amounting to $20.6 million, short term borrowings of Nipuna amounting to $10.5
million and hire purchase loans amounting to $3.2 million with maturities ranging from one to three
years. As of March 31, 2007, we had an unused working capital line of credit of $9.0 million from
banks and unused non-funded lines of credit of $16.2 million from banks.
The following table describes our outstanding credit facilities as of March 31, 2007
Amount
Interest
Computation
Loan Type
Lenders
outstanding
(per annum)
method
(dollars in millions)
Working capital term loan
BNP Paribas
$
10.0
6 month LIBOR +0.95%
Floating
External commercial borrowing
BNP Paribas
10.6
6 month LIBOR +0.95%
Floating
Overdraft facility
BNP Paribas
10.5
6 month LIBOR +0.25%
Floating
Other loans
Various other parties
3.2
3.0%-14.5%
Fixed
Total
$
34.3
We have incurred $81.5 million in fiscal 2007 and we anticipate capital expenditure of
approximately $100.0 million in fiscal 2008, principally to finance construction of new facilities
in our offshore centers, expand facilities in offshore centers in India and establish offsite
centers outside India. We believe that existing cash and cash equivalents 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. 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.
We have guaranteed payment of all sums payable by Nipuna to the Investors on redemption of the
0.05% cumulative convertible redeemable preference shares. We, Nipuna and the investors had also
entered into a warrant agreement whereby Nipuna agreed to issue to the Investors, one warrant in
consideration of and based upon every US$0.1 million referral revenues received by Nipuna or its
subsidiaries. As of March 31, 2007, there were no referral revenues and hence no warrants have been
issued.
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The following table sets forth our contractual obligations and commitments to make future payments
as of March 31, 2007. The following table excludes our accounts payable, accrued operating expenses
and other current liabilities which are payable in normal course of operations.
Payments due as at March 31, 2007,
Within 1
1-3
3-5
After 5
year
years
years
Years
Total
(dollars in millions)
Long-term debt
$
1.6
$
22.0
$
0.2
—
$
23.8
Operating leases
4.6
3.7
0.3
0.3
8.9
Unconditional purchase obligations:
Other commercial commitments
38.2
—
—
—
38.2
Bank guarantees
10.9
0.7
6.9
4.6
23.1
Gratuity Plan
2.1
5.2
8.3
19.2
34.8
Nipuna 0.05% Cumulative convertible redeemable preference shares
13.6
—
—
—
13.6
Citisoft deferred, earn-out consideration and EBT funding (1)
11.2
9.0
—
—
20.2
Knowledge Dynamics deferred and earn-out consideration (2)
2.1
1.2
—
—
3.3
Total contractual cash obligations.
$
84.3
$
41.8
$
15.7
$
24.1
165.9
(1)
The earn-out consideration and the further funding of EBT are based on fulfillment of
certain conditions.
(2)
Earn-out consideration of Knowledge Dynamics is based on certain conditions.
(3)
We anticipate to incur capital expenditure of $100 million in fiscal 2008.
Based on past performance and current expectations, we believe that our cash and cash equivalents
and cash generated from operations will satisfy our working capital needs, capital expenditures,
investment requirements, stock repurchases, commitments, and other liquidity requirements
associated with our existing operations through at least the next 12 months. In addition, there are
no transactions, arrangements, and other relationships with unconsolidated entities or other
persons that are reasonably likely to materially affect liquidity or the availability of our
requirements for capital resources.
Research and Development
Our research and development efforts are focused on developing services required by our existing
customers, to attract new customers and developing competencies and leadership in our service
offerings. We have established close alliances with U.S. and Indian institutions such as Carnegie
Mellon University and Indian Institute of Technology, Madras to strengthen our technology
competencies. We have set up an enterprise business solution laboratory where latest versions of
products are evaluated; business solution scenarios are created and validated. We have set up a
grid computing laboratory which simulates a live grid environment for testing sample applications
on the grid. We have also established a data warehousing and business intelligence center which has
developed proprietary business intelligence architectural platform which enables us to build large
scale data warehousing and business intelligence solutions. We are also working with major
technology providers in the areas of technology architectures for .NET for solutions for various
industries. In the embedded systems space, we have created an environment to simulate various
operating conditions and validate the solutions we build. We have an applied research group which
focuses on creating IP in the areas of competition, communication, networking and information
processing algorithms. In addition to presenting papers at international conferences and publishing
in referenced journals, this group has over 16 United States patent applications in various stages
of registration. In fiscal 2007, fiscal 2006 and fiscal 2005 we spent 0.03%, 0.05% and 0.08% of our
total revenues on research and development activities, respectively.
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Stock-based Compensation
Effective April 1, 2006, Satyam adopted the fair value recognition provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123 (revised 2004), "Share-Based Payment" ("SFAS
123R"). Prior to the adoption of SFAS 123R, Satyam recognized stock-based compensation using the
intrinsic value-based method of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for
Stock Issued to Employees"
, and related interpretations including Financial Accounting Standards
Board (FASB) Interpretation No. 44,
Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25,
issued in March 2000 to account for its
employee stock-based compensation plan. Satyam has therefore adopted the pro-forma disclosure
requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation"
and SFAS 148,
Accounting
for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123
.
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. In March 2005, the Securities and Exchange Commission (the
"SEC") issued Staff Accounting Bulletin No.107 ("SAB 107") regarding the SEC's interpretation of
SFAS 123R and the valuation of share-based payments for public companies. Satyam has applied the
provisions of SAB 107 in its adoption of SFAS 123R.
Satyam adopted SFAS 123R using the modified prospective transition method, which required the
application of the accounting standard as of April 1, 2006, the first day of Satyam's fiscal year
2007. Under this transition method, stock-based compensation expensed for the year ended March 31,
2007 includes a) compensation expense for all stock-based compensation awards granted prior to, but
not yet vested as of April 1, 2006, based on the grant-date fair value estimated in accordance with
the original provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", ("SFAS 123")
and b) Stock-based compensation expenses for all stock-based compensation awards granted after
April 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of
SFAS 123R. In accordance with the modified prospective transition method, Satyam's Consolidated
Financial Statements for the prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.
We have five associate stock option plans. See "Item 6. Directors, Senior Management and Employees
– Employee Benefit Plans" for more information.
Satyam's Consolidated Financial Statements as of and for the year ended March 31, 2007 reflect the
impact of SFAS 123R. In accordance with the modified prospective transition method, Satyam's
Consolidated Financial Statements for the prior periods have not been restated to reflect, and do
not include, the impact of SFAS 123R. As required by SFAS 123(R), management has made an estimate
of expected forfeitures and is recognizing compensation costs only for those equity awards expected
to vest. Upon adoption of SFAS 123R, Satyam had no cumulative adjustment on account of expected
forfeitures for stock-based awards granted prior to April 1, 2006. During the year ended March 31,
2007, Satyam recorded stock-based compensation related to stock options of $15.7 million on a
graded vesting basis for all unvested options granted prior to and options granted after the
adoption of SFAS 123(R). As of March 31, 2007, there was $45.3 million of unrecognized compensation
cost related to unvested options which is expected to be recognized over a weighted average period
of 3.84 years. Satyam issues new shares to satisfy share option exercise. Cash received from option
exercises amounted to $64.4 million, $31.0 million and $15.4 million for the years ended March 31,
2007, 2006 and 2005 respectively.
The fair value of each option award is estimated on the date of grant using the Black Scholes
option-pricing model. The following table gives the weighted-average assumptions used to determine
fair value:
Year ended
March 31,2007
Dividend yield
0.78
%
Expected volatility
59
%
Risk-free interest rate
8
%
Expected term (in years)
0.96
Expected Term: The expected term represents the period that the Company's stock-based awards are
expected to be outstanding and was determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior.
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Risk-Free Interest Rate: The risk-free interest rate is based on the applicable rates of government
securities in effect at the time of grant.
Expected Volatility: The fair values of stock-based payments were valued using a volatility factor
based on the Company's historical stock prices.
Expected Dividend: The Black Scholes option-pricing model calls for a single expected dividend
yield as an input.
Estimated Pre-vesting Forfeitures: When estimating forfeitures, the Company considers voluntary
termination behavior. Estimated forfeiture rates are trued-up to actual forfeiture results as the
stock-based awards vest.
Effect of recently issued accounting pronouncements
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109 ("FIN 48"). The Interpretation clarifies the accounting
for uncertainty in income taxes recognized in a Company's financial statements and prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The Interpretation
also provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006, which is April 1, 2007 for us. The differences, if any between the amounts
recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts
reported after adoption will be accounted for as a cumulative-effect adjustment recorded to the
beginning balance of retained earnings. We are in the process of evaluating the impact this new
standard will have on our financial position, results of operations and liquidity.
In September 2006, the Securities and Exchange Commission ("SEC") released SAB No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on the SEC's views on how
the effects of the carryover or reversal of prior year misstatements should be considered in
quantifying a current year misstatement. Satyam adopted SAB 108 during the fourth quarter of 2007.
The adoption did not have a material impact on our financial position, cash flows, or results of
operations.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements, which establishes a framework
for measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. This Statement applies under other accounting pronouncements that require
or permit fair value measurements. SFAS 157 is effective for fiscal years beginning after November
15, 2007, which is fiscal year commending April 1, 2008 for us. We are in the process of evaluating
the impact SFAS 157 will have on our financial position, results of operations, liquidity and its
related disclosures.
As discussed in note 2(m), "Significant Accounting Policies," effective March 31, 2007, Satyam
adopted SFAS No. 158, "Employer's Accounting for Defined Benefit Pension and Other Postretirement
Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R)," which requires the recognition
of the funded status of the retirement-related benefit plans in the Consolidated Balance Sheet and
the recognition of the changes in that funded status in the year in which the changes occur through
Accumulated Other Comprehensive Income, net of applicable tax effects. The provisions of SFAS No.
158 were adopted pursuant to the transition provisions therein. Satyam measures defined benefit
plan assets and obligations as of March 31 and SFAS No. 158 did not affect the company's existing
valuation practices.
In February 2007, the FASB issued FASB Statement 159, The Fair Value Option for Financial Assets
and Financial Liabilities ("SFAS 159"). SFAS 159 allows the company to choose to measure many
financial assets and financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS 159 is effective for
fiscal years beginning after November 15, 2007, which is fiscal year commending April 1, 2008 for
us. We are in the process of evaluating the impact SFAS 159 will have on our financial position,
results of operations, liquidity and its related disclosures.
Critical Accounting Policies
The following is a brief discussion of the more significant accounting policies and methods used by
us. 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 this section 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
included elsewhere in this Annual Report on Form 20-F.
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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 judgments 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 judgments 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 judgments 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 revenues primarily from IT services, which includes application development and
maintenance services, consulting and enterprise business solutions, extended engineering solutions,
and infrastructure management services.
Our IT service contracts are either on a time-and-material or fixed-price basis. The IT contracts
on a fixed-price basis specify a fixed fee to create a specific deliverable for IT services within
a fixed time frame. Typically, contracts for maintenance services specify the fee amounts for
maintenance services during a fixed period, typically a month. In the case of development projects,
the contracts specify the deliverable to be provided to the client at pre-determined prices.
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 basis, with
revisions to estimates reflected in the period in which changes become known. The use of the
percentage of completion method reflects the pattern in which the obligations to the customer are
fulfilled. We have used an input-based approach since the input measures are a reasonable
surrogate for output measures. Provisions for estimated losses on such engagements are made during
the period in which a loss becomes probable and can be reasonably estimated.
We believe that the percentage of completion method is appropriate for revenue recognition as our
revenues are earned as services are provided over the contractual term of the arrangement by
rendering services to create a specific deliverable or as maintenance services are provided over
the contract term. In determining whether delivery has occurred, we pay careful attention to the
terms of the arrangement, specifically our's and the customer's rights and obligations. The use of
the percentage of completion method reflects the pattern in which the obligations to the customer
are fulfilled. We have used an input-based approach since the input measures are a reasonable
surrogate for output measures. Our method to measure progress-to-completion on our contracts best
approximates progress-to-completion as:
n
We have established a direct relationship between units of input and productivity.
n
We evaluate each contract and apply judgment to ensure the existence of a
relationship between efforts expended and productivity.
n
We periodically ensure that no inefficiencies exist between the input and
productivity and that the incurrence of an input results in progress-to-completion.
n
We periodically review and confirm by alternative measures the acceptability of
the results provided by the input measures with the output measures.
The progress of work on a specific deliverable is monitored on a continuous basis using a project
plan developed specifically for each project. The progress of the project is measured based on
units of work performed (hours incurred by staff members) on a continuous basis and any
modifications to the project plan are made with requisite customer approvals.
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At any point in time, it is possible to determine: a) the extent of progress to date on the
project, b) estimates of future efforts for completion of the project and c) the variance of the
revised project plan(s) from the original project plan. As there is a direct relationship between
the efforts expended and the productivity in measuring progress towards completion, the efforts
expended method has been used since it is found to be reliable and also the best approximation of
progress towards completion.
We provide our customers with one to three months warranty as post-sale support for our
fixed-price engagements. Historically, we have not incurred any material 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.
Delivery of services/deliverables to the customer is clearly the point at which all of our
obligations have been completed (i.e., the earnings process is complete and revenue recognition is
appropriate) and the Company is not required to perform any additional steps. We have conformed to
SAB 104 (SAB Topic 13) framework for evaluating whether customer acceptance has occurred and when a
customer acceptance clause is substantively a right of return clause, a warranty provision or an
arrangement for demonstration purposes.
The title to the deliverable/services passes upon their delivery and the payment is due after a
specified period after customer acceptance but we are not responsible for any post-delivery
services other than those imposed by the terms of the contract's warranty. Customer acceptance is
indicated either by the customer's formal sign-off or by the passage of credit period, if the
customer makes no claim under the acceptance provisions during such time. The customer sign-off
only ensures that the services would not be rejected for failure to meet specifications that had
already been determined to be in compliance with the arrangement, and therefore, the
customer-acceptance provision is evaluated as a warranty under FAS 5, Accounting for Contingencies.
We are able to reasonably and reliably estimate the amount of its warranty obligation at the time
of revenue recognition.
In respect of the customer sign-offs in our arrangements:
n
we do not have any arrangements where services / deliverables are for trial or
evaluation purposes and we do not grant a right of return / exchange;
n
the fees for these contracts are fixed and non refundable and delivery occurs on a
prorate basis as the services are rendered. The customer sign-off rights are generally
identical to those granted to all others within the same class of customer and for which
satisfaction can be generally assured without consideration of conditions specific to the
customer;
n
we are able to objectively demonstrate that the deliverables meet the specified
criteria and that these provisions are not different from general or specific warranties and
accordingly should be accounted for as warranties in accordance with FAS 5, Accounting for
Contingencies. We are able to reliably estimate the related warranty costs based on a
demonstrated history of substantially similar transactions; and
n
no uncertainty exists about customer acceptance once the services have been
rendered. We are able to reliably demonstrate that the criteria specified in the acceptance
provisions and all other revenue recognition criteria are met prior to formal customer
sign-off. We believe that we would be successful in enforcing a claim for payment even in
the absence of formal sign-off.
Impairment of Goodwill
Goodwill represents the excess of the cost of an acquired entity over the net of the amounts
assigned to assets acquired and liabilities assumed.. Effective April 1, 2002, we adopted
provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" which sets forth the accounting
for goodwill and intangible assets subsequent to their acquisition. Goodwill is tested annually for
impairment, or sooner when circumstances indicate an impairment may exist, using a fair-value
approach at the reporting unit level.
We assess the impairment of 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:
n
•
significant underperformance relative to expected historical or projected future operating results;
n
•
significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
n
•
significant negative industry or economic trends;
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n
•
significant decline in our stock price for a sustained period; and
n
•
our market capitalization relative to net book value.
When we determine that the carrying value of 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
the two-step impairment recognition and measurement guidance in accordance with SFAS 142.
The first step of the impairment test, used to identify potential impairment, compares the fair
value of the reporting unit with its carrying amount, including goodwill. If the carrying amount
of the reporting unit exceeds its fair value, goodwill of the reporting unit is considered
impaired, and step two of the impairment test is performed. The second step of the impairment test
quantifies the amount of the impairment loss by comparing the carrying amount of goodwill to the
implied fair value. An impairment loss is recorded to the extent the carrying amount of goodwill
exceeds its implied fair value.
We amortize other intangible assets over their estimated useful lives on a straight line basis
unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows, and, if impaired, written down to fair value based on either
discounted cash flows or appraised values. Intangible assets with indefinite lives are tested
annually for impairment and written down to fair value as required.
We performed an annual impairment review of goodwill in 2007 and based on these tests there is no
impairment of goodwill during the year ended March 31, 2007. 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
We estimate the amount of uncollectible receivables each period and establish an allowance for
uncollectible 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
uncollectible amounts are revised each period, and changes are recorded in the period they become
known. A significant change in the level of uncollectible amounts would have a significant effect
on our 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.
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.
Stock-Based Compensation Expense
Effective April 1, 2006 we adopted SFAS 123R using the modified prospective method and therefore
have not restated prior periods' results. Under the fair value recognition provisions of SFAS 123R,
we recognize stock-based compensation net of an estimated forfeiture rate and therefore only
recognize compensation cost for those shares expected to vest over the service period of the award.
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Prior to SFAS 123R adoption, we accounted for share-based payments under APB 25 and accordingly,
generally recognized stock-based compensation expense related to stock options with intrinsic value
and accounted for forfeitures as they occurred.
Calculating stock-based compensation expense requires the input of highly subjective assumptions,
including the expected term of the stock-based awards, stock price volatility, and the pre-vesting
option forfeiture rate. We estimate the expected life of options granted based on historical
exercise patterns, which we believe are representative of future behavior. We estimate the
volatility of our common stock on the date of grant based on the historically volatility of our
common stock. The assumptions used in calculating the fair value of stock-based awards represent
our best estimates, but these estimates involve inherent uncertainties and the application of
management judgment. As a result, if factors change and we use different assumptions, our
stock-based compensation expense could be materially different in the future. In addition, we are
required to estimate the expected forfeiture rate and only recognize expense for those shares
expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based
awards that are granted, exercised and cancelled. If our actual forfeiture rate is materially
different from our estimate, the stock-based compensation expense could be significantly different
from what we have recorded in the current period.
Effects of Inflation
India has experienced relatively high rates of inflation in the past however it has not had a
significant effect on our results of operations and financial condition to date.
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
(Rupees)
April-05
43.48
43.64
43.72
43.48
May-05
43.62
43.41
43.62
43.21
June-05
43.51
43.52
43.71
43.44
July-05
43.40
43.43
43.59
43.05
August-05
44.00
43.55
44.00
43.36
September-05
43.94
43.85
43.98
43.75
October-05
45.09
44.76
45.11
44.00
November-05
45.87
45.63
45.87
45.02
December-05
44.95
45.56
46.26
44.94
January-06
43.96
44.20
44.92
43.89
February-06
44.21
44.23
44.54
44.10
March-06
44.48
44.34
44.58
44.09
April-06
44.86
44.82
45.09
44.39
May-06
46.22
45.20
46.22
44.69
June-06
45.87
45.89
46.25
45.50
July-06
46.49
46.37
46.83
45.84
August-06
46.43
46.45
46.61
46.32
September-06
45.95
46.01
46.38
45.74
October-06
44.90
45.36
45.97
44.90
November-06
44.59
44.73
45.26
44.46
December-06
44.11
44.48
44.70
44.11
January-07
44.07
44.21
44.49
44.07
February-07
44.08
44.02
44.21
43.87
March-07
43.10
43.79
44.43
42.78
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Risk Management Policy
Our functional currency is the Indian rupee, however we transact a major portion of our business in
U.S. dollars and other currencies and accordingly face foreign currency exposure from our sales in
the United States and elsewhere and from our purchases from overseas suppliers in U.S. dollars and
other currencies. Accordingly, we are exposed to substantial risk on account of adverse currency
movements in global foreign exchange markets. The exchange rate between the rupee and the U.S.
dollar has changed substantially in recent years and may fluctuate substantially in the future.
We manage risk on account of foreign currency fluctuations through treasury operations. Our risk
management strategy is to identify risks we are exposed to, evaluate and measure those risks,
decide on managing those risks, regular monitoring and reporting to management. The objective of
our risk management policy is to minimize risk arising from adverse currency movements by managing
the uncertainty and volatility of foreign exchange fluctuations by hedging the risk to achieve
greater predictability and stability. Our risk management policies are approved by senior
management and include implementing hedging strategies for foreign currency exposures,
specification of transaction limits; specifying authority and responsibility of the personnel
involved in executing, monitoring and controlling such transactions.
We enter into foreign exchange forward and options contracts to mitigate the risk of changes in
foreign exchange rates on cash flows denominated in U.S. dollars. We enter into foreign exchange
forward and options contracts where the counter party is generally a bank. We consider the risks of
non-performance by the counter party as non-material. These contracts mature between one and nine
months. These contracts do not qualify for hedge accounting under SFAS No. 133,
Accounting for
Derivative Instruments and Hedging Activities,
as amended. Any derivative that is either not a
designated hedge, or is so designated but is ineffective per SFAS No. 133, is marked to market and
recognized in earnings.
The following tables give details in respect of our outstanding foreign exchange forward and
options contracts:
As at March 31,
2007
2006
2005
Amount
Amount
Amount
(dollars in millions)
Aggregate contracted principal amounts of contracts outstanding:
Forward contracts
$
100.0
$
79.0
$
160.0
Options contracts
352.6
137.0
141.5
Total
$
452.6
$
216.0
$
301.5
Gains/(loss) on outstanding contracts:
Forward contracts
$
2.1
$
0.4
$
1.0
Options contracts
2.4
(1.8
)
0.1
Total
$
4.5
$
(1.4
)
$
1.1
Gains/(losses) on foreign exchange forward and options contracts are included under the
heading 'Other income/(expense)' in the statement of income and are as stated below:
Year ended March 31,
2007
2006
2005
Amount
Amount
Amount
(dollars in millions)
Forward contracts
$
2.6
$
0.8
$
(0.5
)
Options contracts
3.6
(1.6
)
0.2
Total
$
6.2
$
(0.8
)
$
(0.3
)
Off-Balance Sheet Arrangements
We currently do not engage in any off-balance sheet arrangements.
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Foreign Currency Transactions/ Translation
During fiscal 2007, 2006 and 2005, 74.7%, 77.6% and 81.8%, respectively, of our total revenues were
generated in U.S. dollars. A significant amount of our expenses were incurred in Indian rupees and
the balance was primarily 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, U.S. dollar, Pound Sterling, Singapore Dollar and Renminbi are the functional
currencies of our foreign subsidiaries located in the United States, United Kingdom, Singapore and
China 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.
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/
depreciates against the U.S. dollar.
The average exchange rate of rupee to U.S. dollar fiscal 2007 was Rs. 45.11 against Rs. 44.18 in
fiscal 2006. As at March 31, 2007, the rupee appreciated to Rs. 43.10 against Rs. 44.48 as at March
31, 2006. As at March 31, 2006, the rupee depreciated to Rs. 44.48 against Rs. 43.62 as at March
31, 2005. As a result, loss on foreign exchange transactions was $3.3 million in fiscal 2007 as
compared to a gain of $0.3 million in fiscal 2006.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
The following table sets forth the name, age, and position of each of our directors and key
management personnel of Satyam, as of March 31, 2007:
Directors
Name
Age
Position
B. Ramalinga Raju
51
Chairman
B. Rama Raju
47
Managing Director and Chief Executive Officer(3)
Ram Mynampati
49
President & Whole Time Director
V.P. Rama Rao
73
Director(1)(2)(3)
Dr. Mangalam Srinivasan
68
Director(1)(2)
Krishna G. Palepu
52
Director
Vinod K. Dham
56
Director(2)
M.Rammohan Rao
65
Director(1)(2)
T.R.Prasad
66
Director(1)(3)
V.S. Raju
67
Director(1)(2)(3)
Key Management Personnel
(4)
Name
Age
Position
Anand T. R.
51
Director and Senior Vice President, Vertical Business Unit — TIMES
Hari T.
42
Director & Sr. Vice President – Human Resources
Jayaraman G.
51
Sr. Vice President, Corporate Governance and Company Secretary
Joseph Abraham
54
Director and Senior Vice President, Vertical Business Unit — Retail
Keshab Panda
48
Director and Senior Vice President, Regional Business Unit, Europe
Manish Sukhlal Mehta
50
Director and Senior Vice President, Horizontal Competency Unit — SAP, Engineering and Spatial Services
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Name
Age
Mohan Eddy F.S
56
Director and Senior Vice President
V Murali
42
Director and Senior Vice President – Commercial and Contract
Murty A.S
48
Director and Senior Vice President, Leadership Development Group
Ravi Shanker Bommakanti
48
Director and Senior Vice President — Vertical Business Unit — Insurance
Shailesh Shah
46
Director and Senior Vice President — Corporate Strategy Group
Srinivas V
46
Director, Senior Vice President and Chief Financial Officer
Subramanian D
47
Director and Senior Vice President — Vertical Business Unit — Manufacturing, Energy, Oil and Gas and
Utilities
Vijay Prasad Boddupalli
55
Director and Senior Vice President — Horizontal Competency Unit — Enterprise Applications and Business
Intelligence Solutions
Virender Aggarwal
46
Director and Senior Vice President
— Regional Business Unit-India, Middle East, Africa & Asia Pacific
(1)
Member of the Audit Committee
(2)
Member of the Compensation Committee
(3)
Member of the Investors' Grievance Committee
(4)
Directors listed under key management personnel are directors of
business/support units and not members of our board of directors.
B. Ramalinga Raju
has been on our Board of directors since our inception in 1987. Prior to becoming
the Chairman in 1995, he was the Vice Chairman of the Satyam Corporate Group. Mr. Ramalinga Raju
also sits on the board of directors of Nipuna. Mr. Raju founded Satyam Computer Services in 1987
and has been instrumental in developing Satyam into one of the top Indian IT services company.
Among the many awards received by him, Mr. Raju was awarded the "Corporate Citizen of the Year"
award during the Asian Business Leadership Summit held in Hong Kong in 2002. He was also named as
the "IT Man of the Year" by Dataquest in 2001 and was conferred the "Entrepreneur of the Year Award
(Services)" by Ernst & Young, India in 2000. Mr. Ramalinga Raju holds a Master of Business
Administration degree from Ohio University and has attended the Advanced Management Program
conducted by 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 in 1991. Prior to joining our company, he was a director of
Maytas Infra Limited. Mr. Rama Raju also sits on the board of directors of Nipuna, Maytas Infra
Limited and Satyam Venture Engineering Services Private Limited. Mr. Rama Raju holds a Master of
Economics degree from Loyola College, Chennai and a Master of Business Administration degree from
Loredo State University, Texas. He has also attended the Advanced Management Program conducted by
Harvard Business School. Mr. Rama Raju is the younger brother of Mr. Ramalinga Raju, the Chairman
of the company.
Ram Mynampati
has been inducted on the Board as whole time director effective August 21, 2006. He
has been our President, Commercial and Healthcare Businesses since October 2002. He was our
Executive Vice President and Chief Operating Officer, Vertical Business Unit — Insurance, Banking
and Financial Services, Healthcare since November 2000 and Executive Vice President, Strategic
Business Units 1, 2 and 4 in 1999. He also provides executive leadership to our customer
relationship with General Electric and oversees our industry groups which service the U.S.
Government. Prior to joining Satyam, Mr. Mynampati has held key positions in large, multinational
organizations, such as UNISYS and Southern California Gas Company. Mr. Mynampati holds a Master of
Computer Science degree from California State University. He is the Chairman of Citisoft Plc. and
Satyam Technologies, Inc. and also a director of Satyam Venture Engineering Services Pvt. Ltd.
V. P. Rama Rao
was appointed to our board of directors in July 1991 as an independent
director. Before joining our company, he was with the Indian Government's 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 Law and a Post-Graduate diploma in Technical Science and Industrial
Administration, from Manchester University, England. Mr. Rama Rao also sits on the board of
directors of VBC Ferro Alloys Limited, NCC Finance Limited and Konaseema EPS Oakwell Power Limited.
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Dr. Mangalam Srinivasan
was appointed to our board of directors in July 1991 as an independent
director. 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 the Kennedy School of Government, Harvard University,
Massachusetts where she is a distinguished fellow.
Professor Krishna G. Palepu
was appointed to our board of directors on January 23, 2003 as an
independent director. Professor Palepu is the Ross Graham Walker Professor of Business
Administration at the Harvard Business School, where he also holds the title of Senior Associate
Dean, Director of Research. Professor Palepu joined the Harvard Business School faculty in 1983. He
graduated with a Masters degree in Physics from Andhra University and holds a Master of Business
Administration degree from the Indian Institute of Management, and a Ph.D. from the Massachusetts
Institute of Technology. Professor Palepu serves as consultant to a wide variety of businesses, and
is on the boards of Dr. Reddy's Laboratories Limited in India and Brooks Automation.
Vinod K. Dham
was appointed to our board of directors on January 23, 2003 as an independent
director. Mr. Dham is Vice President and General Manager, Carrier Access Business Unit, of Broadcom
Corporation. Prior to this, he was the Chairman, President and Chief Executive Officer of Silicon
Spice Inc., which was acquired by Broadcom Corporation. Mr. Dham obtained his Bachelor's degree in
Electrical Engineering (electronics) from the University of Delhi and received his Master degree in
Electrical Engineering (solid state) from the University of Cincinnati. He held the positions of
Vice President of Intel Corporation's Microprocessor Products Group and General Manager of the
Pentium Processor Division. Mr. Dham is also a director of NewPath Ventures LLC, Hellosoft Inc.,
Sasken Communication Technologies Limited, Nevis Networks Inc., Telsima Inc, Insilica and Montalvo
Systems.
M Rammohan Rao,
Dean, Indian School of Business was appointed to our board of directors on July 29,
2005 as an independent director. Mr. Rao is recognized internationally for his research and
teaching capabilities. As a Research Fellow, Mr. Rao was associated with the International
Institute of Management, Science Center, Berlin, Germany, and the International Center for
Management Sciences, Center for Operations Research and Econometrics, University Catholique de
Louvain, Belgium. He has also conducted research at the Operations Research Group, United States
Steel Corporation, Applied Research Laboratory, Monroeville, Pennsylvania. Mr. Rao has a PhD in
Industrial Administration from the Graduate School of Industrial Administration, Carnegie-Mellon
University, Pittsburgh, Pennsylvania, USA. He has completed two Masters Degrees — Master of Science
in Industrial Administration, Carnegie-Mellon University, Pittsburgh, Pennsylvania, and Master of
Engineering (Industrial), Cornell University, New York. Mr. Rao has won several prestigious awards
conferred on him by leading institutions across the world. Mr. Rao also sits on the Boards of
Krishna Fabrications Pvt. Ltd., MosChip Semiconductor Technology Ltd. and APIDC Venture Capital.
Mr. T.R. Prasad
was a member of the Indian Administrative Services. He was the Cabinet Secretary,
Government of India and was also a member of the Finance Commission of India. Prior to this, he
held the following positions: Defence Secretary, Government of India; Secretary, Industrial Policy
and Promotion, Ministry of Industry; Chairman, Foreign Investment Promotion Board; Secretary, Heavy
Industry and Chairman, Maruti Udyog Ltd. Mr. Prasad holds a Master's degree in Physics
(Electronics) from Banaras University and is a lifetime fellow of the Institute of Engineers (FIE).
He is also a member of the board of directors of TVS Motors Company Ltd., Suven Life Sciences
Ltd., Taj GVK Hotels and Resorts Ltd., Nelcast Ltd., GMR Infrastructure Company Ltd. and Indofil
Organic Industries Ltd.
Prof. V. S. Raju
is the Chairman of the Naval Research Board, Defense Research and Development
Organization, Government of India. Prior to this, he was the Director of the Indian Institute of
Technology, Delhi and was a professor and Dean at the Indian Institute of Technology, Madras.
During his over 40 year's academic career, he interacted extensively with the IT industry as a
consultant, and at a policy level promoted Industry-Academia collaboration. Mr. Raju holds a
Bachelor's and a Master's degree in engineering from Andhra University and Indian Institute of
Science, respectively and a Doctorate in engineering from the University of Karlsruhe, Germany. He
is also a member of the board of directors of Bharti Airtel Ltd., Kaytee Switchgar Ltd and
Nagarjuna Construction Company Ltd.
Anand T.R.
has been our Director and Senior Vice President of the Telecom, Infrastructure, Media &
Entertainment, and Semiconductors (TIMES) business unit since April 2004. Prior to this, he was the
Chief Operating Officer of the Telecom Business Unit. During 2001 — 2002 he was the chairperson of
Satyam, Japan. Prior to joining our company, he was the Country General
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Manager — e-Business and Cross Industry Solutions at IBM Global Services, India. He started his
career at Tata Consultancy Services and later worked at the Groupe Bull subsidiary in India for
eleven years. Mr. Anand holds a bachelor degree in electronics engineering from the University
Visvesvaraya College of Engineering, Bangalore, and a post- graduate diploma in Business Management
(with specialization in Information Systems) from the Indian Institute of Management, Ahmedabad.
Hari
T
. is our Director and Senior Vice President – Human
Resources. He joined Satyam in 1998. Prior to joining our company, he
was with Hyderabad-based OMC Computers Ltd, and moved on to DSQ Software Limited, Chennai. He
currently spearheads various initiatives and handles the Attraction, Retention and Motivation
related initiatives for this organization. He is part of the three member Leadership Development
Council, which includes the chairman. He also heads the Real Time Leadership Centre — Satyam's 24x7
Business Performance Management centre. He is also the co-chairman for CII (HR) South Chapter and
represents Satyam in various national and international
bodies/forums. He holds a Masters in Personnel
Management & Organisational Behavior.
Jayaraman G.
has been our Sr.Vice President, Corporate Governance and Company Secretary since April
2005. From October 2000 to April 2005 he was Vice President – Corporate Affairs and Company Secretary.
Prior to joining our company, he was with Samrat Spinner Limited as Director (Finance) and Company
Secretary. Mr. Jayaraman holds a Bachelor of Science degree from University of Madras, 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 fellow member of the Institute of Company Secretaries of
India.
Joseph Abraham
was appointed as our Director and Senior Vice President, Vertical Business Unit
— Retail in November 2000 after being the Senior Vice President, Strategic Business Unit 7 since
1998. Prior to joining our company, he was with Tata Consultancy Services Limited as Executive Vice
President, Human Resources. Mr. Abraham holds a Master of Personnel Management and Industrial
Relations degree from Tata Institute of Social Services and a Differential Test Battery Certificate
from Morrisby Institute, United Kingdom.
Keshab Panda
has been our Director and Senior Vice President — Head of Satyam Europe
Operations since April 2004. He is also the Chief Executive Officer of Satyam Technologies Inc, a
wholly owned subsidiary of Satyam and additionally manages multiple strategic relationships with
our key customers as well. Prior to this, as a veteran of the Indian Space Research Organization
(ISRO) Satellite Centre, he played an important role with the design of India's indigenous
communications satellite, INSAT II Satellite and the Defence Research Development Organization
(DRDO) in various capacities. He is also a director of Satyam Technologies, Inc.
Manish Sukhlal Mehta
has been our Director and Senior Vice President — Horizontal Competency
Unit — SAP, Engineering & Spatial Services, since April 2004. Prior to his current role, he was
responsible for building our automotive practice. Mr. Mehta also played a key role in establishing
the Manufacturing Business Unit in Satyam. He also established a Strategic Business Unit for
Banking & Finance and managed it successfully as a profit center. Prior to joining our company, Mr.
Mehta was heading the business operations of Datamatics in Chennai. He began his career with Tata
Consultancy Services Limited, where he served for 15 years in various positions. Mr. Mehta holds a
Masters in Science (Hons.) — Chemistry, and a Masters in Engineering — Industrial Development from
the Birla Institute of Technology & Science (BITS), Pilani. He is also a director of Satyam
Computer Services (Shanghai) Co. Limited.
Mohan Eddy F. S.
has been our Director, Internal Information Systems and Platinum Processes Group
since 2003. He was the Director, Horizontal Business Unit — Collaborative Enterprise Solutions
since November 2000 and a Director, Strategic Business Unit of Satyam Renaissance Consulting from
1995. Mr. Mohan Eddy holds a Bachelor of Engineering degree and a Post-Graduate diploma in
Management from the Indian Institute of Management, Calcutta.
V Murali
is our Director and Senior Vice President — Commercial and Contract Management. He is
responsible for creating and maintaining world-class facilities both in terms of physical and IT
infrastructure that meets the growing demand of Satyam's global operations. Mr.Murali joined Satyam
in May 1998 as Head of Finance for one of the then Subsidiary companies of Satyam, and moved to
Satyam Computer Services Limited in 2000. Mr.Murali has a total experience of 20 years in the
industry handled various roles and responsibilities during his tenure. Mr.Murali is also Director
of Satyam Venture Engineering Services Private Limited and CA Satyam ASP Pvt. Ltd. He is a member
of Infrastructure Panel constituted by Confederation of Indian Industry's A.P. Council. Mr. Murali
is a Chartered Accountant, Cost and Works Accountant and Company Secretary and holds a Post
Graduate Diploma in Business Management.
Murty A. S.
has been our Director and Senior Vice President, Global Human Resources since
November 2000. He was Senior Vice President, Human Resources in 1999 and Senior Vice President of
Strategic Business Unit I since 1994. Before joining our company, Mr. Murty was with Tata
Consulting Services Limited for over 12 years. Mr. Murty holds a Master of Engineering degree from
the Indian Institute of Science, Bangalore.
Ravi Shanker Bommakanti
has been our Director and Senior Vice President of Insurance Business
Unit since April, 2004. Prior to this, he was responsible for the GE Strategic Relationship unit of
Satyam for five years. Mr. Bommakanti was also responsible for managing the Dun and Bradstreet
relationship for Satyam and in developing client-server competencies in Satyam. Prior to joining
our company, Mr. Bommakanti worked with Citicorp in United States and India and Bankers Trust in
Australia. Mr. Bommakanti is a
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Chartered Accountant with experience in Financial Services and Accounting.
Shailesh Shah
has been our Director and Senior Vice President — Corporate Strategy since
September, 2004. Mr. Shah's last employment was with Watson Wyatt (India), as its Managing
Director. Spanning his 20 year career, Mr. Shah has worked with organizations like Price
Waterhouse, The Strategy Consulting Group and the Hay Group. Mr. Shah holds a Bachelors degree in
Mechanical Engineering from Bangalore University, a Masters in Science Industrial Engineering &
Operations Research from Syracuse University and a Master of Business Administration degree from
Drexel University, United States. He is also a director of Citisoft Plc.
Srinivas V.
has been our Director, Senior Vice President and Chief Financial Officer since
October 2002. He was our Senior Vice President and Chief Financial Officer since November 2000 and
as Vice President and Chief Financial Officer from 1998. 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. In addition,
he holds a Bachelor of Law degree and a Master of Commerce degree from Osmania University,
Hyderabad. He is also a director of Nipuna and Satyam Computer Services (Shanghai) Co. Limited.
Subramanian D.
has been our Director since October 2002. He is also Director and Senior Vice
President — Manufacturing, Automotive, Energy, Oil and Gas and Utilities since April 2004. He was
Senior Vice President — SAP — Manufacturing and Engineering practices since October 2002 and Vice
President — SAP since joining our company in 1999. Mr. Subramanian graduated with a Master of
Business Administration degree from Annamalai University, Tamil Nadu and is an associate member of
the Institute of Cost and Works Accountants of India. He is also a director of CA Satyam ASP Pvt
Ltd.
Vijay Prasad Boddupalli
has been our Director and Senior Vice President — EABIS (Enterprise
Applications and Business Intelligence Solutions) business unit since April 2004. Prior to joining
our company in 1996 Mr. Boddupalli worked in the United States and Australia. He started his career
with Tata Consulting Services Limited, during which time he worked with American Express in the
United Kingdom, Slavenburg's bank in the Netherlands, New Zealand Post Office in New Zealand. Mr.
Boddupalli has a Bachelor degree of Technology in Electronics &
Communications Engineering.
Engineering, from Regional Engineering College, Warangal and a Masters degree of Technology in
Computer Science from Indian Institute of Technology, Bombay. He is also a director of CA Satyam
ASP Pvt Ltd and Knowledge Dynamics Pvt. Ltd.
Virender Aggarwal
is our Director and Senior Vice President — APAC-MEIA territories (Asia Pacific,
Middle East, India and Africa) since April, 2004. He is responsible for management of business and
delivery operations, which include the development centers across China, Australia, Malaysia,
Singapore, Middle East and Japan. Prior to joining Satyam, Mr. Aggarwal was the head of a large
Indian Software and Training Company operating out of Singapore. Mr. Aggarwal has completed his
Masters in Management from BITS, Pilani and has more than 18 years' experience, including eight
years in general management positions. Mr. Aggarwal's other assignments included working for
management consultancy firm — AF Ferguson and Co in India, and various positions of responsibility
in other organizations in the field of IT consulting. He is also a director of Satyam Computer
Services (Shanghai) Co. Limited and Knowledge Dynamics Pvt. Ltd.
Compensation of Directors and Key Management Personnel
Under the
Companies Act, our shareholders must approved the salary, bonus and
benefits of all executive directors at an annual general meeting of
shareholders. At our general meeting held on July 23, 2004, our
shareholders approved the employment terms and conditions for each of
our executive directors including monthly salary, benefits, medical
reimbursement and pension fund contributions. These term are made for
a five-year period. The employment term 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, 2004.
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 2007 for services rendered
in all capacities to us. Mr. Raju was appointed as managing director and
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chief executive officer of our company in 1991. The total remuneration received by our executive officers and directors
for their services to us for the fiscal year ended March 31, 2007 was $4.8 million. The total
remuneration and the amounts in the following table are in dollars based on the noon buying rate of
Rs. 43.1 per dollar on March 30, 2007.
At our general meeting held on July 25, 2003, our shareholders approved the payment of
remuneration to our non-executive directors by way of commission. There are no loans to, or
guarantees in favor of, directors or key management personnel other than interest-bearing housing
loans provided to certain key management personnel which have not been made, modified or renewed
after July 30, 2002.
Annual Compensation
$ in millions
Name and Principal Position
Salary
Bonus
Others
(1)
B. Rama Raju, Managing
Director and Chief Executive
Officer
$
0.09
—
$
0.01
(1)
Includes membership fees and housing allowance.
Option Grants
During the fiscal year ended March 31, 2007, we granted options to our key managerial personnel to
purchase 377500 shares under our ASOP — RSUs and 80000 under our ASOP – RSUs (ADS). The expiration
dates for these options granted under ASOP — RSUs and ASOP – RSUs(ADS) ranged from January 28, 2013
to January 28, 2016. The exercise price for the options granted under ASOP – RSUs was Rs. 2/- and
the exercise price for the options granted under ASOP – RSUs(ADS) was the U.S. dollar equivalent to
Rs. 4.
Employee Benefit Plans
We have instituted an incentive plan 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.
Our ASOP and ESOP Plans
We have five associate stock option plans: our Associate Stock Option Plan, or ASOP, established in
May 1998; our Associated Stock Option Plan B, or ASOP B, established in May 1999; our Associated
Stock Option Plan ADS, or ASOP ADS, established in May 1999; our Associate Stock Option Restricted
Stock Units or ASOP RSUs and our Associate Stock Option Restricted Stock Units ADS or ASOP RSUs ADS
established in October 2006. We also have the Employee Stock Option Plan, or ESOP, established by
Nipuna in April 2004.
ASOP
In May 1998, Satyam Computer Services established its Associate Stock Option Plan (the "ASOP
plan"), which provided for the issue of 26,000,000 shares, as adjusted to eligible associates.
Satyam Computer Services issued warrants to purchase these shares to a controlled associate welfare
trust called the Satyam Associate Trust (the "SC-Trust"). In December 1999 the SC- Trust exercised
all its warrants to purchase Satyam Computer Services shares prior to the stock split using the
proceeds obtained from bank loans. The warrants vest immediately or vest over a period ranging
from one to three years. Upon vesting, associates have 30 days in which to exercise these warrants.
As of March 31, 2007, warrants (net of lapsed and cancelled) to purchase 23,829,720 equity shares
have been granted to associates pursuant to ASOP since inception.
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We
established a controlled associate welfare trust called the Satyam Associate Trust to administer
the ASOP and issued warrants to purchase 13.0 million equity shares of Satyam. 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
($10.4), 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.
ASOP B
In April 2000, Satyam Computer Services established its Associate Stock Option Plan B (the "ASOP
B") and reserved warrants for 83,454,280 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% in
second year, 30% in the third year and 50% in the fourth year. Upon vesting, associates have 5
years to exercise these warrants. As of March 31, 2007, options (net of lapsed and cancelled) to
purchase 54,582,747 equity shares have been granted to associates under this plan since inception.
The ASOP B is substantially similar to the ASOP and is administered by a committee of our
board of directors. The SEBI guidelines define the exercise price as the price payable by the
employee for exercising the option granted to him in pursuance of the stock option plan. In
determining the exercise price, we opted for the higher of the following: (a) the closing price of
the shares on the date of the meeting of the Compensation Committee convened to grant the stock
options, on the stock exchange where highest volumes are traded; or (b) the average of the two
weeks high and low price of the share preceding the date of grant of option on the stock exchange
on which the shares of the company are listed. As of March 31, 2007, options (net of forfeited and
cancelled) to purchase 54,582,747 equity shares have been granted to associates under this plan and
warrants to purchase 34,606,537 equity shares have been exercised.
ASOP ADS
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 5,149,330 ADSs (10,298,660 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 NYSE on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the grant date. These warrants
vest over a period of 1-10 years from the grant date. As of March 31, 2007, warrants (net of lapsed
and cancelled) for 3,215,800 ADSs representing 6,431,600 equity shares have been granted to
associates under the ASOP ADS since inception.
Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. The
warrants issued under ASOP ADS can be granted 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 of March 31, 2007, warrants
(net of forfeited and cancelled) for 65,104,736 ADSs representing 130,209,472 equity shares have
been granted to associates under the ASOP ADS, and warrants to purchase 65,104,736 ADSs
representing 130,209,472 equity shares have been exercised.
In October 2005, our compensation committee approved amendments to our associate stock option plans
(ASOP B and ASOP ADS) to allow for continuation of vesting of options upon retirement and
accelerated vesting upon death. These amendments are applicable retrospectively for ASOP-B and
prospectively for ASOP-ADS. Refer to Exhibits 4.2 and 4.3 to this Annual Report for a copy of the
amended and restated plans.
Associate
Stock Option Plan — Restricted Stock Units (ASOP –
RSUs)
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In fiscal 2007, we established the "Associate Stock Option Plan — Restricted Stock Units," or
ASOP – RSUs, to be administered by the Administrator of the ASOP – RSUs, a committee appointed by
the Board of Directors of the Company. Under the scheme 13 million equity shares are reserved to be
issued to eligible associates at a price to be determined by the Administrator which shall not be
less than the face value of the share. ASOP RSUs vest over a period of one to four years from the
date of the grant. Upon vesting, associates have 5 years in which to exercise these warrants. As
of March 31, 2007, warrants for 3,293,140 equity shares have been granted under the ASOP — RSUs
Associate Stock Option Plan — RSUs (ADS) (ASOP – RSUs(ADS))
In fiscal 2007, we established the "Associate Stock Option Plan — RSUs (ADS)," or
ASOP-RSUs(ADS), to be administered by the Administrator of the ASOP – RSUs (ADS), a committee
appointed by the Board of Directors of the Company. Under the scheme 13 million equity shares minus
the number of shares issued from time to time under the ASOP — RSUs are reserved to be issued to
eligible associates at a price to be determined by the Administrator not less than the face value
of the share. These RSUs vest over a period of one to four years from the date of the grant. Upon
vesting, associates have five years in which to exercise these warrants. As of March 31, 2007,
warrants for 236,620 ADS representing 473,240 equity shares have been granted under the ASOP – RSUs
(ADS).
Nipuna ESOP
In April 2004, Nipuna established its Employee Stock Option Plan (the "ESOP"). As per the ESOP, the
options are granted at fair value as determined by an independent valuer as on the date of the
grant and hence no compensation cost has been recognized. These options vest starting with 33.33%
at the end of the second year, 33.33% at the end of the third year and remaining 33.34% at the end
of the fourth year from the date of grant. As of March 31, 2007, options (net of forfeited and
cancelled) for 998,702 equity shares have been granted to associates under the Nipuna ESOP, and no
options to purchase equity shares have been exercised.
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 ten 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.
B. Ramalinga Raju, B. Rama Raju and Ram Mynampati are permanent directors and are not subject to
retirement by rotation. Dr. Mangalam Srinivasan, Krishna G. Palepu, Vinod K. Dham, V.P. Rama Rao, M
Rammohan Rao, T.R. Prasad and V.S.Raju are the directors who are scheduled to retire by rotation.
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 registered public accounting firm, the scope of the annual audits, fees to be paid to
the independent registered public accounting firm, the adequacy and effectiveness of the accounting
and financial controls of our company and our accounting practices. The members of the audit
committee are M Rammohan Rao, Dr. Mangalam Srinivasan, T.R. Prasad and V.S. Raju 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 the stock options for all associates. The members of the compensation
committee are Dr. Mangalam Srinivasan, Vinod K Dham, M. Rammohan Rao and V.S. Raju 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
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addressing
investors' concerns. The members of the committee are T.R.
Prasad, and V.S Raju who are
independent directors, and B. Rama Raju, our Managing Director and Chief Executive Officer.
Directors 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.10,000 for every board or committee meeting. In addition, Independent directors receive
compensation by way of commission 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. In addition, special remuneration is paid to Mr.Krishna G Palepu for his
professional services in his capacity as a non-executive director of our company in the amount of
$0.2mn per fiscal.
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. There are no severance agreements with our key
managerial personnel.
Employees
For a description of our employees, see "Item 4. Information on the Company – Employees."
Share Ownership
The following table sets forth information with respect to the beneficial ownership of our equity
shares as of March 31, 2007 by each of our directors and all of our directors and executive
officers as a group. The table gives effect to equity shares issuable within 60 days of March 31,
2007 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
2,000
(1)(2)
0.00
B. Ramalinga Raju
0
(2)
0.00
Ram Mynampati
946,148
0.14
V.P. Rama Rao
—
—
Dr. Mangalam Srinivasan
—
—
Krishna G. Palepu
—
—
Vinod K Dham
—
—
M Rammohan Rao
—
—
T.R. Prasad
—
—
V.S. Raju
—
—
All directors and executive officers as a group
2,604,499
0.39
(1)
Includes 1,000 equity shares held by B. Rama Raju's wife, B.
Radha Raju. B. Rama Raju disclaims beneficial ownership of any equity
shares held by B. Radha Raju.
(2)
B. Ramalinga Raju and B. Rama Raju control SRSR Holdings
Private Limited, which holds approximately 8.38% of our outstanding
equity shares as of March 31, 2007.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Share Ownership
The following table sets forth certain information regarding beneficial ownership of our
shares of Common Stock as of March 31, 2007 by all persons who are known to us to own five percent
(5%) or more of the outstanding shares of Common Stock.
Beneficial ownership is determined in accordance with rules of the SEC, which generally attribute
beneficial ownership of securities to persons who possess sole or shared voting power or investment
power with respect to those securities and includes equity shares issuable pursuant to the exercise
of stock options or warrants that are immediately exercisable or exercisable within 60 days of
1,962,105. These shares are deemed to be outstanding and to be beneficially owned by the person
holding those options or warrants for the purpose of computing the percentage ownership of that
person, but are not treated as outstanding for the purpose of computing the percentage ownership of
any other person. Unless otherwise indicated, all information with respect to the beneficial
ownership of any principal shareholder has been furnished by such shareholder and, unless otherwise
indicated, we believe that persons named in the table have sole voting and sole investment power
with respect to all the equity shares shown as beneficially owned. The share numbers and
percentages listed below are based on [667,196,009] equity shares outstanding as of March 31, 2007.
As of March 31, 2007, 975,251 of our equity shares, representing 0.14% of our outstanding shares,
were held by a total of 344 holders of record with addresses in the United States. As of March 31,
2007, we have issued 65,104,736 ADSs (representing 130,209,472 equity shares) and which represent
19.6% of our outstanding equity shares and which are held by approximately 35,400 beneficial
holders.
Identity of Person or Group
Number
Percentage (%)
FMR Corp.
(1)
59,495,832
8.95
%
SRSR Holdings Private Limited
(2)
55,728,000
8.38
%
(1)
Information based on a report on Schedule 13G jointly filed by FMR Corp. and Edward C.
Johnson with the SEC on February 14, 2004 and as amended on February 14, 2005, February 14,
2006, August 10, 2006 and February 14, 2007. Based on Amendment No. 4 to the Schedule 13G
filed by FMR Corp. and Edward C. Johnson with the SEC on
February 14, 2007 FMR Corp. has sole voting power for
6,443,905 equity shares and sole dispositive power for
59,495,832 equity shares. Edward Johnson has sole voting and
dispositive power for 59,495,832 equity shares.
(2)
Information based upon a report on Schedule 13G filed by SRSR Holdings Private Limited, with
the SEC on September 21, 2006.
Related Party Transactions
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 or Satyam
Venture, formed in January 2000, provides engineering services and computer services to the
automotive industry. We hold a 50% stake in the joint venture
company. For fiscal 2007, fiscal 2006 and
fiscal 2005, we provided infrastructure and other services to Satyam Venture, which amounted to
$0.5 million, $0.5 million and $0.3 million
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respectively.
For fiscal 2007, fiscal 2006 and fiscal 2005, we received services from Satyam Venture,
which amounted to $8.6 million, $8.6 million and $7.1 million respectively. As of March 31, 2007
and 2006, we owe $2.6 million and $1.8 million to Satyam Venture.
During fiscal 2007 and fiscal 2006, Sify, a company in which we used to hold 31.61% interest,
rendered services to us aggregating to $Nil and $2.9 million, on terms which were no less
favorable to us than could have been obtained from independent third parties. During fiscal 2006,
Satyam sold its entire 31.61% stake in Sify.
ITEM 8. FINANCIAL INFORMATION
Financial Statements
We have elected to provide financial statements pursuant to Item 18 of Form 20-F.
Legal Proceedings
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 2602.70 million ($56.7
million), Rs1,820.5 million ($ 41.3 million), and Rs. 1,722.7 million ($37.6 million) in fiscal
2007, fiscal 2006 and fiscal 2005 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. 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.
Holders 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 BSE and NSE. Our ADSs evidenced by American Depositary
Receipts, or ADRs, are traded in the United States on the NYSE under the symbol "SAY". Each ADS
represents two equity shares. The ADRs evidencing ADSs were issued by our depositary, Citibank,
N.A., pursuant to a deposit agreement.
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.
We had filed a request for arbitration with the London Court of
International Arbitration (or LCIA) naming Venture Global Engineering LLC, USA (VGE) as
respondent. The Arbitration concerned a dispute between us and VGE in
connection with their joint venture, Satyam Venture Engineering Services Private Limited (or SVES).
The LCIA Arbitrator issued his Final Award on April 3, 2006 in our favour.
We has filed a petition to recognize and enforce the award in the United
States District Court in Michigan. VGE has separately filed a declaratory judgment action seeking
to refuse enforcement of the Award in the United States District Court in Illinois. Our management
believes that this will not have an adverse effect upon our results of operations, financial
condition and cash flows.
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The number of our outstanding equity shares (including the underlying shares for ADSs) as of
March, 31, 2007 was 667,196,009. As of March 31, 2007, there were 65,104,736 ADSs outstanding
(representing 130,209,472 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.
Annual high and low market prices
Rupee price per
U.S. dollar price
equity share(1)
per equity share
Fiscal year ended March 31,(2)
High
Low
High
Low
2003
145.93
87.55
3.07
1.84
2004
195.50
63.65
4.50
1.47
2005
221.00
125.00
5.07
2.87
2006
431.00
182.20
9.69
4.10
2007
524.90
270.50
12.18
6.28
2008 (through April 20, 2007)
495.90
435.00
11.88
10.20
Fiscal 2006:
First Quarter
258.73
182.20
5.95
4.19
Second Quarter
283.00
237.20
6.44
5.40
Third Quarter
370.50
271.50
8.24
6.04
Fourth Quarter
431.00
356.50
9.69
8.01
Fiscal 2007:
First Quarter
445.00
270.50
9.70
5.90
Second Quarter
432.00
325.68
9.40
7.09
Third Quarter
498.10
396.00
11.29
8.98
Fourth Quarter
524.90
404.00
12.18
9.37
Fiscal 2008:
First Quarter (Through April 20, 2007)
495.90
435.00
11.88
10.20
Monthly prices:
October 2006
453.00
396.00
10.09
8.82
November 2006
484.00
412.05
10.85
9.24
December 2006
498.10
435.30
11.29
9.87
January 2007
524.90
454.00
11.91
10.30
February 2007
495.50
404.00
11.24
9.17
March 2007
474.80
409.30
11.02
9.50
April 2007 (Though April 20, 2007)
495.90
435.00
11.88
10.20
(1)
Data derived from the BSE website. The prices and volumes quoted on the NSE may be different.
(2)
For comparative purposes, the price per equity share data above is adjusted for the October
10, 2006 one-for-one stock split
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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.
U.S. dollar
Price per ADS
High
Low
Fiscal
2003
6.75
3.97
2004
17.68
3.63
2005
14.25
8.00
2006
21.95
10.50
2007
25.94
13.98
2008 (through April 20, 2007)
26.20
22.04
Fiscal 2006
First Quarter
13.39
10.50
Second Quarter
15.31
12.88
Third Quarter
18.72
14.13
Fourth Quarter
21.95
18.30
Fiscal 2007
First Quarter
22.25
13.98
Second Quarter
20.50
15.34
Third Quarter
24.50
19.29
Fourth Quarter
25.94
19.35
Monthly prices
September 2006
20.50
18.60
October 2006
22.67
19.29
November 2006
24.42
20.70
December 2006
24.50
22.11
January 2007
25.94
22.28
February 2007
24.55
20.55
March 2007
23.33
19.35
April 2007 (through April 20, 2007)
26.20
22.04
ITEM 10. ADDITIONAL INFORMATION
Corporate Governance
We are subject to the NYSE listing standards, although, because we are a foreign private issuer,
those standards are considerably different from those applied to U.S. companies. Under the NYSE
rules, we need only (i) establish an independent audit committee that has specified
responsibilities as described in the following table; (ii) provide prompt certification by our
chief executive officer of any material non-compliance with any corporate governance rules; (iii)
provide periodic written affirmations to the NYSE with respect to our corporate governance
practices; and (iv) provide a brief description of significant differences between our corporate
governance practices and those followed by U.S. companies.
The following table compares our principal corporate governance practices to those required of U.S.
companies.
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Standard for U.S. Listed Companies
Our Practice
Director Independence
•
A majority of the board must consist
of independent directors.
•
Six of our ten
directors, namely Mr. VP
Rama Rao, Dr. Mangalam
Srinivasan, Mr. Vinod K
Dham, Mr. M Rammohan Rao,
Mr. T.R. Prasad and Mr.
V.S. Raju are independent
within the meaning of the
NYSE standards.
Independence is defined by various
criteria including the absence of a
material relationship between the
director and the listed company. For
example, directors who are employees,
are immediate family of the chief
executive officer or receive over
$100,000 per year in direct compensation
from the listed company are not
independent. Directors who are employees
of or otherwise affiliated through
immediate family with the listed
company's independent auditor are also
not independent.
•
The non-management directors of each
company must meet at regularly scheduled
executive sessions without management.
•
Our
non-management directors
do not meet periodically
without management
directors.
Audit Committee
•
Listed companies must have an audit
committee that satisfies the requirements of
Rule 10A-3 under the Securities Exchange Act.
The rule requires that the audit committee (i)
be comprised entirely of independent
directors; (ii) be directly responsible for
the appointment, compensation and oversight of
the independent auditor; (iii) adopt
procedures for the receipt and treatment of
complaints with respect to accounting and
auditing issues; (iv) be authorized to engage
independent counsel and other advisors it
deems necessary in performing its duties; and
(v) be given sufficient funding by the board
of directors to compensate the independent
auditors and other advisors as well as for the
payment of ordinary administrative expenses
incurred by the committee.
•
We have an audit
committee which meets all
of the requirements of
Rule 10A-3.
•
The audit committee must consist of at
least three members, and each member must be
independent within the meaning established by
the NYSE.
•
Our audit committee consists of four members and all the members are
independent under the NYSE's rules.
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Standard for U.S. Listed Companies
Our Practice
•
The audit committee must have a
written charter that addresses the committee's
purpose and responsibilities.
Our audit committee has a charter
outlining the committee's purpose and responsibilities.
At a minimum, the committee's purpose
must be to assist the board in the
oversight of the integrity of the
company's financial statements, the
company's compliance with legal and
regulatory requirements, the independent
auditor's qualifications and
independence and the performance of the
company's internal audit function and
independent auditors.
The audit committee is also required to
review the independent auditing firm's
annual report, describing the firm's
internal quality control procedures, any
material issues raised by the most
recent internal quality control review
or peer review of the firm and any steps
taken to address such issues. The audit
committee is also to assess the
auditor's independence by reviewing all
relationships between the company and
its auditor. It must establish the
company's hiring guidelines for
employees and former employees of the
independent auditor.
The committee must also discuss the
company's annual audited financial
statements and quarterly financial
statements with management and the
independent auditors, the company's
earnings press releases, as well as
financial information and earnings
guidance provided to analysts and rating
agencies, and policies with respect to
risk assessment and risk management. It
must also meet periodically with the
internal auditors and the board of
directors.
•
Each listed company must have
disclosed whether their board of directors has
identified an Audit Committee Financial
Expert, and if not the reasons why the board
has not done so.
•
We do not have an
individual serving on out
audit committee as an
"Audit Committee
Financial Expert," as
defined in applicable
rules of the Securities
and Exchange Commission.
This is because our board
of directors has
determined that no
individual audit
committee member
possesses all of the
attributes required by
the definition of "Audit
Committee Financial
Expert."
•
Each listed company must have an
internal audit function.
•
We have a
separate department for
our internal audit
function.
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Standard for U.S. Listed Companies
Our Practice
Compensation Committee
•
Listed companies must have a
compensation committee composed entirely of
independent board members as defined by the
NYSE listing standards.
•
Our compensation
committee has four
members, each of whom is
independent within the
meaning of the NYSE
standards.
•
The committee must have a written
charter that addresses its purpose and
responsibilities.
These responsibilities include (i)
reviewing and approving corporate goals
and objectives relevant to CEO
compensation; (ii) evaluating CEO
performance and compensation in light of
such goals and objectives for the CEO;
(iii) based on such evaluation,
reviewing and approving CEO compensation
levels; (iv) recommending to the board
non-CEO compensation, incentive
compensation plans and equity-based
plans; and (v) producing a report on
executive compensation as required by
the Securities and Exchange Commission
to be included in the company's annual
proxy statement or annual report. The
committee must also conduct an annual
performance self-evaluation.
•
Our compensation
committee reviews among
other things our general
compensation structure,
and reviews and
recommends the
compensation and benefits
of directors and the
chief executive officer,
subject to ratification
by the Board of
Directors.
Nominating/Corporate Governance Committee
•
Listed companies must have a
nominating/corporate governance committee
composed entirely of independent board
members.
•
We do not have a
nominating/corporate
governance committee.
The committee must have a written
charter that addresses its purpose and
responsibilities, which include (i)
identifying qualified individuals to
become board member; (ii) selecting, or
recommending that the board select, the
director nominees for the next annual
meeting of shareholders; (iii)
developing and recommending to the board
a set of corporate governance principles
applicable to the company; (iv)
overseeing the evaluation of the board
and management; and (v) conducting an
annual performance evaluation of the
committee.
Equity-Compensation Plans
•
Shareholders must be given the
opportunity to vote on all equity-compensation
plans and material revisions thereto, with
limited exceptions.
•
The Company is in
compliance with this
requirement.
Corporate Governance Guidelines
•
Listed companies must adopt and
disclose corporate governance guidelines.
•
We are fully
compliant with Clause 49
of the listing agreement
of Indian Stock
Exchanges, with regard to
corporate governance
guidelines. We publish a
report on corporate
governance in annual
report which is
distributed to our
domestic shareholders and
ADS holders annually.
Code of Business Conduct and Ethics
•
All listed companies, U.S. and
foreign, must adopt and disclose a code of
business conduct and ethics for directors,
officers and employees, and promptly disclose
any waivers of the code for directors or
executive officers.
•
We have adopted a
Code of Business Conduct
and Ethics Policy, which
is available at
www.satyam.com.
Memorandum and Articles of Association
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 Registered Statements. See
exhibit index.
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Objects and Purposes
Under our Memorandum of Association, the main objectives of our company include, but are not
limited to:
(i)
manufacturing and selling computer systems, peripherals, accessories, consumables and other
computer Products
(ii)
designing and developing computer systems and applications software for our own use and for
sale and designing and developing systems and applications software for or on behalf of
manufacturers, owners and users of computer systems and digital or electronic
equipment; and
(iii)
providing electronic data processing centers, word processing, software consultancy, system
studies, management consultancy, feasibility studies and computer training
Board of Directors
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% 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% 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%
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 capital and free
reserves.
Equity Shares
Our authorized share capital is 800,000,000 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 on equity shares which
are not fully paid-up. All of our issued and outstanding equity shares are fully paid-up.
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Dividends
We paid
out dividends of Rs 2,602.70 million ($56.7 million), Rs1,820.5 million ($41.3
million), Rs. 1,722.7 million ($37.6 million) in fiscal 2007, fiscal 2006 and fiscal 2005
respectively.
Under the Indian 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 Indian 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:
(i)
the rate of dividend to be declared may not exceed 10.0% of its paid up capital or the
average of the rate at which dividends were declared by the company in the prior five years,
whichever is less
(ii)
the total amount to be drawn from the accumulated profits earned in the previous years and
transferred to the reserves may not exceed an amount equivalent to 10.0% of its paid up
capital and free reserves, and the amount
so drawn is to be used first to set off the losses incurred in the fiscal year before any
dividends in respect of preference or equity shares are declared; and
(iii)
the balance of reserves after withdrawals shall not fall below 5.0% of its paid up capital
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 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 October 2006.
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
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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 Company 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 our audited balance sheet
and profit and loss account and the related 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 at our registered office. 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' and fifteen days'
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prior notice respectively 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) of
the Companies Act, 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.
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 there under together with delivery of the share certificates. We
have entered into listing agreements with two of the Indian
Stock exchanges: Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.
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.
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.
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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
Under the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, or Takeover Code, upon the acquisition of more than 5% or 10% or 14%
or 54% or 74% of the outstanding shares or voting rights of a publicly-listed 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 such company are listed. Further, the
Takeover Code requires that any person holding more than 15% and less than 55% of the shares or
voting rights in a company, upon the sale or purchase of 2% or more of the shares or voting rights
of the company, is required to notify the company and all the stock exchanges where the shares are
listed. A holder of ADSs would be subject to these notification requirements.
Upon the acquisition of 15% or more of such shares or voting rights, or a change in control of
the company, the purchaser is required
to make an open offer to the other shareholders, offering to purchase at least 20% of all the
outstanding shares of the company at a minimum offer price determined pursuant to the Takeover
Code. Since we are
a listed company in India, the provisions of the Takeover Code will apply to us and to any person
acquiring our equity shares or voting rights in our company. However, the Takeover Code provides
for a specific exemption from this provision to a holder of ADSs and states that this provision
will apply to a holder of ADSs only once he or she converts the ADSs into the underlying equity
shares.
Material Contracts
Except as described herein, we have not entered into any material contracts in the two years
preceding the date of this Annual Report, other than contracts entered into in the ordinary course
of business.
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 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.
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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 either Ministry of Finance or the RBI 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 GoI. 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. The GoI does not restrict
the payment of dividends to the holders of our ADSs or equity shares, whether or not such holders
reside in India. For additional information, please see "Taxation—Indian Taxation" below.
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 and non-resident Indians in Indian companies do not require the approval of the Foreign
Investment Promotion Board, or FIPB, a body formed by the GoI to negotiate with large foreign
companies interested in making long-term investments in India. Furthermore, henceforth no prior
approval of the RBI 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 an 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 GoI 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. 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
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 and non-resident
Indians. These facilities permit non-resident Indians to make portfolio
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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 may also invest in Indian companies through foreign direct investments. For
additional information, see "—Foreign Direct Investment". Under the foreign direct investment
rules, non-resident Indians 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 GoI issued guidelines which enable Foreign Institutional Investors, or FIIs,
including institutions such as pension funds, investment trusts, asset management companies,
nominee companies and incorporated/institutional portfolio managers, to invest in all the
securities traded on the primary and secondary markets in India. Under the guidelines, FIIs are
required to obtain an initial registration from the Securities and Exchange Board of India, or
SEBI, and a general permission from the Reserve Bank of India to engage in transactions regulated
under the Foreign Exchange Management Act. FIIs must also comply with the provisions of the SEBI
Foreign Institutional Investors Regulations, 1995. When it receives the initial registration, the
FII also obtains general permission from the Reserve Bank of India to engage in transactions
regulated under the Foreign Exchange Management Act. Together, the initial registration and the
Reserve Bank of India's general permission enable the registered FII to: (i) buy (subject to the
ownership restrictions discussed below) and sell unrestricted securities issued by Indian
companies; (ii) realize capital gains on investments made through the initial amount invested in
India; (iii) participate in rights offerings for shares; (iv) appoint a domestic custodian for
custody of investments held; and (v) repatriate the capital, capital gains, dividends, interest
income and any other compensation received pursuant to rights offerings of shares. The current
policy with respect to purchase/sale of securities of an Indian company by an FII is enshrined in
Schedule 2 and Regulation 5(2) of the Foreign Exchange Management
(Transfer or Issue of Securities by a Person Resident Outside India) Regulations, 2000.
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 Director Investment."
Ownership Restrictions
The Securities and Exchange Board of India and Reserve Bank of India regulations, restrict
investments in Indian companies by FIIs and NRIs or collectively, Foreign Direct Investors. Under
the current SEBI regulations applicable to us, subject to the requisite approvals of the
shareholders in a general meeting, Foreign Direct Investors in aggregate may hold no more than 49%
of a company's equity shares, excluding the equity shares underlying the ADSs. Pursuant to
Notification No. FEMA.45/2001-RB dated September 20, 2001 under Foreign Exchange Management
(Transfer or Issue of Securities by a Person Resident Outside India) (Amendment) Regulations, 2001,
upon obtaining the approval of the shareholders by a special resolution, the limit of FII
investment in a company may be increased to 100% for companies in the IT industry. Furthermore,
SEBI regulations provide that no single FII may hold more than 10% of a company's total equity
shares.
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.
Detailed provisions relating to FII investment have been introduced by the SEBI with the
introduction of the SEBI Foreign Institutional Investors Regulations, 1995. These provisions relate
to the registration of FIIs, their general obligations and responsibilities, and certain investment
conditions and restrictions. One such restriction is that the total investment in equity and
equity-related instruments should not be less than 70% of the aggregate of all investments of an
FII in India. The SEBI has also permitted private placements of shares by listed companies with
FIIs, subject to the prior approval of the Reserve Bank of India under the Foreign Exchange
Management Act. Such private placements must be made at the average of the weekly highs and lows of
the closing price over the preceding six months or the preceding two weeks, whichever is higher.
Under the Takeover Code, which replaced the 1994 Takeover Code (as defined herein), upon the
acquisition of more than 5% or 10% or 14% or 54% or 74% of the outstanding shares of a public
Indian company, a purchaser is required to notify the company and the company and the purchasers
are required to notify to 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
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the other shareholders offering to purchase at least 20% of all the outstanding shares of the
company at a minimum offer price as determined pursuant to the rules of the Takeover Code. Upon
conversion of ADSs into equity shares, a holder of ADSs will be subject to the Takeover Code.
Open market purchases of securities of Indian companies in India by Foreign Direct Investors
above the ownership levels set forth above require GoI 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.
Taxation
The following summary of the material Indian and United States federal income and estate tax
consequences of an investment in our ADSs is based upon laws and relevant interpretations thereof
in effect as of the date of this document, all of which are subject to change. This summary does
not deal with all possible tax consequences relating to an investment in our equity stock, such as
the tax consequences under state, local and other tax laws.
Indian Taxation
General.
The following is a summary of 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. The following is based on the provisions of the Income-tax Act,
1961, including the special tax regime contained in Section 115AC and 115ACA of the Income-tax Act
and the 1993 Regulations as amended on January 19, 2000. The Income-tax Act is amended every year
by the Finance Act of the relevant year. Some or all of the tax consequences of Section 115AC and
115ACA may be amended or changed by future amendments of the Income-tax Act.
We believe this information is materially complete as of the date hereof. However, this summary 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 should therefore consult their own tax advisors 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 if within the four preceding years he/she has been in India for a period
or periods amounting to 365 days or more; or
•
182 days or more, in the case of a citizen of India or a person of Indian origin living
abroad who visits India and within the four preceding years has been in India for a period
or periods amounting to 365 days or
•
182 days or more, in the case of a citizen of India who leaves India for the purposes of
employment outside India in any previous year and has within the four preceding years been
in India for a period or periods amounting to 365 days or more.
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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 resident of India
would be treated as non-residents for purposes of the Income-tax Act.
Taxation of Distributions.
There is no withholding tax on dividends paid to shareholders. However,
the company paying the dividend would be subject to a dividend distribution tax of 13.75% including
the presently applicable surcharge of 10%, of the total amount it distributes, declares or pays as
a dividend. Additionally, an education cess at the rate of 2.0% of such tax and surcharge after
which the effective dividend distribution tax payable would be
14.025%.
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.
The following is a brief summary of capital gains taxation of non-resident holders and resident
employees relating to the sale of ADSs and equity shares received upon conversion of ADSs. The
relevant provisions are contained mainly in sections 45, 47(vii)(a), 115AC and 115ACA, of the
Income-tax Act, in conjunction with the Scheme. Effective April 1, 2002, the Finance Act, 2001
introduced a new section 115AC in place of the prevailing section 115AC of the Income-tax Act. You
should consult your own tax advisor concerning the tax consequences of your particular situation.
Capital gains arising to the non-resident investor on the transfer of the equity shares received
upon conversion of the ADSs (whether in India or outside India to a non-resident investor) will be
liable for income tax under the provisions of the Income-tax Act.
With effect from October 1, 2004 any gain realized on the sale of listed equity shares held for
more than 12 months to an Indian resident or to a non-resident investor in India will not be
subject to Indian capital gains tax if the STT has been paid on the transaction. With effect from
June 1, 2005, the STT levied on delivery-based transactions on both buyer and seller is at the rate of 0.1 per cent and on non-delivery based transactions it is 0.02
per cent. Further, consequent to the Finance Act, 2006, with effect from June 1, 2006, the new rate
of STT on delivery-based transactions (for both buyer and seller) will be 0.125% and on
non-delivery based transactions it will be 0.025%.
Any gain realized on the sale of equity shares to an Indian resident, whether in India or outside
India, or to a non-resident in India, on which no STT has been paid will be subject to Indian
capital gains tax at the rate of 10% plus applicable surcharge on income tax and education cess at
the rate of 2.0% of sale of shares on which no STT is paid. For the purpose of computing capital
gains tax on the sale of the equity shares under section 115AC, the cost of acquisition of equity
shares received in exchange for ADSs will be determined on the basis of the prevailing price of the
equity shares on the BSE or NSE as on the date on which the relevant depositary gives notice to its
custodian for the delivery of such equity shares upon redemption of the ADSs, while the cost of
acquisition of shares directly converted from the ADSs will be determined on the basis of the price
prevailing on the BSE or the NSE on the date of conversion into shares. A non-resident holder's
holding period (for purpose 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 advice of withdrawal of
such equity shares by the relevant depositary to its custodian.
Capital gain realized in respect of equity shares held (calculated in the manner set forth in
the prior paragraph) for 12 months or less (short-term gain) on which STT is paid in the manner and
rates set out above, is subject to tax at the rate of 10% plus applicable surcharge on income tax
and an education cess at the rate of 2.0%. In the event that no STT is paid, short-term gain is
subject to tax at variable rates with the maximum rate of 40% plus applicable rate of surcharge on
income tax and education cess at the rate of 2.0% The actual rate of tax on short-term gains
depends on a number of factors, including the legal status of the non-resident holder and the type
of income chargeable in India. The provisions of the Agreement for Avoidance of Double Taxation
entered into by the GoI, or India Double Taxation Avoidance Agreement, with the country of
residence of the non-resident investor will be applicable to the extent they are more beneficial to
the non-resident investor. The capital gains tax is computed by applying the appropriate tax rates
to
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the difference between the sale price and the purchase price of the ADSs or equity shares. It is
unclear as to whether section 115AC and the Scheme are applicable 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 conversion of the ADSs. It is unclear as to whether capital gains derived from the sale
of subscription rights or other rights by a non-resident holder not entitled to an exemption under
a tax treaty will be subject to Indian capital gains tax. If such subscription rights or other
rights are deemed by the Indian tax authorities to be situated within India, the gains realized on
the sale of such subscription rights or other rights will be subject to Indian taxation. The
capital gains realized on the sale of such subscription rights or other rights, which will
generally be in the nature of short-term capital gains, will be subject to tax at variable rates
with a maximum rate of 40% excluding the applicable surcharge and education cess, in case of a
foreign company, and 30% excluding the applicable surcharge and education cess, in case of resident
employees, and non-resident individuals with taxable income over Rs.150,000.
Capital Losses.
Neither section 115AC nor the 1993 Regulations deals with capital losses arising on
a transfer of equity shares in India. In general terms, losses arising from a transfer of a capital
asset in India can only be set off against capital gains. A long-term capital loss can be set off
only against a long-term capital gain. To the extent that the losses are not absorbed in the year
of transfer, they may be carried forward for a period of eight assessment years immediately
succeeding the assessment year for which the loss was first determined by the assessing authority
and may be set off against the capital gains assessable for such subsequent assessment years. In
order to set off capital losses as above, the non-resident investor would be required to file
appropriate and timely tax returns in India and undergo the usual assessment procedures.
Withholding Tax on Capital Gains.
Any taxable gain realized by a non-resident on the sale of
ADSs or equity shares is to be withheld at the source by the buyer. However, as per the provisions
of Section 196D(2) of the Income-tax Act, no withholding tax is required to be deducted from any
income by way of capital gains arising to Foreign Institutional Investors as defined in Section
115AD of the Income-tax Act on the transfer of securities defined in Section 115AD of the
Income-tax Act.
Buy-back of Securities.
Indian companies are not subject to any tax on the buy-back of their
shares. However, the shareholders will be taxed on any resulting gains. We would be required to
deduct tax at source according to the capital gains tax liability of a non-resident shareholder.
Tax Treaties.
Currently divided income is not subject to tax in India in the hands of the holder of
the equity shares. If any equity shares are held by a non-resident investor following withdrawal
thereof from the depositary facility under the deposit agreements, the double taxation treaty, if
any, entered into by India with the country of residence of such non-resident investor will be
applicable to taxation with respect to any capital gain arising from transfer of such equity shares
or the ADSs. However, during the period of fiduciary ownership of equity shares in the hands of the
Depositary, the provisions of the India Double Taxation Avoidance Agreement entered into by the GoI
with the country of residence of the Depositary will be applicable in the matter of taxation of
capital gains, if any, on ADSs.
Stamp Duty and Transfer Tax.
Our equity shares are compulsorily deliverable in dematerialized
form (except for trades of up to 500 equity shares which may be delivered in physical form), and
accordingly, there would be no stamp duty in India on transfer of these equity shares in
dematerialized form. Upon issuance of the equity shares underlying our ADSs, we are required to pay
a stamp duty of Rs. 0.30 per share certificate or per share. 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 0.25% 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 0.25% 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.
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 advisors 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.
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Service Tax.
Brokerage or commission paid to stock brokers in connection with the sale or purchase
of shares listed on a recognized stock exchange in India is subject to a service tax of 10%,
excluding surcharges and education cess. There is an additional add on tax at the rate of 2.0%. The
stock broker is responsible for collecting the service tax from the shareholder and paying it to
the relevant authority.
Recent Developments – Budget  —
The Finance Bill 2007 has proposed, among
others, the following:
•
Increase in Education Cess from 2% to 3%, consequently, the tax rates for domestic
companies increased from 33.66% to 33.99% and for foreign companies from 41.82% to 42.23%;
•
Applicability Minimum Alternate Tax to Companies claiming deduction under section
10A/10B of the Income Tax Act.
•
Increase in dividend distribution tax from 14.03% to 16.995%; and
•
Employee stock options have been brought under net of Fringe Benefit Tax.
U.S. Taxation
The following discussion describes the material U.S. federal income tax consequences under present
law of an investment in the ADSs or equity shares. This summary applies only to investors that hold
the ADSs or equity shares as capital assets and that have the U.S. dollar as their functional
currency. This discussion is based on the tax laws of the United States as in effect on the date of
this document and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the
date of this document, as well as judicial and administrative interpretations thereof available on
or before such date. All of the foregoing authorities are subject to change, which change could
apply retroactively and could affect the tax consequences described below.
The following discussion does not deal with the tax consequences to any particular investor or to
persons in special tax situations such as:
•
banks;
•
financial institutions;
•
insurance companies;
•
broker dealers;
•
traders that elect to mark to market;
•
tax-exempt entities;
•
persons liable for alternative minimum tax;
•
U.S. expatriates;
•
persons holding an ADS or equity share as part of a straddle, hedging, conversion or integrated transaction;
•
persons that actually or constructively own 10% or more of our voting stock; or
•
persons holding ADSs or equity shares through partnerships or other pass-through entities.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE
U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL AND FOREIGN
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.
The discussion below of the U.S. federal income tax consequences to "U.S. Holders" will apply
if you are the beneficial owner of ADSs or equity shares and you are, for U.S. federal income tax
purposes,
•
a citizen or resident of the U.S.;
•
a corporation (or other entity taxable as a corporation for U.S. federal income tax
purposes) organized under the laws of the U.S., any State or the District of Columbia
•
an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
•
a trust that (1) is subject to the supervision of a court within the United States and
the control of one or more U.S. persons or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S. person.
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If a partnership holds ADSs or equity shares, the U.S. federal income tax treatment of a
partner in the partnership generally will depend on the status of the partner and the activities of
the partnership. Partners of partnerships holding ADSs or equity shares should consult their own
tax advisors regarding the U.S. federal income tax consequences to them of the acquisition,
ownership and disposition of ADSs or equity shares. The discussion below assumes that the
representations contained in the deposit agreement are true and that the obligations in the deposit
agreement and any related agreement will be complied with in accordance with the terms. If you hold
ADSs, you should be treated as the holder of the underlying equity shares represented by those ADSs
for U.S. federal income tax purposes. The U.S. Treasury has expressed concerns that parties to whom
ADSs are pre-released may be taking actions that are inconsistent with the claiming, by U.S.
Holders of ADSs, of foreign tax credits for U.S. federal income tax purposes. Such actions would
also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received
by certain non-corporate U.S. Holders, as described below. Accordingly, the availability of the
reduced tax rate for dividends received by certain non-corporate U.S. Holders could be affected by
future actions that may be taken by the U.S. Treasury.
Dividends
Subject to the passive foreign investment company rules discussed below, the gross amount of
distributions made by us with respect to the ADSs or the equity shares will generally be includable
in your gross income in the year received as foreign source dividend income to the extent that such
distributions are paid out of our current or accumulated earnings and profits as determined under
U.S. federal income tax principles. To the extent, if any, that the amount of any such distribution
exceeds our current or accumulated earnings and profits, as determined under U.S. federal income
tax principles, it will be treated first as a tax-free return of your tax basis in the ADSs or the
equity shares (thereby increasing the amount of any gain or decreasing the amount of any loss
realized on the subsequent sale or disposition of such ADSs or equity shares) and thereafter as
capital gain. No dividends received deduction will be allowed for U.S. federal income tax purposes
with respect to dividends paid by us. With respect to non-corporate U.S. Holders, including
individuals, for taxable years beginning before January 1, 2011, dividends may be "qualified
dividend income" which is taxed at the lower applicable capital gains rate provided that (1) either
(a) we are eligible for the benefits of the income tax treaty between the United States and India
or (b) the ADSs or equity shares, as applicable, are readily tradable on an established securities
market in the United States, (2) we are not a passive foreign investment company (as discussed
below) for either our taxable year in which the dividend was paid or the preceding taxable year and
(3) certain holding period requirements are met. Under Internal
Revenue Service authority, common shares, or ADSs representing such shares, are considered to be
readily tradable on an established securities market in the United States if they are listed on the
New York Stock Exchange, as our ADSs are. You should consult your own tax advisors regarding the
availability of the lower rate for dividends paid with respect to ADSs or equity shares. The amount
of any distribution paid in Indian rupees will be equal to the U.S. dollar value of such Indian
rupees on the date such distribution is received by the depositary, in the case of ADSs, or by you,
in the case of equity shares, regardless of whether the payment is in fact converted into U.S.
dollars at that time. Gain or loss, if any, realized on the sale or other disposition of such
Indian rupees will generally be U.S. source ordinary income or loss. The amount of any distribution
of property other than cash will be the fair market value of such property on the date of
distribution. For foreign tax credit purposes, dividends
distributed by us with respect to ADSs or equity shares would generally constitute "passive
category income" but could, in the case of certain U.S. Holders, constitute "general category
income." A U.S. Holder will not be able to claim a U.S. foreign tax credit for any Indian taxes
imposed with respect to distributions on equity shares or ADSs (as discussed under "—Indian
Taxation— Taxation of Distributions.").
Sale or Other Disposition of ADSs or Equity Shares
Subject to the passive foreign investment company rules discussed below, upon a sale or other
disposition of ADSs or equity shares, you will recognize a capital gain or loss for U.S. federal
income tax purposes in an amount equal to the difference between the amount realized and your tax
basis in such ADSs or equity shares. Your tax basis in your ADSs or equity shares will generally
equal the cost of such ADSs or equity shares, as applicable. Any such gain or loss will generally
be U.S. source gain or loss and will be treated as long-term capital gain or loss if your holding
period in the ADSs or the equity shares exceeds one year. If you are a non-corporate U.S. Holder,
including an individual, any capital gain generally will be subject to U.S. federal income tax at
preferential rates if specified minimum holding periods are met. The deductibility of capital
losses is subject to significant limitations.
Because capital gains generally will be treated as U.S. source gain, as a result of the U.S.
foreign tax credit limitation, any Indian income tax imposed upon capital gains in respect of
equity shares or ADSs (as discussed under "—Indian Taxation—Taxation of
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Capital Gains") may not be currently creditable unless a U.S. Holder has other foreign source
income for the year in the appropriate U.S. foreign tax credit limitation basket.
Stamp Duty and Transfer Tax
U.S. Holder generally will not be able to claim a U.S. foreign tax credit for any Indian stamp
duty for which such U.S. Holder is liable (as discussed under "—Indian Taxation—Stamp Duty and
Transfer Tax") and which is paid by such U.S. Holder. You should consult your tax advisor regarding
the effect of payment of any Indian stamp duty.
Passive Foreign Investment Company
A non-U.S.
corporation is considered a passive foreign investment company, or a
PFIC, for any taxable year if either
•
at least 75% of its gross income is passive income, or
•
at least 50% of the value of its assets (determined on the basis of a quarterly average)
is attributable to assets that produce or are held for the production of passive income
We will be treated as owning our proportionate share of the assets and earning our proportionate
share of the income of any other corporation in which we own, directly or indirectly, at least 25%
(by value) of the stock. We do not believe that we were a PFIC for the taxable year ended March 31,
2006, and we do not anticipate that we will be a PFIC for future taxable years. This is a factual
determination, however, that must be made annually at the end of the taxable year. Therefore there
can be no assurance that we will not be classified as a PFIC for the current taxable year or for
any future taxable year. If we were classified as a PFIC for any taxable year during which you held
our ADSs or equity shares, you could be subject to materially adverse tax consequences with respect
to certain distributions on, and gain realized from a disposition of, ADSs or equity shares. You
should consult your own tax advisors regarding the potential application of the PFIC rules to your
ownership of ADSs or equity shares.
U.S. Information Reporting and Backup Withholding
Dividend payments with respect to ADSs or equity shares and proceeds from the sale, exchange or
redemption of ADSs or equity
shares may be subject to information reporting to the Internal Revenue Service and possible U.S.
backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S.
Holder who furnishes a correct taxpayer identification number and makes any other required
certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to
establish their exempt status generally must provide such certification on Internal Revenue Service
Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited
against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for refund with the
Internal Revenue Service and furnishing any required information. 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
100 F Street, N.E.
Washington, D.C. 20549
Copies of these materials can also be obtained from the Public Reference Section of the SEC,
100 F Street, N.F., 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.
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Subsidiary Information
Not applicable.
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. 12 "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.
dollars, 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 at March 31,
2007
2006
2005
Total Recorded
Total Recorded
Amount
Fair Value
Amount
Fair value
Amount
Fair Value
( dollars in millions)
Debt:
Variable rate
short-term debt
$
10.5
$
10.5
$
4.1
$
4.1
$
1.7
$
1.7
Average interest rate
6.71
%
5.33
%
3.61
%
Variable rate long term debt
$
20.5
$
20.5
$
16.1
$
16.1
—
—
Average interest rate
7.23
%
5.58
%
—
Fixed rate long-term
debt
$
3.3
$
3.3
$
4.2
$
4.2
$
4.3
$
4.3
Average interest rate
7.93
%
7.78
%
9.49
%
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 2007 and fiscal 2006, 94.9% and 98.6%, respectively, of our revenues were
generated outside of India. Using sensitivity analysis, a hypothetical 10% increase in the value of
the Indian rupee against all other currencies would decrease revenue by 2.5%, or $36.9 million, in
fiscal 2007, 2.3%, or $24.9 million, in fiscal 2006 while a hypothetical 10% decrease in the value
of the Indian rupee against all other currency would increase revenue by 2.5% or $36.9 million, in
fiscal 2007, 2.3%, or $24.9 million in fiscal 2006.
We had outstanding forward and options contract amounting to $452.6 million and $216.0 million as
at March 31, 2007 and 2006, respectively. Gains/ (losses) on outstanding forward and options
contracts amounted to $4.5 million and $(1.4) million during fiscal 2007 and 2006 respectively.
Using sensitivity analysis, a hypothetical 1% increase in the value of the Indian rupee against all
other currencies would decrease these gains by $0.7 million in fiscal 2007 and by $0.8 million in
fiscal 2006 while a hypothetical 1% decrease in the value of the Indian rupee against all other
currency would increase these gains by $0.7 million in fiscal 2007 and by $0.8 million in fiscal
2006.
In the opinion of management, a substantial portion of this fluctuation would be offset by expenses
incurred in local currencies. As a result, the aggregate of the hypothetical movement described
above of the value of the Indian rupee against all other currencies in either direction would have
impacted our earnings before interest and taxes by $37.6 million fiscal 2007 and $25.7 million in
fiscal 2006. This amount would be offset, in part, from the impacts of local income taxes and local
currency interest expense. As of March
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31, 2007, we had approximately $141.7 million of non-Indian rupee denominated cash and cash
equivalents
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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 $150.6 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 SEC on May 14, 2001 (Registration No. 333-13464). In May 2005, we filed a registration statement on
Form F-3 (Registration No. 333-122996) for the sale by certain selling shareholders of an
aggregate 13,043,480 ADSs of the Company held by such shareholders. We did not receive any
proceeds from such offering. As of March 31, 2007, the entire $150.6 million of these proceeds has been
used for prepayment of loans ($26.9 million); strategic investments in our subsidiaries ($39.3
million); development of facilities and infrastructure ($58.5 million) and working capital and
general corporate purposes ($25.9 million). 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. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the U.S. SEC's rules
and forms, and that such information is accumulated and communicated to our management, to allow
timely decisions regarding required disclosures. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and, in reaching a reasonable level of assurance, management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures. Also, we have investments in certain unconsolidated entities. As we do not control or
manage these entities, our disclosure controls and procedures with respect to such entities are
necessarily substantially more limited than those we maintain with respect to our consolidated
subsidiaries.
We have carried out an evaluation, under the supervision and with the participation of our Chief
Executive Officer, Chief Financial Officer and other management, of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of March 31, 2007.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting refers to a process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board
of directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in
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accordance with authorizations of our management and members of our board of directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on our
financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial
reporting objectives because of its inherent limitations. Internal control over financial reporting
is a process that involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal control over financial reporting also can be
circumvented by collusion or improper override. Because of such limitations, there is a risk that
material misstatements may not be
prevented or detected on a timely basis by internal control over financial reporting. However,
these inherent limitations are known features of the financial reporting process, and it is
possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management evaluated the effectiveness of our internal control over financial reporting as of March
31, 2007 using the framework set forth in the report of the Treadway Commission's Committee of
Sponsoring Organizations (COSO),
"Internal Control — Integrated Framework."
Based on the foregoing, management has concluded that our internal control over financial reporting
was effective as of March 31, 2007.
Price Waterhouse, who have audited the consolidated financial statements for the year ended March
31, 2007, have also audited management's assessment of the effectiveness of internal control over
financial reporting as at March 31, 2007 and have issued an attestation report on management's
assessment. For the auditor's report please refer to Item 18..
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial
Officer, whether any changes in our internal control over financial reporting that occurred during
our last fiscal year have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. Based on the evaluation we conducted, management has
concluded that no such changes have occurred.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit Committee members as of April 27, 2007 are Dr. Mangalam Srinivasan, M Rammohan Rao,
T.R. Prasad and V.S. Raju each of whom is an independent director pursuant to the applicable rules
of the Securities and Exchange Commission and the NYSE. See "Item 6. Directors, Senior Management and
Employees" for the experience and qualifications of the members of the Audit Committee. We do not
have an individual serving on our audit committee as an "Audit Committee Financial Experts," as
defined in applicable rules of the SEC. This is because although our
audit committee members have certain financial expertise, our board of directors has determined
that no individual audit committee member possesses all of the attributes required by the
definition of "Audit Committee Financial Expert."
ITEM 16B. CODE OF ETHICS
We have adopted a written Code of Ethics that is applicable to all of our directors, senior
management and employees. We will make available a copy of the Code of Ethics to any person,
without charge, if a written request is made to our Company Secretary at Mayfair Center, SP Road,
Secunderabad 500 003, Andhra Pradesh, India. Our Code of Ethics is
also available on our corporate website, www.satyam.com.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the remuneration that we paid to our Independent Auditors and its
associated entities in each of our previous two fiscal years:
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Audit Related
Fiscal Year
Audit Services
Services
Tax Services
Other Services
Total
2007
$
873,959
$
342,411
$
328,723
$
257,167
$
1,802,260
2006
$
493,120
$
206,010
$
109,717
$
10,245
$
819,092
Audit Services
Audit of the standalone financial statements, consolidated financial statements of our Company and
our subsidiaries prepared in accordance with Indian GAAP, US GAAP and other local GAAPs of the
subsidiaries and attest services that generally only the auditor can provide.
Audit Related Services
Audit Related Services represent assurance and related services that are related to the performance
of the audit of our financial statements.
Tax Services
Tax audit, tax returns, tax processing, tax filing and advisory services pertaining to
withholding taxes, double tax avoidance agreements, indirect tax matters, etc.
Other Services
Work permit related services and other advisory services
During fiscal 2007, the Audit Committee pre-approved a list of services that could be rendered
by the principal accountant in fiscal 2007 pursuant to pre-approval policies and procedures
established by the Audit Committee. For services other than those specified, approval would need to
be obtained from the Audit Committee prior to the performance of such services. Services provided
by the principal accountant in fiscal 2006 were allowable services that were approved by the Audit
Committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
None.
PART III
ITEM 17. FINANCIAL STATEMENTS
See Item 18 for a list of financial statements filed under Item 17.
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ITEM 18. FINANCIAL STATEMENTS
Financial Statement
The following financial statements are filed as part of this document, together with the report
of the independent auditors:
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of March 31, 2007 and 2006
F-4
Consolidated Statements of Income for the three years ended March 31, 2007
F-5
Consolidated Statements of Shareholder's Equity and Comprehensive Income for the three years ended March 31, 2007
F-6
Consolidated Statements of Cash Flows for the three years ended March 31, 2007
F-9
Notes to the Consolidated Financial Statements
F-10
Financial Statement Schedule
F-39
ITEM 19. EXHIBITS
Number
Description
1.1
Memorandum and Articles of Association of Satyam Computer Services Limited. (1)
1.2
Certificate of Incorporation of Satyam Computer Services Limited. (2)
2.1
Specimens of Share Certificates. (2)
2.2
Deposit Agreement dated May 14, 2001, by and among Satyam Computer Services Limited,
Citibank, N.A. (as Depositary) and the holders from time to time of American Depositary
Receipts issued thereunder (including as an exhibit, the form of American Depositary
Receipt). (3)
4.1
Associate Stock Option Plan (including the Trust Deed). (2)
4.2
Associate Stock Option Plan B, as
amended and restated. (4)
4.3
Associate Stock Option Plan ADS, as
amended and restated. (4)
4.4
Associate Stock Option
Plan–RSUs(ADS). (5)
4.5
Associate Stock Option
Plan–RSUs. (6)
8.1
List of Significant Subsidiaries. (6)
12.1
Certification of Chief Executive
Officer under Section 302 of the Sarbanes-Oxley Act 2002. (6)
12.2
Certification of Chief Financial
Officer under Section 302 of the Sarbanes-Oxley Act 2002. (6)
13.1
Certification of Chief Executive
Officer under Section 906 of the Sarbanes-Oxley Act 2002. (6)
13.2
Certification of Chief Financial
Officer under Section 906 of the Sarbanes-Oxley Act 2002. (6)
15.1
Consent of Price Waterhouse,
Independent Registered Public Accounting Firm. (6)
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(1)
Previously filed as an exhibit to our Registration Statement on Form F-3 (File No.
333-122996) filed on February 25, 2005 and incorporated herein by reference.
(2)
Previously filed as an exhibit to our Registration Statement on Form F-1 (File No.
333-13464) filed on May 7, 2001 and incorporated herein by reference.
(3)
Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed on August
13, 2001 and incorporated herein by reference.
(4)
Previously filed as an exhibit to our Form 20-F (File No. 001-15190) filed on April 28,
2006 and incorporated here in by reference.
(5)
Previously filed as an exhibit to our Form S-8 (File No. 333-139949) filed on January
12, 2007 and incorporated herein by reference.
(6)
Filed herewith.
SIGNATURES
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/  B. Rama Raju
Name:
B. Rama Raju
Title:
Managing Director and Chief Executive
Officer
By:
/s/ V. Srinivas
Name:
Srinivas V.
Title:
Director and Senior Vice President
& Chief Financial Officer
Date:
April 30, 2007
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SATYAM COMPUTER SERVICES LIMITED
INDEX TO THE U.S. GAAP CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of March 31, 2007 and 2006
F-4
Consolidated Statements of Income for the three years ended March 31, 2007
F-5
Consolidated Statements of Shareholder's Equity and Comprehensive Income for the three years ended March 31, 2007
F-6
Consolidated Statements of Cash Flows for the three years ended March 31, 2007
F-9
Notes to the Consolidated Financial Statements
F-10
Financial Statement Schedule
F-39
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Satyam Computer Services Limited:
We have completed an integrated audit of Satyam Computer Services Limited's March 31, 2007
consolidated financial statements and of its internal control over financial reporting as of March
31, 2007 and audits of its March 31, 2006 and March 31, 2005 consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States).
Our opinions, based on our audits, are presented below.
Consolidated financial statements and financial statement schedule
In our opinion, the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Satyam Computer Services Limited and
its subsidiaries at March 31, 2007 and 2006, and the results of their operations and their cash
flows for each of the three years in the period ended March 31, 2007 in conformity with accounting
principles generally accepted in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We conducted our audits
of these statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit of financial statements 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 provide a reasonable basis for our opinion.
As discussed in Note 2(p) to the consolidated financial statements, effective April 1, 2006, the
Company changed its method of accounting for stock-based compensation in accordance with Statement
of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment".
Internal control over financial reporting
Also, in our opinion, management's assessment, included in Management's Report on Internal Control
Over Financial Reporting appearing under Item 15, that the Company maintained effective internal
control over financial reporting as of March 31, 2007 based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of March 31, 2007, based on criteria established in Internal
Control — Integrated Framework issued by the COSO. The Company's management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express
opinions on management's assessment and on the effectiveness of the Company's internal control over
financial reporting based on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes obtaining an
understanding of internal control over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of internal control, and performing
such other procedures as we consider necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable
F-2
Table of Contents
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
/s/ Price
Waterhouse
Price Waterhouse
Secunderabad, India
April 27, 2007
F-3
Table of Contents
Satyam Computer Services Limited
Consolidated Balance Sheets
(Millions of US Dollars except per share data and as stated otherwise)
As of March 31,
2007
2006
Assets
Current assets
Cash and cash equivalents
$
152.2
$
292.8
Investments in bank deposits
—
403.7
Accounts receivable, net of allowance for doubtful debts
364.2
220.0
Unbilled revenue on contracts
38.6
41.1
Deferred income taxes
17.1
10.5
Prepaid expenses and other receivables
37.1
48.9
Total current assets
609.2
1,017.0
Investments in bank deposits
767.6
—
Investments in associated companies
4.6
3.5
Premises and equipment, net
163.1
106.6
Goodwill, net
32.7
27.6
Intangible assets, net
7.4
6.6
Other assets
39.5
19.9
Total assets
1,624.1
1,181.2
Liabilities and shareholders' equity
Current liabilities
Short-term and current portion of long-term debt
12.1
6.5
0.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share (45,505,000 shares as of March 31, 2007)
13.6
—
Accounts payable
16.8
11.9
Accrued expenses and other current liabilities
148.6
104.0
Unearned and deferred revenue
20.1
11.8
Total current liabilities
211.2
134.2
Long-term debt, excluding current portion
22.2
17.9
Accrued benefit cost — Gratuity, excluding current portion
8.1
4.9
Deferred income taxes
11.6
8.9
Total liabilities
253.1
165.9
Contingencies and Commitments (
Note No.19)
Minority interest
—
0.9
Preferred Stock of Subsidiary
0.05% Cumulative convertible redeemable preference shares, par value Rs.10 (US$0.23)* per
share
(100 million preference shares authorized, Nil and 91,009,999 preference shares issued
as of March 31, 2007 and 2006 respectively)
—
20.0
Shareholders' equity
Common stock — par value Rs.2 (US$0.05)* per equity share
(
800 million and 750 million equity shares authorized as of March 31, 2007 and 2006
respectively. 667,196,009 and 648,899,078 equity shares as of March 31, 2007 and 2006
respectively
)
36.0
17.6
Additional paid-in capital
552.4
465.1
Shares subscribed but unissued
1.8
0.4
Deferred stock-based compensation
—
(0.4
)
Retained earnings
721.1
497.1
Accumulated other comprehensive income/(loss)
60.9
15.8
1,372.2
995.6
Shares held by the SC-Trust under associate stock option plan
(2,295,880 and 2,386,280 equity shares as of March 31, 2007 and 2006 respectively)
(1.2
)
(1.2
)
Total shareholders' equity
1,371.0
994.4
Total liabilities and shareholders' equity
$
1,624.1
$
1,181.2
*
The par value in US$ has been converted at the closing
rate as of March 31, 2007, 1US$ = Rs 43.10
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
Satyam Computer Services Limited
Consolidated Statements of Income
(Millions of US Dollars except per share data and as stated otherwise)
Year ended March 31,
2007
2006
2005
Revenues
$
1,461.4
$
1,096.3
$
793.6
Cost of
revenues
(
Includes stock-based compensation of US$12.8,US$Nil and US$0.8
for the three years ended March 31, 2007, 2006 and 2005
respectively)
(937.6
)
(689.0
)
(506.8
)
Gross profit
523.8
407.3
286.8
Selling,
general and administrative expenses
(Includes stock-based compensation of US$2.9,US$0.8 and US$1.1
for the three years ended March 31, 2007, 2006 and 2005
respectively)
(232.2
)
(187.6
)
(124.3
)
Total operating expenses
(232.2
)
(187.6
)
(124.3
)
Operating income
291.6
219.7
162.5
Interest income
37.3
26.3
22.3
Interest expense
(3.6
)
(1.3
)
(0.4
)
Gain on sale of investments (Refer note 7)
—
43.6
—
Gain/(Loss) on foreign exchange transactions
(3.3
)
0.3
(4.6
)
Other income/(expense), net
6.2
(0.8
)
0.4
Income before income taxes and equity in earnings/(losses) of
associated companies
328.2
287.8
180.2
Income taxes
(30.6
)
(37.7
)
(25.3
)
Minority interest
—
0.1
—
Income before equity in earnings/(losses) of associated companies
297.6
250.2
154.9
Equity in earnings/(losses) of associated companies, net of taxes
0.8
(0.8
)
(1.1
)
Net income
$
298.4
$
249.4
$
153.8
Earnings per share:
Basic
$
0.46
$
0.39
$
0.24
Diluted
$
0.45
$
0.38
$
0.24
Weighted average number of shares used in computing earnings per
share (in millions)
Basic
652.5
641.2
632.4
Diluted
666.0
662.8
647.2
The accompanying notes form an integral part of these consolidated financial statements.
F-5
Table of Contents
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Millions of US Dollars except per share data and as stated otherwise)
Accumulated
Additional
Shares
Deferred
other
Shares held
Total
Common Stock
paid-in
subscribed but
stock-based
Retained
comprehensive
by
Shareholders'
Shares
Par Value
capital
unissued
compensation
earnings
income/(loss)
SC-Trust
Equity
Balance as of March 31, 2004
632,503,420
$
17.2
$
416.2
—
—
$
172.8
$
29.4
$
(1.7
)
$
633.9
Net income
—
—
—
—
—
153.8
—
—
153.8
Other comprehensive income
Gain on foreign currency translation
—
—
—
—
—
—
0.2
—
0.2
Total Comprehensive income
154.0
Issuance of common stock
6,027,162
0.2
14.7
—
—
—
—
—
14.9
Shares subscribed but unissued
—
—
—
0.1
—
—
—
—
0.1
Gain on dilution of interest in associate company
on its issuance of new shares, net of taxes
—
—
0.2
—
—
—
—
—
0.2
Deferred stock-based compensation
—
—
2.2
—
(2.2
)
—
—
—
—
Amortization of deferred stock-based compensation
—
—
—
—
1.9
—
—
—
1.9
Shares transferred by SC-Trust to employees
—
—
0.3
—
—
—
—
0.2
0.5
Cash dividend paid at the rate of US$0.12 per share
—
—
—
—
—
(37.6
)
—
—
(37.6
)
Balance as of March 31, 2005
638,530,582
$
17.4
$
433.6
$
0.1
$
(0.3
)
$
289.0
$
29.6
$
(1.5
)
$
767.9
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Millions of US Dollars except per share data and as stated otherwise)
Accumulated
Additional
Shares
Deferred
other
Shares held
Total
Common Stock
paid-in
subscribed but
stock-based
Retained
comprehensive
by
Shareholders'
Shares
Par Value
capital
unissued
compensation
earnings
income/(loss)
SC-Trust
Equity
Balance as of March 31, 2005
638,530,582
$
17.4
$
433.6
$
0.1
$
(0.3
)
$
289.0
$
29.6
$
(1.5
)
$
767.9
Net income
—
—
—
—
—
249.4
—
—
249.4
Other comprehensive income
Loss on foreign currency translation
—
—
—
—
—
—
(13.8
)
—
(13.8
)
Total Comprehensive income
235.6
Issuance of common stock
10,368,496
0.2
30.3
(0.1
)
—
—
—
—
30.4
Shares subscribed but unissued
—
—
—
0.4
—
—
—
—
0.4
Deferred stock-based compensation
—
—
0.9
—
(0.9
)
—
—
—
—
Amortization of deferred stock-based compensation
—
—
—
—
0.8
—
—
—
0.8
Shares transferred by SC-Trust to employees
—
—
0.3
—
—
—
—
0.3
0.6
Cash dividend paid at the rate of US$0.11 per share
—
—
—
—
—
(41.3
)
—
—
(41.3
)
Balance as of March 31, 2006
648,899,078
$
17.6
$
465.1
$
0.4
($0.4
)
$
497.1
$
15.8
($1.2
)
$
994.4
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
Satyam Computer Services Limited
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Millions of US Dollars except per share data and as stated otherwise)
Accumulated
Additional
Shares
Deferred
other
Shares
Total
Common Stock
paid-in
subscribed
stock-based
Retained
comprehensive
held by
Shareholders'
Shares
Par Value
capital
but unissued
compensation
earnings
income/(loss)
SC-Trust
Equity
Balance as of March 31, 2006
648,899,078
$
17.6
$
465.1
$
0.4
$
(0.4
)
$
497.1
$15.8
$
(1.2
)
$994.4
Net income
—
—
—
—
—
298.4
—
—
298.4
Other comprehensive income/(loss)
Gain on foreign currency translation
—
—
—
—
—
—
46.3
—
46.3
Adjustments to initially adopt SFAS No. 158, net of tax
—
—
—
—
—
—
(1.2
)
—
(1.2
)
Total Comprehensive income
343.5
Issuance of common stock
18,296,931
0.7
64.1
(0.4
)
—
—
—
—
64.4
Stock split (effected in the form of dividend)
—
17.7
—
—
—
(17.7
)
—
—
—
Shares subscribed but unissued
—
—
—
1.8
—
—
—
—
1.8
Gain on
dilution of interest in subsidiary company on its issuance of new shares, net of taxes (Refer note 4)
—
—
7.9
—
—
—
—
—
7.9
Reversal of Deferred stock based compensation on adoption
of SFAS 123R
—
—
(0.4
)
—
0.4
—
—
—
—
Stock-based compensation expense
—
—
15.7
—
—
—
—
—
15.7
Cash dividend paid at the rate of US$0.13 per share
—
—
—
—
—
(56.7
)
—
—
(56.7
)
Balance as of March 31, 2007
667,196,009
$
36.0
$
552.4
$
1.8
—
$
721.1
$
60.9
($1.2
)
$
1,371.0
The accompanying notes are an integral part of these
consolidated financial statements.
F-8
Table of Contents
Satyam Computer Services Limited
Consolidated Statements of Cashflows
(Millions of US Dollars except per share data and as stated otherwise)
Year ended March 31,
2007
2006
2005
Cash Flows From Operating Activities
Net income
$
298.4
$
249.4
$
153.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets
33.6
31.5
25.0
Stock-based compensation
15.7
0.8
1.9
Deferred income taxes
(6.7
)
(5.1
)
(1.9
)
Gain on sale of investments
—
(43.6
)
—
Loss on sale of premises and equipment
0.3
0.2
0.3
Minority Interest
—
(0.1
)
—
Equity in (earnings)/losses of associated companies, net of taxes
(0.8
)
0.8
1.1
Changes in assets and liabilities:
—
Accounts receivable, net and unbilled revenue on contracts
(127.7
)
(81.9
)
(40.7
)
Prepaid expenses and other receivables, net
13.4
(31.7
)
16.6
Other assets, net
(17.5
)
(1.8
)
(8.0
)
Accounts payable
3.8
(2.5
)
2.5
Accrued expenses and other current liabilities
38.4
40.1
15.8
Unearned and deferred revenue
7.6
6.1
3.5
Other liabilities non-current
3.0
0.5
1.4
Net cash provided by operating activities
261.5
162.7
171.3
Cash Flows From Investing Activities
Proceeds from maturity of bank deposits
408.0
—
332.1
Investment in bank deposits
(745.6
)
—
(411.5
)
Purchase of premises and equipment
(81.5
)
(54.1
)
(39.0
)
Proceeds from sale of premises and equipment
0.5
0.3
0.3
Payment for purchase of Citisoft Plc, net of cash acquired
(3.3
)
(12.1
)
—
Payment for purchase of Knowledge Dynamics Pte. Ltd., net of cash acquired
(0.8
)
(1.6
)
—
Purchase of investments
—
—
(7.6
)
Proceeds from sale of investments
—
62.3
10.2
Net cash used in investing activities
(422.7
)
(5.2
)
(115.5
)
Cash Flows From Financing Activities
Proceeds from short-term debt
10.9
3.6
1.7
Repayments of short-term debt
(4.7
)
(1.2
)
—
Proceeds from long-term debt
4.3
16.3
0.2
Repayment of long-term debt
(3.9
)
(2.7
)
(2.2
)
Issuance of common stock
64.4
31.0
15.4
Shares subscribed but unissued
1.8
0.4
0.1
Issuance of Preferred stock by subsidiary, net of issuance cost
—
—
9.5
Cash dividends paid
(56.7
)
(41.3
)
(37.6
)
Net cash provided by/(used in) financing activities
16.1
6.1
(12.9
)
Effect of exchange rate changes on cash and cash equivalents
4.5
(0.6
)
0.2
Net change in cash and cash equivalents
(140.6
)
163.0
43.1
Cash and cash equivalents at the beginning of the year
292.8
129.8
86.7
Cash and cash equivalents at the end of the year
$
152.2
$
292.8
$
129.8
Supplementary information:
Cash paid during the year for:
Income taxes
$
32.8
$
44.9
$
25.4
Interest
2.6
1.3
0.5
Non-cash items:
Capital leases and hire purchase
$
2.3
$
2.5
$
2.0
Deferred consideration for purchase of Citisoft Plc
5.9
3.1
—
Deferred consideration for purchase of Knowledge Dynamics Pte Ltd
—
1.5
—
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
1. Description of Business
Satyam Computer Services Limited, its consolidated subsidiaries and associated companies
(hereinafter referred to as "
Satyam
") are engaged in providing Information Technology ("IT")
services and Business Process Outsourcing ("BPO") services. Satyam Computer Services Limited
(hereinafter referred to as "
Satyam Computer Services
") is an IT services provider that uses 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, United Kingdom, Japan, Australia, Singapore, Malaysia, Dubai, Germany, Canada, China,
Hungary, Saudi Arabia and Brazil. Satyam offers a comprehensive range of IT services, including
application development and maintenance, consulting and enterprise business solutions, extended
engineering solutions and infrastructure management 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.
Nipuna
Services Limited ("Nipuna") a majority owned subsidiary of Satyam Computer Services is engaged
in providing BPO services covering HR, Finance & Accounting, Customer Care (Voice, Mail and Chat),
and Transaction Processing (industry-specific offerings).
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.
Satyam's investments in business entities in which it does not have control, but have the ability
to exercise significant influence over operating and financial policies (generally 20—50 percent
ownership), are referred to as associated companies and 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/(loss) in the statement of income. 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 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.
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, and future obligations under employee benefit plans, valuation
allowances for deferred taxes, impairment of goodwill and useful lives of premises and equipment
(fixed assets). Actual results could differ materially from those estimates.
F-10
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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 U.S. Dollar, Pound Sterling, Singapore Dollar and Renminbi are the
functional currencies for its foreign subsidiaries located in U.S., UK, Singapore and China
respectively. The translation of the functional currencies into U.S. dollars 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 exchange rates prevailing on the date of transaction. Gains or losses
resulting from foreign currency transactions are included in the statement of income.
d) Revenue Recognition
Revenues from IT services, which includes software development, system maintenance, package
software implementation, engineering design services and e-Business 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 basis, with
revisions to estimates reflected in the period in which changes become known. The use of the
percentage of completion method reflects the pattern in which the obligations to the customer are
fulfilled. Satyam has used an input-based approach since the input measures are a reasonable
surrogate for output measures. Provisions for estimated losses on such engagements are made during
the period in which a loss becomes probable and can be reasonably estimated.
Revenues from BPO services consist of revenues from time-and-material services or time bound fixed
price engagements. Revenues from time-and-material services are recognized as the services are
performed. Revenues from BPO services are also on time bound fixed-price engagements, under which
revenue is recognized using the percentage completion method of accounting. The cumulative impact
of any revision in estimates of the percentage of work completed is reflected in the period in
which the change becomes known. Provisions for estimated losses are made during the year in which a
loss becomes probable and can 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. Satyam has
not provided for any warranty costs for the years ended March 31, 2007, 2006 and 2005 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 Emerging Issues Task Force (EITF) 01-14 (formerly 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 income.
e) Cash and Cash Equivalents
Satyam considers all highly liquid investments with an original maturity or remaining maturity of
three months or less at the date of purchase 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) 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
F-11
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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 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 income. 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.
g) Research and development Costs
Research and development costs are expensed as incurred and amounted to US$0.4 million, US$0.5
million and US$0.6 million for the years ended March 31, 2007, 2006 and 2005 respectively.
h) Goodwill and Other Intangible Assets
Goodwill
represents the excess of the cost of an acquired entity over the net
of the amounts assigned to assets acquired and liabilities assumed. Effective April 1, 2002, Satyam adopted
provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" which sets forth the accounting
for goodwill and intangible assets subsequent to their acquisition. Goodwill is tested annually for
impairment, or sooner when circumstances indicate an impairment may exist, using a fair-value
approach at the reporting unit level. Satyam follows the two-step impairment recognition and
measurement guidance in accordance with SFAS 142.
Satyam amortizes other intangible assets over their estimated useful lives on a straight-line basis
unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows, and, if impaired, written down to fair value based on either
discounted cash flows or appraised values.
i) Impairment of Long-lived Assets
Satyam accounts for impairment of long-lived assets in accordance with the provisions of SFAS 144
"
Accounting for the Impairment or Disposal of Long-Lived Assets
". Satyam reviews long-lived assets,
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 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.
j) Investments
Satyam accounts for investments in accordance with the provisions of SFAS 115,
"Accounting for
Certain Investments in Debt and Equity Securities"
. Other investments that are not marketable are
carried at cost, subject to tests of other than temporary impairment.
k) 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 and application software costs, amortization of intangibles, 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, advertising, business promotion,
depreciation on assets, rent, repairs, electricity and other general expenses not attributable to
cost of revenues.
l) Advertising Costs
Satyam expenses all advertising costs as incurred. Advertising costs charged to income amounted to
US$1.0 million, US$2.2 million and US$1.1 million for the years ended March 31, 2007, 2006 and 2005
respectively.
m) Employee Benefits
i) Provident Fund
In accordance with Indian law, employees 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.
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Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
ii) Gratuity Plan
Satyam has 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 valuation. The entire Gratuity
Plan of Satyam Computer Services and Nipuna is unfunded.
Effective March 31, 2007, Satyam adopted the provisions of SFAS No. 158, "Employer's
Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB
Statements No. 87, 88, 106, and 132(R)". The provisions of SFAS No. 158 were adopted pursuant to
the transition provisions therein. Accordingly, Satyam has recognized unrecognized actuarial losses
as a liability with corresponding adjustment to accumulated other comprehensive income (net of
tax), a separate component of shareholders' equity.
The funded status of the company's retirement-related benefit plans is recognized in the
Consolidated Balance Sheet. The funded status is measured as the difference between the fair value
of plan assets and the projected benefit obligation at March 31, the measurement date. The current
portion of the benefit obligation represents the actuarial present value of benefits payable in the
next 12 months exceeding the fair value of plan assets. This liability is recorded in Accrued
Expenses and Other Current Liabilities in the Consolidated Balance Sheet.
(Gains)/losses not recognized as a component of net periodic gratuity cost/(income) in the
Consolidated Statement of Income as they arise are recognized as a component of other comprehensive
income in the Consolidated Statement of Stockholders' Equity, net of tax. Those (gains)/losses are
subsequently recognized as a component of net periodic gratuity period cost/(income) pursuant to
the recognition and amortization provisions of applicable accounting standards. (Gains)/losses
arise as a result of differences between actual experience and assumptions or as a result of
changes in actuarial assumptions. Net periodic gratuity cost/(income) is recorded in the
Consolidated Statement of Income and includes service cost, interest cost, expected return on plan
assets, amortization of prior service cost and (gains)/losses previously recognized as a component
of Other Comprehensive Income.
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.
Effective October 1, 2003, Satyam Computer Services has discontinued its matching contribution
under this plan.
n) Income Taxes
In
accordance wit h 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 carry forwards. 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 income in the period of enactment. 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.
o) 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-13
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Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
p) Stock-Based Compensation
Effective April 1, 2006, Satyam adopted the fair value recognition provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123 (revised 2004), "Share-Based Payment" ("SFAS
123R"). Prior to the adoption of SFAS 123R, Satyam recognized stock-based compensation using the
intrinsic value-based method of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for
Stock Issued to Employees"
, and related interpretations including Financial Accounting Standards
Board (FASB) Interpretation No. 44,
Accounting for Certain Transactions involving Stock
Compensation an interpretation of APB Opinion No. 25,
issued in March 2000 to account for its
employee stock-based compensation plan. Satyam has therefore adopted the pro-forma disclosure
requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation"
and SFAS 148,
Accounting
for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123
.
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. In March 2005, the Securities and Exchange Commission (the
"SEC") issued Staff Accounting Bulletin No.107 ("SAB 107") regarding the SEC's interpretation of
SFAS 123R and the valuation of share-based payments for public companies. Satyam has applied the
provisions of SAB 107 in its adoption of SFAS 123R.
Satyam adopted SFAS 123R using the modified prospective transition method, which required the
application of the accounting standard as of April 1, 2006, the first day of Satyam's fiscal year
2007. Under this transition method, stock-based compensation expensed for the year ended March 31,
2007 includes a) compensation expense for all stock-based compensation awards granted prior to, but
not yet vested as of April 1, 2006, based on the grant-date fair value estimated in accordance with
the original provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", ("SFAS 123")
and b) Stock-based compensation expenses for all stock-based compensation awards granted after
April 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of
SFAS 123R. In accordance with the modified prospective transition method, Satyam's Consolidated
Financial Statements for the prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.
Pro forma disclosure
Had deferred stock-based 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 and earnings per
share would have been as follows for the year ended March 31, 2006 and 2005.
(US$ in millions except per share data)
Year ended March 31,
2006
2005
Net Income
- As reported
$
249.4
$
153.8
Add: Charge under APB25
0.8
1.9
Less: Charge under FAS123
(22.2
)
(22.6
)
- Pro forma
$
228.0
$
133.1
Earnings Per Share:
Basic
- As reported
$
0.39
$
0.49
- Pro forma
$
0.38
$
0.42
Diluted
- As reported
$
0.36
$
0.48
- Pro forma
$
0.34
$
0.41
Note: The pro forma disclosures shown above are not representative of the effects on net income
and earnings per share in future years.
F-14
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The fair value of Satyam Computer Services' stock options used to compute pro forma net income
and earnings per share disclosures is the estimated present value at grant date using the
Black-Scholes option-pricing model.
The following weighted average assumptions were used:
Year ended March 31,
2006
2005
Dividend yield
0.75
%
0.75
%
Expected volatility
57
%
61
%
Risk-free interest rate
7
%
7
%
Expected term (in years)
1.26
2.03
q) Derivative financial instruments
Satyam has adopted the provisions of SFAS 133, "
Accounting for Derivative Instruments and Hedging
Activities
" as amended. Satyam enters into foreign exchange forward and options contracts where the
counter party is generally a bank. Satyam purchases foreign exchange forward and options contracts
to mitigate the risk of changes in foreign exchange rates on cash flows denominated in certain
foreign currencies. These contracts do not qualify for hedge accounting under SFAS 133, as amended.
Any derivative that is either not a designated hedge, or is so designated but is ineffective per
SFAS 133, as amended is marked to market and recognized in earnings immediately.
r)
Recently issued accounting pronouncements
In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109 ("FIN 48"). The Interpretation clarifies the accounting
for uncertainty in income taxes recognized in a Company's financial statements and prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The Interpretation
also provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006, which is April 1, 2007 for us. The differences, if any between the amounts
recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts
reported after adoption will be accounted for as a cumulative-effect adjustment recorded to the
beginning balance of retained earnings. We are in the process of evaluating the impact this new
standard will have on our financial position, results of operations and liquidity.
In September 2006, the Securities and Exchange Commission ("SEC") released SAB No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on the SEC's views on how
the effects of the carryover or reversal of prior year misstatements should be considered in
quantifying a current year misstatement. Satyam adopted SAB 108 during the fourth quarter of 2007.
The adoption did not have a material impact on our financial position, cash flows, or results of
operations.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements, which establishes a framework
for measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. This Statement applies under other accounting pronouncements that require
or permit fair value measurements. SFAS 157 is effective for fiscal years beginning after November
15, 2007, which is fiscal year commending April 1, 2008 for us. We are in the process of evaluating
the impact SFAS 157 will have on our financial position, results of operations, liquidity and its
related disclosures.
As discussed in note 2(m), "Significant Accounting Policies," effective March 31, 2007, Satyam
adopted SFAS No. 158, "Employer's Accounting for Defined Benefit Pension and Other Postretirement
Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R)," which requires the recognition
of the funded status of the retirement-related benefit plans in the Consolidated Balance Sheet and
the recognition of the changes in that funded status in the year in which the changes occur through
Accumulated Other Comprehensive Income, net of applicable tax effects. The provisions of SFAS No.
158 were adopted pursuant to the transition provisions therein. Satyam measures defined benefit
plan assets and obligations as of March 31 and SFAS No. 158 did not affect the company's existing
valuation practices.
In February 2007, the FASB issued FASB Statement 159, The Fair Value Option for Financial Assets
and Financial Liabilities ("SFAS 159"). SFAS 159 allows the company to choose to measure many
financial assets and financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been
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Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after
November 15, 2007, which is fiscal year commencing April 1, 2008 for us. We are in the process of
evaluating the impact SFAS 159 will have on our financial position, results of operations,
liquidity and its related disclosures.
s) Reclassifications
Certain items previously reported in specific financial statement captions have been reclassified
to conform to the current period's presentation.
3. Acquisitions
a) Citisoft Plc.
On May 12, 2005, Satyam Computer Services acquired a 75% interest in Citisoft Plc or Citisoft, a
specialist business and systems consulting firm located in the United Kingdom that has focused on
the investment management industry since 1986. The results of Citisoft's operations have been
consolidated by Satyam Computer Services from the consummation date of May 12, 2005. The
acquisition has been accounted for by following the purchase method of accounting.
The consideration for the 75% equity interest in Citisoft amounted to US$17.4 million comprising of
an initial consideration of US$14.3 million (including direct acquisition costs of US$0.9 million)
and deferred consideration (non-contingent) of US$3.1 million. Deferred consideration for the
acquisition of the 75% equity interest was accounted for as part of the purchase consideration and
disclosed as a current liability in the consolidated balance sheet as of March 31, 2006 this has
been paid subsequently in June 2006.
Satyam Computer Services is also required to pay a maximum earn out consideration amounting to
US$3.9 million in May 2007 based on achievement of targeted revenues and profits for the year ended
April 30, 2007. The earn-out consideration will be accounted for as additional purchase
consideration when the contingency is resolved.
Satyam Computer Services had a call option and the minority shareholders had a put option to
acquire / sell the balance 25% equity shares in two tranches 12.5% on April 30, 2007 and 12.5% on
April 30, 2008. The consideration payable for the first tranche of 12.5% equity shares on April
30, 2007 would amount to US$2.8 million and a maximum earn-out consideration amounting to US$2.7
million based on achievement of targeted revenues and profits. The consideration payable for the
second tranche of 12.5% equity shares on April 30, 2008 would amount to US$2.9 million and a
maximum earn-out consideration amounting to US$4.2 million based on achievement of targeted
revenues and profits. Satyam Computer Services recorded the put option at fair value at each
balance sheet date, with the initial fair value of the put option included as part of the
consideration for its 75.0% interest in Citisoft. The difference between the fair values at each
valuation date was charged to selling, general and administration expenses in statement of income.
On the basis of an independent valuation, the value of put option was US$ Nil and US$1.1 million as
of May 12, 2005 and March 31, 2006 respectively.
On June 29, 2006, Satyam Computer Services exercised the call option and acquired the remaining 25%
equity interest for a deferred consideration of US$5.9 million payable on April 30, 2007 and a
maximum earn-out consideration of US$2.7 million and US$4.2 million payable in May 2007 and 2008
respectively based on achievement of targeted revenues and profits for the years ended April 30,
2007 and 2008 respectively.. As a result Satyam reversed the put option liability during the year
ended March 31, 2007. The acquisition was accounted for as a step purchase of the 25% equity
interest, the deferred consideration for the acquisition of the 25% equity interest was accounted
for as part of the purchase consideration and disclosed as a current liability in the consolidated
balance sheet as of March 31, 2007. The earn-out consideration will be accounted for as additional
purchase consideration when the contingency is resolved.
Satyam Computer Services is also required to fund an Employee Benefit Trust ("EBT") formed by
Citisoft for the purpose of providing additional incentive to employees to contribute to the
success of Citisoft. Satyam is required to fund a maximum of US$3.4 million and US$1.7 million on
April 30, 2007 and 2008 respectively, based on achievement of targeted revenues and profits. Satyam
Computer Services has recognized US$1.7 million and US$1.4 million in the consolidated statement of
income as part of cost of revenues in respect of the EBT contribution for the years ended March 31,
2007 and 2006 respectively. The unpaid EBT contribution (disclosed as a current liability) amounted
to US$1.6 million and US$1.4 million as of March 31, 2007 and 2006 respectively.
F-16
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The purchase consideration for acquisition of interest has been allocated to the assets acquired
and liabilities assumed as of the date of acquisition based on management's estimates and a
valuation done by an independent valuer in accordance with Statement of Financial Accounting
Standards No. 141, Business Combinations. The goodwill has been allocated to the IT services
segment. The purchase price allocation is as follows:
US$ in millions
Acquisition of
Acquisition of
75% interest
25% interest
Purchase price
$
17.4
$
5.9
Allocated to:
Net current assets
$
2.2
0.7
Tangible assets
0.3
0.1
Customer Contracts related intangibles
0.8
0.3
Customer relationship related intangibles
5.4
0.7
Trade name
0.7
0.1
Goodwill
10.3
4.4
Deferred tax liability
(2.3
)
(0.4
)
Total
$
17.4
$
5.9
Pro forma disclosure regarding this acquisition has not been provided because it is not
material to the operations of the Company.
b) Knowledge Dynamics Pte Ltd ("Knowledge Dynamics").
On July 21 2005, Satyam Computer Services announced its intention to acquire 100% of the shares of
Knowledge Dynamics Pte Ltd, Singapore, ("Knowledge Dynamics"), a leading Data Warehousing and
Business Intelligence Solutions provider. The transaction was consummated on October 1, 2005, the
date of transfer of shares to Satyam Computer Services and Satyam Computer Services has
consolidated Knowledge Dynamics Pte Ltd, Singapore, from October 1, 2005. The acquisition has been
accounted for by following the purchase method of accounting.
The consideration for this acquisition amounted to US$3.3 million comprising of initial
consideration of US$1.8 million (including direct acquisition costs of $11 thousand) and deferred
consideration (non-contingent) of US$1.5 million. The total deferred consideration for the
acquisition of US$1.5 million has been accounted for as part of the purchase consideration out of
which US$0.8 million has been paid during the year ended March 31, 2007 and US$0.7 million has been
disclosed as a current liability in the consolidated balance sheet. Satyam Computer Services is
also required to pay a maximum earn out consideration amounting to US$1.1 million and US$1.1
million on April 30, 2007 and 2008 respectively based on the achievement of targeted revenues and
profits from the date of acquisition up to April 30, 2007 and
2008 respectively. The earn-out consideration will be accounted for as purchase consideration when the
contingency is resolved.
The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management's estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
US$ in millions
Purchase price
$
3.3
Allocated to:
Net current assets
$
0.5
Customer Contracts and Related Relationships
1.0
Trade name
0.1
Goodwill
2.1
Deferred tax liability
(0.4
)
Total
$
3.3
Pro forma disclosure regarding this acquisition has not been provided because it is not
material to the operations of the Company.
F-17
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
4. Preferred Stock of Subsidiary
Nipuna issued 45,669,999 and 45,340,000 0.05% convertible redeemable cumulative preference shares
of par value Rs 10 (US$0.23) per share in October 2003 and June 2004 respectively to the investors
at an issue price of Rs.10 (US$0.23) per share, in exchange for an aggregate consideration of US$20
million.
As per the agreement, these preference shares were mandatorily convertible into equity shares of
Nipuna no later than June 2006, if Nipuna achieved certain targets for revenues and profits earned
up to March 31, 2006. If these targeted revenues and profits were not achieved by Nipuna along with
other triggering events, the investors had an option to either redeem these preference shares or
convert them. Although certain triggering events for early redemption as per the agreement occurred
during the period January 2004 to December 2004 the investors waived the right of early redemption.
Further Nipuna has not achieved the targeted revenues and profits upto March 2006.
If not converted, early converted or redeemed, these convertible preference shares were redeemable
on maturity in June 2007 at a redemption premium, which could range between 7.5% to 13.5% p.a. The
Investors are entitled to receive dividends at the rate of 0.05% per cent per annum, on the face
value of Rs. 10 (US$0.23) from the date of issuance of such Preference Shares. The dividends are
cumulative and payable in cash at the rate indicated above, whether or not they have been declared
and whether or not there are profits, surplus or other funds of Nipuna legally available for the
payment of dividends. These preference shares rank senior to all classes of Nipuna's currently
existing capital stock or established subsequently with respect to dividend distributions and
repayment of capital and premium upon a Bankruptcy Event or Change in Control with respect to
Nipuna, unless the terms and conditions of such class expressly provide that such class will rank
senior to or on parity with the convertible redeemable cumulative preference shares. The dividend
on the preference shares for the year ended March 31, 2007 is payable.
On November 20, 2006, a Share Purchase, Redemption and Amendment Agreement ("SPRA Agreement") was
entered into between Satyam, the Investors and Nipuna. Out of the total preference shares, 50% of
the preference shares (US$10 million) would be redeemed for US$13.6 million at the target date on
May 21, 2007 and the balance 50% would get converted into equity shares of Nipuna based on the
terms of the existing subscription agreement. Since 50% of the Preference Shares are mandatorily
redeemable, Satyam has reclassified 50% of the preference shares as a current liability measured at
fair value and accrued redemption premium amounting to US$3.6 million up to March 31, 2007.
Further as per the SPRA Agreement, Satyam agrees to purchase and the Investors agree to sell these
equity shares at an aggregate purchase price based on a formula. If the share purchase closing
occurs on or before the share purchase target date (May 21, 2007) then the purchase price would
range from a minimum of US$35 million to maximum of US$45 million, however if an acceleration event
occurs the purchase price would equal US$45 million. If the share purchase closing occurs after
the share purchase target date then the purchase price shall not be less than US$35 million however
if an acceleration event occurs the purchase price shall not be less than US$45 million. This is
subject to fulfillment of terms and conditions specified in the agreement and obtaining necessary
approvals from appropriate authorities. As of March 31, 2007 an acceleration event has occurred.
The forward contract is freestanding and has been accounted for under SFAS 150 and hence the
issuance of Nipuna's equity shares has been considered as a minority interest. The Investors gave
Nipuna a Notice of Conversion of Preference Shares and in January 2007 preference shares amounting
to US$10 million have been converted into 6,422,267 equity shares of Nipuna. Due to the issue of
shares by Nipuna Satyam Computer Services' ownership interest in Nipuna was reduced from 100.0% as
at March 31, 2006 to 74.0% as at March 31, 2007. The shares issued to the Investors are at amounts
per share higher than Satyam Computer Services' average cost per share. With respect to this
transaction, the resulting gain of US$7.9 million, net of taxes during the year ended March 31,
2007 has been recorded as an increase in additional paid in capital. Since the losses applicable to
the minority interest in Nipuna exceeded the minority interest in the equity capital of Nipuna,
such excess and further losses have been charged in Satyam's consolidated statement of income. The
Investors holding in Nipuna has been accounted for as a minority interest.
The forward contract has a zero fair vale at inception and at balance sheet date since as per
regulatory requirements the transaction can take place only at fair value. Upon settlement of the
forward the acquisition of the minority interest would be reflected as a step acquisition with a
corresponding reduction in minority interest.
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Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
5. Investments
Investments of Satyam consist of other non-marketable securities.
(US$ in millions)
As of March 31,
2007
2006
Other investments, at cost
$
3.7
$
3.7
Less: Provision for impairment
(3.7
)
(3.7
)
Investments — Non current
—
—
Satyam records an investment impairment charge on other non-marketable investments, which are
carried at cost, when management believes an investment has experienced a decline in value that is
judged to be other than temporary. Satyam monitors its investments for impairment by considering
current factors including economic environment, market conditions and the operational performance
and other specific factors relating to the business underlying the investment. Based on its
assessment of its carrying values of investments, Satyam impaired the entire carrying value of
other non-marketable investments as of March 31, 2003 due to adverse changes in the above factors.
6. Investments in bank deposits
Investments in bank deposits represent term deposits placed with banks earning fixed rate of
interest. Investments in bank deposits with maturities of less than a year are disclosed as
current assets and with maturities of more than one year as non current. Interest on investments
in bank deposits is recognized on accrual basis. Investments in bank deposits amounted to US$767.6
million and US$403.7 million as of March 31, 2007 and 2006 respectively with maturities of more
than two years (as of March 31, 2007).
7. Investments in associated companies
The carrying values of investments in various associated companies of Satyam are as follows:
(US$ in millions)
As of March 31,
2007
2006
Satyam Venture
$
3.5
$
2.7
CA Satyam
1.1
0.8
Total
$
4.6
$
3.5
Sify
On November 7, 2005, Satyam Computer Services offered to sell an aggregate of 11,182,600 equity
shares, representing its entire investment of 31.61% of the outstanding equity shares of Sify. The
sale transaction was consummated on November 9, 2005 at a sale price of US$5.60 per equity share
aggregating to US$62.3 million.
Satyam Computer Services accounted for its share of equity in earnings/(losses) of Sify under
equity method of accounting upto November 9, 2005. The excess of sale proceeds (net of transaction
costs) over the carrying value of investment in Sify as on the date of sale amounting to US$43.6
million has been recognized as gain in the statement of income during the year ended March 31,
2006.
Satyam Computer Services' equity in loss of Sify, net of taxes amounted to US$Nil, US$1.3 million
and US$1.7 million for the years ended March 31, 2007, 2006 and 2005 respectively.
Satyam Venture
On October 28, 1999, Satyam Computer Services entered into an agreement with Venture Industries,
USA ("Venture") to form an equally held joint venture company Satyam Venture Engineering Services
Private Limited. ("Satyam Venture"). Satyam Computer Services holds 50% in Satyam Venture. The
joint venture was formed on January 3, 2000 at Hyderabad, India. Satyam Venture is engaged in
providing engineering solutions, software development and customization services specifically for
the automotive industries worldwide. Satyam Computer Services' equity in the profit of Satyam
Venture, net of taxes amounted to US$0.6 million, US$0.5 million and US$0.7 million for the years
ended March 31, 2007, 2006 and 2005 respectively. (Also refer note 19(f)).
F-19
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
CA Satyam
On December 29, 2000, Satyam Computer Services entered into an agreement with Computer Associates
International, Inc. ("CA") to form an equally held joint venture company CA Satyam ASP Private
Limited ("CA Satyam"). Satyam Computer Services holds 50% in CA Satyam. The joint venture was
formed in January 2001, at Mumbai, India. As per the agreement, both Satyam Computer Services and
CA have invested US$1.5 million each in the joint venture. Satyam Computer Services equity in the
profit / (losses) of CA Satyam, net of taxes amounted to US$0.2 million, US$(15) thousand and
US$(0.1) million for the years ended March 31, 2007, 2006 and 2005 respectively.
8. Premises, Equipment and Depreciation
Premises and equipment at cost less accumulated depreciation consist of:
(
US$ in millions)
As of March 31,
2007
2006
Freehold land
$
8.9
$
7.0
Leasehold land
1.9
1.8
Premises
24.5
23.6
Computers including servers
131.2
109.7
System software
24.7
21.0
Office equipment
69.0
61.6
Furniture and fixtures
47.4
40.1
Vehicles
9.0
7.0
Assets under construction
70.8
19.9
Total
387.4
291.7
Less: Accumulated depreciation
(224.3
)
(185.1
)
Premises and equipment, net
$
163.1
$
106.6
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$32.4 million, US$30.6 million and US$25.0 million for the years
ended March 31, 2007, 2006 and 2005 respectively.
9. Goodwill
Goodwill consists of:
(US$ in millions)
As of March 31,
2007
2006
Goodwill
Acquisition of Citisoft Plc
$
15.0
$
10.5
Acquisition of Knowledge Dynamics Pte Ltd
2.1
2.0
Acquisition of minority interest in
Satyam Enterprise Solutions Limited
23.9
23.1
Satyam Technologies Inc.
3.7
3.6
Total
44.7
39.2
Less: Accumulated amortization
(12.0
)
(11.6
)
Goodwill, net
$
32.7
$
27.6
F-20
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The following table presents the reconciliation of changes in carrying values of goodwill:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Goodwill at the beginning of the year
$
27.6
$
15.5
$
15.5
Acquisitions during the year
4.4
12.4
—
Impairment during the year
—
—
—
Change due to foreign exchange
0.7
(0.3
)
—
Goodwill at the end of the year
$
32.7
$
27.6
$
15.5
Goodwill represents the excess of amount paid towards purchase price over the fair value of assets
acquired, and relates to the acquisition of the minority interest in Satyam Enterprise Solutions
Limited and Satyam Technologies Inc., and acquisition of Citisoft Plc. and Knowledge Dynamics Pte
Ltd., by Satyam Computer Services
.
Goodwill is tested for impairment annually and when
circumstances indicate that the carrying amount may not be recoverable as provided under FAS 142.
10. Intangible assets, net
Intangible assets consist of:
(US$ in millions)
As of March 31,
2007
2006
Acquired and
amortized intangible
Weighted average
Gross carrying
Accumulated
Net intangible
Gross carrying
Accumulated
Net intangible
assets
life (in years)
amount
amortization
assets
amount
amortization
assets
Citisoft Plc
Customer Relationship
8
$
6.3
(1.4
)
$
4.9
$
4.9
$
(0.6
)
$
4.3
Customer Contracts
6
1.1
(0.2
)
0.9
0.8
(0.1
)
0.7
Trade name
5
0.8
(0.2
)
0.6
0.6
(0.1
)
0.5
Total
$
8.2
(1.8
)
$
6.4
$
6.3
$
(0.8
)
$
5.5
Knowledge Dynamics
Customer Contracts
and Related
Relationships
9
$
1.1
$
(0.3
)
$
0.8
$
1.0
$
(0.1
)
$
0.9
Trade name
3
0.1
—
0.1
0.1
—
0.1
Internally developed
technology
3
0.1
—
0.1
0.1
—
0.1
Total
$
1.3
$
(0.3
)
$
1.0
$
1.2
$
(0.1
)
$
1.1
During the year Satyam has not recognized any impairment of other intangible assets. Satyam has
adopted the provisions of SFAS No. 141 and 142, and has accordingly assessed the remaining useful
lives of identified intangibles with definite useful lives and provides for amortization over the
determined useful life of the asset. Satyam does not have any intangible assets with indefinite
useful life.
The following table presents the reconciliation of changes in carrying values of other intangible
assets:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Identifiable intangibles at the beginning of the year
$
6.6
—
—
Acquisitions during the year
1.1
$
8.0
—
Amortization during the year
(1.2
)
(0.9
)
—
Change due to foreign exchange
0.9
(0.5
)
—
Identifiable intangibles at the end of the year
$
7.4
$
6.6
—
The expected future annual amortization expense of other intangible assets is as follows:
US$ in millions
Estimated amortization expense:
For the year ended March 31,
2008
$
1.4
2009
1.3
2010
1.2
2011
1.1
2012
1.0
Beyond 2012
1.4
F-21
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
11. Income Taxes
The income tax expense consists of:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Foreign taxes
Current
$
10.4
$
15.4
$
18.1
Deferred
(0.7
)
(0.8
)
(0.6
)
Domestic taxes
Current
26.9
27.4
9.1
Deferred
(6.0
)
(4.3
)
(1.3
)
Aggregate taxes
$
30.6
$
37.7
$
25.3
A reconciliation of the income tax expense to the amount computed by applying the statutory income
tax rate to income before income tax expense is summarized below:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Net income before taxes
$
328.2
$
287.8
$
180.2
Enacted tax rates in India
33.66
%
33.66
%
36.59
%
Computed tax expense
$
110.5
$
96.9
$
65.9
Tax effect due to non-taxable export income
(98.4
)
(75.3
)
(52.7
)
Difference arising from different tax rates in other tax jurisdictions
12.0
10.2
5.5
Difference arising from different tax rates on gain on sale of
investment
—
(7.0
)
—
Stock- based compensation (non-deductible)
4.0
0.3
0.7
Changes in valuation allowance, including losses of subsidiaries
1.7
5.4
3.5
Effect of tax rate change
—
0.1
—
Others
0.8
7.1
2.4
Income taxes recognized in the statement of income
$
30.6
$
37.7
$
25.3
The current provision for income taxes, net of payments, were US$15.5 million and US$8.5 million as
of March 31, 2007 and 2006 respectively. The foreign taxes are due to income taxes payable in
overseas tax jurisdictions by its offsite and onsite centers, principally in the United States.
Satyam Computer Services benefits from tax incentive provided to software entities as an exemption
from payment of Indian corporate income taxes for a period of ten consecutive years of operations
of software development facilities designated as "Software Technology Parks" ("STP units"). The
benefit of this tax incentive has historically resulted in an effective tax rate for Satyam
Computer Services well below statutory rates. In case of Satyam Computer Services for various
registered STP units these exemptions expire starting from fiscal
2006 through fiscal 2009. Satyam
Computer Services subsidiaries are subject to income taxes of the countries in which they operate.
Satyam has not recognized deferred income taxes arising on income of Satyam Computer Services
due to the tax benefit available to it in the form of a exemption from taxable income, except to
the extent of timing differences which reverse after the tax holiday period or unless they reverse
under foreign taxes. However, Satyam Computer Services earns certain other income and domestic
income, which are taxable irrespective of the tax holiday as stated above.
F-22
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Significant components of activities that gave rise to deferred tax assets and liabilities
included in the financial statements are as follows:
(US$ in millions)
As of March 31,
2007
2006
Deferred tax assets:
Operating loss carry forwards
$
26.6
$
24.0
Provision for accounts receivable, advances and investments
4.2
5.7
Premises and equipment
3.3
0.5
Provision for gratuity and unutilized leaves
12.8
6.5
Gross deferred tax assets
46.9
36.7
Less: Valuation allowance
(26.6
)
(24.0
)
Total deferred tax assets
20.3
12.7
Deferred tax liabilities:
Premises and equipment
(6.3
)
(6.4
)
Provision for accounts receivable and advances
(3.0
)
(2.8
)
Intangible assets
(2.5
)
(2.2
)
Investments in associated companies and gain on dilution
(2.8
)
(0.3
)
Total deferred tax liabilities
(14.6
)
(11.7
)
Net deferred tax assets/ (liabilities)
$
5.7
$
1.0
Satyam has not provided for any deferred income taxes on undistributed earnings of foreign
subsidiaries due to the losses incurred by them since their inception. These losses aggregated to
approximately US$39.8 million and US$37.8 million as of March 31, 2007 and 2006 respectively.
Operating loss carry forwards for tax purposes of Satyam amounts to approximately US$26.6 million
and US$24.0 as of March 31, 2007 and 2006 respectively and are available as an offset against
future taxable income of such entities. These carry forwards expire at various dates primarily over
8 to 20 years. Realization is dependent on such subsidiaries generating sufficient taxable income
prior to expiration of the loss carry forwards. A valuation allowance is established attributable
to deferred tax assets and loss carry forwards in subsidiaries where, based on available evidence,
it is more likely than not that they will not be realized. Currently,
a full valuation allowance has been made for such losses since we
believe that our subsidiaries will not generate sufficient taxable
income prior to expiration of carry forwards and under Indian
regulations we are not allowed to file a consolidated tax return.
Net deferred tax asset/ (liabilities) included in the consolidated balance sheets are as follows:
(US$ in millions)
As of March 31,
2007
2006
Current assets — deferred income taxes
$
17.1
$
10.5
Non-current assets — other assets*
3.3
2.2
Current liabilities — accrued expenses and other liabilities*
(3.1
)
(2.8
)
Long-term liabilities — deferred income taxes
(11.6
)
(8.9
)
Net deferred tax asset/ (liabilities)
$
5.7
$
1.0
*
Included in "other assets" and "accrued expenses and other liabilities" respectively.
12. Borrowings
Short-term debt
Short-term debt amounted to US$10.5 million and US$4.1 million as of March 31, 2007 and 2006
respectively. Short-term debt represents overdraft facility of Nipuna at floating rate of interest
of LIBOR+0.25% which is secured by a charge on book debts, accounts receivable and other moveable
assets. The weighted-average interest rate on this borrowing was 6.71% and 5.33% for the years
ended March 31, 2007 and 2006 respectively.
F-23
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Long-term debt
Long-term debt outstanding comprise of:
(US$ in millions)
As of March 31,
2007
2006
Secured debts,
representing obligation principally to banks and financial
institutions
— 10.25% Rupee loans of SC-Trust, maturing serially through fiscal 2008
—
$
1.3
— 0.95% above 6 month LIBOR working capital term loan maturing serially through
fiscal 2009
10.0
5.6
— 0.95% above 6 month LIBOR external commercial borrowing maturing serially
through fiscal 2009
10.6
10.5
Hire Purchase Loans
3.2
2.9
Total Debt
23.8
20.3
Less: Current portion of long-term debt
(1.6
)
(2.4
)
Long-term debt, net of current portion
$
22.2
$
17.9
Rupee loans as of March 31, 2006 were secured by equity shares of Satyam Computer Services'
held by the SC-Trust and had an interest rate of 10.25%. These rupee loans have been repaid during
the year ended March 31, 2007.
Working capital term loan and external commercial borrowing have been taken by Nipuna. Satyam
Computer Services has given a corporate guarantee to the bank for these borrowings. These
borrowings are repayable in 3 years from each draw down date.
Aggregate maturities of long-term debt subsequent to March 31, 2007, are US$1.6 million in fiscal
2008, US$21.6 million in fiscal 2009, US$0.4 million in fiscal 2010 and US$0.2 million in fiscal
2011.
Unused lines of credit
Unused lines of credit comprise of:
(US$ in millions)
As of March 31,
2007
2006
Short-term debt
$
9.0
$
3.8
Long-term debt
—
3.9
Non-fund facilities — Bank Guarantees
16.2
4.4
Total Unused lines of credit
$
25.2
$
12.1
F-24
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
13. Employee Benefits
The Gratuity Plan
The following table sets forth the status of the Gratuity Plan of Satyam, and the amounts
recognized in Satyam's consolidated balance sheets and statements of income.
(US$ in millions)
Year ended March 31,
2007
2006
2005
Accumulated benefit obligation
$
7.6
$
5.7
$
2.6
Change in projected benefit obligation
Projected benefit obligation at beginning of the year
$
7.8
$
5.2
$
4.0
Service cost
2.1
1.9
1.5
Interest cost
0.6
0.4
0.3
Actuarial loss/(gain)
0.6
0.9
(0.3
)
Benefits paid
(1.2
)
(0.5
)
(0.3
)
Effect of exchange rate changes
0.3
(0.1
)
—
Projected benefit obligation at end of the year
10.2
7.8
5.2
Change in plan assets
Employer contribution
1.2
0.5
0.3
Benefits paid from plan assets
(1.2
)
(0.5
)
(0.3
)
Fair value of plan assets at end of the year
—
—
—
Funded status of the plans
(10.2
)
(7.8
)
(5.2
)
Unrecognized net actuarial loss
—
1.3
0.4
Accrued benefit cost
$
(10.2
)
$
(6.5
)
$
(4.8
)
The components of net gratuity costs are reflected below:
Service cost
$
2.1
$
1.9
$
1.5
Interest cost
0.6
0.4
0.3
Amortization
0.1
—
—
Net gratuity costs
$
2.8
$
2.3
$
1.8
The assumptions used in accounting for the gratuity plan for the years ended March 31, 2007,
2006 and 2005 are set out below:
Weighted-average assumptions used to determine benefit obligations:
Year ended March 31,
2007
2006
2005
Discount rate
9.8
%
8.0
%
8.0
%
Long-term rate of compensation increase
7.0
%
7.0
%
7.0
%
Weighted-average assumptions used to determine net periodic benefit cost:
Year ended March 31,
2007
2006
2005
Discount rate
9.8
%
8.0
%
7.0
%
Long-term rate of compensation increase
7.0
%
7.0
%
7.0
%
F-25
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Cash Flows
Satyam expects to contribute US$2.1 million to its Gratuity plan during the year ending March 31,
2008. The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:
(US$ in millions)
Expected
For the financial year ended March 31,
contribution
2009
$
2.3
2010
2.9
2011
3.6
2012
4.6
2013 — 2016
$
19.2
Effective March 31, 2007, Satyam adopted the provisions of SFAS No. 158. The following table
presents the incremental effect of applying SFAS No. 158 on the Consolidated Statement of Financial
Position:
Before
After
application of
application of
SFAS 158
Adjustments
SFAS 158
Current assets — Deferred income taxes
$
17.0
$
0.1
$
17.1
Non-current assets — Other assets
39.0
0.5
39.5
Total Assets
1,623.5
0.6
1,624.1
Current liabilities — Accrued expenses and other current liabilities
148.4
0.2
148.6
Long-term liabilities — Gratuity, excluding current portion
6.5
1.6
8.1
Total Liabilities
251.3
1.8
253.1
Accumulated other comprehensive income, net of tax
62.1
(1.2
)
60.9
Total Shareholders' Equity
$
1,372.2
$
(1.2
)
$
1,371.0
As at March 31, 2007, Satyam recorded unrecognized net gains/(losses) amounting to US$(1.2)
million in the Stockholders' equity section as part of Accumulated Other Comprehensive Income, net
of tax, of US$0.6 million.
Provident Fund
Satyam's contribution towards the Provident Fund amounted to US$14.7 million, US$10.7 million and
US$6.8 million for the years ended March 31, 2007, 2006 and 2005 respectively.
Superannuation Plan
Satyam Computer Services' contribution towards the Superannuation Plan maintained by LIC amounted
to US$1.9 million, US$1.2 million and US$0.9 million for the years ended March 31, 2007, 2006 and
2005.
14. Earnings per Share
Basic earning per share is computed on the basis of the weighted average number of shares
outstanding (weighted average number of shares issued less unallocated, unvested and unexercised
shares held by the SC — Trust). Allocated but unvested or unexercised shares not included in the
calculation of weighted-average shares outstanding for basic earnings per share were 146,200 and
106,600 as of March 31, 2007 and 2006 respectively. Diluted earnings per share is computed on the
basis of the weighted average number of shares outstanding plus the effect of outstanding stock
options using the "treasury stock" method.
In addition to the above, the unallocated shares held by SC — Trust, which are by definition
unvested, have been excluded from all earnings per share calculations. Such shares amounted to
2,149,680 and 2,279,680 as of March 31, 2007 and 2006 respectively.
F-26
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The components of basic and diluted earnings per share were as follows:
(US$ in millions except per share data and as stated otherwise)
Year ended March 31,
2007
2006
2005
Net income
$
298.4
$
249.4
$
153.8
Equity Shares:
Average outstanding shares (in millions)
652.5
641.2
632.4
Dilutive effect of Associate Stock Options (in millions)
13.5
21.6
14.8
Share and share equivalents
(in millions)
666.0
662.8
647.2
Earnings per share
Basic
$
0.46
$
0.39
$
0.24
Diluted
$
0.45
$
0.38
$
0.24
15. Stock-based Compensation Plans
ASOP plan
In May 1998, Satyam Computer Services established its Associate Stock Option Plan (the "ASOP
plan"), which provided for the issue of 26,000,000 shares, as adjusted to eligible associates.
Satyam Computer Services issued warrants to purchase these shares to a controlled associate welfare
trust called the Satyam Associate Trust (the "SC-Trust"). In December 1999 the SC- Trust exercised
all its warrants to purchase Satyam Computer Services shares prior to the stock split using the
proceeds obtained from bank loans. The warrants vest immediately or vest over a period ranging
from one to three years. Upon vesting, associates have 30 days in which to exercise these warrants.
As of March 31, 2007, warrants (net of lapsed and cancelled) to purchase 23,829,720 equity shares
have been granted to associates pursuant to ASOP since inception.
ASOP B plan
In April 2000, Satyam Computer Services established its Associate Stock Option Plan B (the "ASOP
B") and reserved warrants for 83,454,280 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% in
second year, 30% in the third year and 50% in the fourth year. Upon vesting, associates have 5
years to exercise these warrants. As of March 31, 2007, options (net of lapsed and cancelled) to
purchase 54,582,747 equity shares have been granted to associates under this plan since inception.
ASOP ADS plan
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 5,149,330 ADSs (10,298,660 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 NYSE on the date of grant
converted into Indian Rupees at the rate of exchange prevalent on the grant date. These warrants
vest over a period of 1-10 years from the grant date. As of March 31, 2007, warrants (net of lapsed
and cancelled) for 3,215,800 ADSs representing 6,431,600 equity shares have been granted to
associates under the ASOP ADS since inception.
Associate Stock Option Plan — Restricted Stock Units (ASOP — RSUs)
During the year ended March 31, 2007, Satyam Computer Services has established a scheme "Associate
Stock Option Plan — Restricted Stock Units (ASOP — RSUs)" to be administered by the Administrator
of the ASOP — RSUs, a committee appointed by the Board of Directors of the Company. Under the
scheme 13 million equity shares are reserved to be issued to eligible associates at a price to be
determined by the Administrator which shall not be less than the face value of the share. ASOP RSUs
vest over a period of 1-4 years from the date of the grant. Upon vesting, associates have 5 years
in which to exercise these warrants. As of March 31, 2007, warrants for 3,293,140 shares have been
granted under the ASOP — RSUs.
F-27
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Associate Stock Option Plan — RSUs (ADS) (ASOP — RSUs (ADS))
During the year ended March 31, 2007, Satyam Computer Services has established a scheme "Associate
Stock Option Plan — RSUs (ADS)" to be administered by the Administrator of the ASOP — RSUs (ADS),
a committee appointed by the Board of Directors of the Company. Under the scheme 13 million equity
shares minus the number of shares issued from time to time under the Associate Stock Option Plan —
RSUs are reserved to be issued to eligible associates at a price to be determined by the
Administrator not less than the face value of the share. These RSUs vest over a period of 1-4 years
from the date of the grant. Upon vesting, associates have 5 years in which to exercise these
warrants. As of March 31, 2007, warrants for 236,620 ADS representing 473,240 shares have been
granted under the ASOP — RSUs (ADS).
Warrant grants
During the year ended March 31, 2007, the SC-Trust issued immediately vesting warrants for 39,000
shares and warrants for 91,000 (net of Nil warrants cancelled) shares with longer vesting periods
to the associates under the ASOP plan. Further, during the year ended March 31, 2007, under the
ASOP B plan, Satyam Computer Services issued warrants for Nil (net of 8,180,519 warrants cancelled)
shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer Services
issued warrants for 20,000 ADS representing 40,000 shares, warrants for 126,142 ADS representing
252,284 shares were cancelled. Further, during the year ended
March 31, 2007, under the ASOP — RSUs plan, Satyam Computer Services issued warrants for 3,293,140 shares to the associates. During
the same period, under the ASOP — RSUs (ADS) plan, Satyam Computer Services issued warrants for
236,620 ADS representing 473,240 shares to associates under the ASOP — RSUs (ADS) plan.
During the year ended March 31, 2006, the SC-Trust issued immediately vesting warrants for 26,400
shares and warrants for 61,600 (net of Nil warrants cancelled) shares with longer vesting periods
to the associates under the ASOP plan. Further, during the year ended March 31, 2006, under the
ASOP B plan, Satyam Computer Services issued warrants for 984,362 (net of 5,595,190 warrants
cancelled) shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer
Services issued warrants for 139,986 ADS representing 279,972 (net of warrants for 180,444 ADS
representing 360,888 shares cancelled) shares to associates under the ASOP (ADS) plan.
During the year ended March 31, 2005, the SC-Trust issued immediately vesting warrants for 101,680
and warrants for 769,000 (net of Nil warrants cancelled) shares with longer vesting periods to the
associates under the ASOP plan. Further, during the year, under the ASOP B plan, Satyam Computer
Services issued warrants for 23,914,466 (net of 4,497,048 warrants cancelled) shares to the
associates. During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
529,120 ADS representing 1,058,240 (net of warrants for 204,328 ADS representing 408,656 shares
cancelled) shares to associates under the ASOP (ADS) plan.
Changes in number of equity shares representing stock options outstanding for each of the plans
were as follows:
Year ended March 31,
2007
2006
2005
Weighted
Weighted
Weighted
Number of
Average
Number of
Average
Number of
Average
equity
Exercise
equity
Exercise
equity
Exercise
ASOP Plan
shares
Price
shares
Price
shares
Price
Balance at the beginning of the year
106,600
$
1.42
481,000
$
1.18
116,400
$
1.00
Granted
130,000
$
1.67
88,000
$
1.37
870,680
$
1.12
Exercised
(90,400
)
$
1.39
(462,400
)
$
1.13
(506,080
)
$
1.05
Cancelled
—
—
—
—
—
—
Lapsed
—
—
—
—
—
—
Balance at the end of the year
146,200
$
1.69
106,600
$
1.42
481,000
$
1.18
Exercisable at the end of the year
—
—
—
—
—
—
Weighted average fair value of options
granted during the year
$
10.24
$
6.08
$
3.83
The aggregate grant date intrinsic value of stock options outstanding under ASOP Plan was
US$2.6 million, US$0.2 million and US$0.3 million for the years ended March 31, 2007, 2006 and 2005
respectively. As of March 31, 2007 options vested and expected to vest are 146,200 with an aggregate grant date intrinsic
value of US$2.6 million.
F-28
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Year ended March 31,
2007
2006
2005
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise
Number of
Exercise
Number of
Exercise
ASOP B
equity shares
Price
equity shares
Price
equity shares
Price
Balance at the beginning of the year
45,605,388
$
3.74
53,660,630
$
3.57
35,020,962
$
3.03
Granted
—
—
6,579,552
$
4.71
28,411,514
$
4.03
Exercised
(17,448,659
)
$
3.80
(9,039,604
)
$
3.05
(5,274,798
)
$
2.51
Cancelled
(8,180,519
)
$
3.88
(5,595,190
)
$
3.77
(4,497,048
)
$
3.34
Balance at the end of the year
19,976,210
$
3.89
45,605,388
$
3.74
53,660,630
$
3.57
Exercisable at the end of the year
6,001,418
$
4.06
10,248,808
$
3.43
11,390,396
$
3.38
Weighted average fair value of options
granted during the year
—
—
$
4.71
$
4.03
As of March 31, 2007 options vested and expected to vest are 16,780,016 with an aggregate
grant date intrinsic value of US$Nil.
Year ended March 31,
2007
2006
2005
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise
Number of
Exercise
Number of
Exercise
ASOP (ADS)
equity shares
Price
equity shares
Price
equity shares
Price
Balance at the beginning of the year
3,982,684
$
4.12
5,031,604
$
3.71
4,725,728
$
2.96
Granted
40,000
$
10.02
640,860
$
5.74
1,466,896
$
5.71
Exercised
(848,272
)
$
2.89
(1,328,892
)
$
2.69
(752,364
)
$
2.71
Cancelled
(252,284
)
$
4.42
(360,888
)
$
7.41
(408,656
)
$
3.91
Balance at the end of the year
2,922,128
$
4.89
3,982,684
$
4.25
5,031,604
$
3.71
Exercisable at the end of the year
1,985,282
$
8.33
1,865,764
$
2.97
1,427,400
$
2.72
Weighted average fair value of options
granted during the year
$
10.02
$
5.74
$
5.71
As of March 31, 2007 options vested and expected to vest are 2,600,294 with an aggregate grant
date intrinsic value of US$Nil.
F-29
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Year ended March 31,
2007
2006
2005
Weighted
Weighted
Weighted
Number of
Average
Number of
Average
Number of
Average
equity
Exercise
equity
Exercise
equity
Exercise
RSU Plan
shares
Price
shares
Price
shares
Price
Balance at the beginning of the year
—
—
—
—
—
—
Granted
3,293,140
$
0.05
—
—
—
—
Exercised
—
—
—
—
—
—
Cancelled
—
—
—
—
—
—
Lapsed
—
—
—
—
—
—
Balance at the end of the year
3,293,140
$
0.05
—
—
—
—
Exercisable at the end of the year
—
—
—
—
—
—
Weighted average fair value of options
granted during the year
—
$
11.77
—
—
—
—
The aggregate grant date intrinsic value of stock options outstanding under ASOP RSU Plan was
US$31.1 million, US$Nil and US$Nil for the years ended March 31, 2007, 2006 and 2005 respectively.
As of March 31, 2007 options vested and expected to vest are 2,852,518 with an aggregate grant date
intrinsic value of US$28.0 million.
Year ended March 31,
2007
2006
2005
Weighted
Weighted
Weighted
Number of
Average
Number of
Average
Number of
Average
equity
Exercise
equity
Exercise
equity
Exercise
RSU ADS Plan
shares
Price
shares
Price
shares
Price
Balance at the beginning of the year
—
—
—
—
—
—
Granted
473,240
$
0.05
—
—
—
—
Exercised
—
—
—
—
—
—
Cancelled
—
—
—
—
—
—
Lapsed
—
—
—
—
—
—
Balance at the end of the year
473,240
$
0.05
—
—
—
—
Exercisable at the end of the year
—
—
—
—
—
—
Weighted average fair value of options
granted during the year
$
24.05
—
—
—
—
The aggregate grant date intrinsic value of stock options outstanding under ASOP RSU ADS Plan
was US$4.9 million, US$Nil and US$Nil for the years ended March 31, 2007, 2006 and 2005
respectively. As of March 31, 2007 options vested and expected to vest are 426,910 with an
aggregate grant date intrinsic value of US$4.6 million.
F-30
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Information about number of equity shares representing stock options outstanding as on March
31, 2007:
Outstanding
Exercisable
Weighted Average
Weighted Average
Number of equity
Weighted Average
Number of equity
Range of Exercise
Exercise Price (per
remaining
shares arising out
Exercise Price (per
shares arising out
Price (per equity share)
equity share)
contractual life
of options
equity share)
of options
Rs.2.00
$
0.05
Rs.2.25
Rs.4.00
$
0.09
$
0.05
7.23 Years
3,766,380
—
—
Rs.70.57
$
1.64
Rs.148.07
Rs.135.08
Rs.172.68
$
4.01
$
3.44
5.49 Years
10,149,014
$
3.13
2,593,992
Rs.172.69
$
4.01
Rs.204.72
Rs.214.51
Rs.430.68
$
9.99
$
4.75
5.72 Years
11,237,734
$
4.98
4,511,728
Rs.430.69
$
9.99
Rs.521.02
Rs.504.66
Rs. 863.67
$
20.04
$
12.09
5.84 Years
1,657,790
$
11.71
880,980
The US$ numbers in the above tables have been translated using the closing exchange rate as
of March 31, 2007 1US$= Rs43.10
There
are no grants with the exercise price in the range of Rs.4.01 — Rs.70.56 (US$0.10 — US$1.63).
Stock-based compensation
Satyam's Consolidated Financial Statements as of and for the year ended March 31, 2007 reflect the
impact of SFAS 123R. In accordance with the modified prospective transition method, Satyam's
Consolidated Financial Statements for the prior periods have not been restated to reflect, and do
not include, the impact of SFAS 123R. As required by SFAS 123(R), management has made an estimate
of expected forfeitures and is recognizing compensation costs only for those equity awards expected
to vest. Upon adoption of SFAS 123R, Satyam had no cumulative adjustment on account of expected
forfeitures for stock-based awards granted prior to April 1, 2006. During the year ended March 31,
2007, Satyam recorded stock-based compensation related to stock options of US$15.7 million on
graded vesting basis for all unvested options granted prior to and options granted after the
adoption of SFAS 123(R). As of March 31, 2007, there was US$45.3 million of unrecognized
compensation cost related to unvested options which is expected to be recognized over a weighted
average period of 3.84 years. Satyam issues new shares to satisfy share option exercise. Cash
received from option exercises amounted to US$64.4 million, US$31.0 million and US$15.4 million for
the years ended March 31, 2007, 2006 and 2005 respectively.
The fair value of each option award is estimated on the date of grant using the Black Scholes
option-pricing model. The following table gives the weighted-average assumptions used to determine
fair value:
Year ended
March 31, 2007
Dividend yield
0.78
%
Expected volatility
59
%
Risk-free interest rate
8
%
Expected term (in years)
0.96
Expected Term:
The expected term represents the period that the Company's stock-based awards are
expected to be outstanding and was determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior.
Risk-Free Interest Rate:
The risk-free interest rate is based on the applicable rates of government
securities in effect at the time of grant.
F-31
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Expected Volatility:
The fair values of stock-based payments were valued using a volatility factor
based on the Company's historical stock prices.
Expected Dividend:
The Black Scholes option-pricing model calls for a single expected dividend
yield as an input.
Estimated Pre-vesting Forfeitures:
When estimating forfeitures, the Company considers voluntary
termination behavior. Estimated forfeiture rates are trued-up to actual forfeiture results as the
stock-based awards vest.
Stock based compensation plan of Nipuna
In April 2004, Nipuna established its Employee Stock Option Plan (the "ESOP"). As per the ESOP, the
options were granted at fair value as determined by an independent valuer as on the date of the
grant and hence no compensation cost has been recognized. These options vest starting with 33.33%
at the end of the second year, 33.33% at the end of the third year and remaining 33.34% at the end
of the fourth year from the date of grant.
Changes in number of equity shares representing stock options outstanding were as follows:
Year ended March 31,
2007
2006
2005
Number of
Weighted
Number of
Weighted
Number of
Weighted
equity
Average
equity
Average
equity
Average
ASOP Plan
shares
Exercise Price
shares
Exercise Price
shares
Exercise Price
Balance at the beginning of the year
1,215,506
$
1.80
813,578
$
1.83
—
—
Granted
324,000
1.77
655,000
$
1.77
813,578
$
1.78
Exercised
—
—
—
—
—
—
Cancelled
(540,804
)
1.77
(253,072
)
$
1.77
—
—
Lapsed
—
—
—
—
—
—
Balance at the end of the year
998,702
$
1.86
1,215,506
$
1.80
813,578
$
1.83
Exercisable at the end of the year
—
—
—
—
—
—
Weighted average fair value of
options granted during the year
$
1.77
$
1.77
$
1.78
16. Segmental Reporting
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. The executive management evaluates Satyam's operating segments based on the
following two business groups:
•
IT services
, providing a comprehensive range of services, including application
development and maintenance, consulting and enterprise business solutions, extended
engineering solutions, infrastructure management services. Satyam provides its customers the
ability to meet all of their information technology needs from one service provider. Satyam's
eBusiness services include designing, developing integrating and maintaining Internet-based
applications, such as eCommerce websites, and implementing packaged software applications,
such as customer or supply chain management software applications. Satyam also assists its
customers in making their existing computing systems accessible over the Internet. The segment
information includes the results of Citisoft and Knowledge Dynamics which were acquired during
last year.
•
Business Process Outsourcing
, providing BPO services covering HR, Finance & Accounting,
Customer Contact (Voice, Mail and Chat), and Transaction Processing (industry-specific
offerings).
F-32
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Satyam's operating segment information for the years ended March 31, 2007, 2006 and 2005 are as
follows:
Business Segments
(US$ in millions)
IT Services
BPO
Elimination
Consolidated totals
For the year ended March 31, 2007
Revenue — External customers
1,432.5
28.9
—
1,461.4
Revenue — Inter-segment
0.6
9.2
(9.8
)
—
Total Revenues
1,433.1
38.1
(9.8
)
1,461.4
Operating income / (loss)
294.0
(2.4
)
—
291.6
Equity in earnings/(losses) of associated
companies, net of taxes
0.8
—
—
0.8
Net income / (loss)
302.7
(4.3
)
—
298.4
Segment assets
1,605.3
42.5
(23.7
)
1,624.1
Depreciation and amortization
30.4
3.2
—
33.6
Capital expenditures for long-lived assets
79.6
4.2
—
83.8
For the year ended March 31, 2006
Revenue — External customers
$
1,082.7
$
13.6
—
$
1,096.3
Revenue — Inter-segment
0.8
6.4
(7.2
)
—
Total Revenues
1,083.5
20.0
(7.2
)
1096.3
Operating income / (loss)
228.5
(8.8
)
—
219.7
Equity in earnings/(losses) of associated
companies, net of taxes
(0.8
)
—
—
(0.8
)
Net income / (loss)
259.0
(9.6
)
—
249.4
Segment assets
1,170.8
27.7
(17.3
)
1,181.2
Depreciation
29.0
2.5
—
31.5
Capital expenditures for long-lived assets
53.4
3.2
—
56.6
For the year ended March 31, 2005
Revenue — External customers
$
786.7
$
6.9
—
$
793.6
Revenue — Inter-segment
0.7
3.1
$
(3.8
)
—
Total Revenues
787.4
10.0
(3.8
)
793.6
Operating income / (loss)
171.8
(9.3
)
—
162.5
Equity in earnings/(losses) of associated
companies, net of taxes
(1.1
)
—
—
(1.1
)
Net income
163.7
(9.9
)
—
153.8
Segment assets
885.2
16.1
(17.2
)
884.1
Depreciation
23.4
1.6
—
25.0
Capital expenditures for long-lived assets
37.4
3.7
—
41.1
The capital expenditures for long-lived assets in the above table represent the additions to
premises and equipment (fixed assets) of each segment.
F-33
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Geographic Information
The revenues that are attributable to countries based on location of customers and long-lived
assets are as follows:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Revenues from
Revenues from
Revenues from
external customers
Long-lived assets
external customers
Long-lived assets
external customers
Long-lived assets
United States
$
924.0
$
4.1
$
711.2
$
4.0
$
542.4
$
4.0
Europe
276.5
1.4
206.3
0.9
131.7
0.6
India
75.2
194.8
45.1
133.1
27.2
92.2
Japan
20.8
0.4
15.5
0.5
13.9
0.5
Rest of the World
164.9
2.5
118.2
2.3
78.4
2.3
Total
$
1,461.4
$
203.2
$
1,096.3
$
140.8
$
793.6
$
99.6
The long-lived assets in the above table represent premises and equipment and intangible assets of
each segment.
17. Related Party Transactions
Related party transactions comprise of
(US$ in millions)
Year ended March 31,
2007
2006
2005
Infrastructure and other services provided by Satyam to
Sify, its subsidiaries and associated companies
—
—
$
0.1
Satyam Venture
$
0.5
$
0.5
0.3
Short term advance provided by Satyam to
CA Satyam
—
0.1
—
Total
$
0.5
$
0.6
$
0.4
Infrastructure and other services received by Satyam from
Sify, its subsidiaries and associated companies
—
$
2.9
$
1.5
Satyam Venture
$
8.6
8.6
7.1
CA Satyam
0.2
—
—
Total
$
8.8
$
11.5
$
8.6
The balances receivable from and payable to related parties are as follows:
(US$ in millions)
As of March 31,
Amount due from/(to) associated companies
2007
2006
Satyam Venture
$
(2.6
)
$
(1.8
)
CA Satyam
—
0.1
Total
$
(2.6
)
$
(1.7
)
18. Shareholders' Equity and Dividends
Increase in authorized share capital
On August 21, 2006, the shareholders of Satyam Computer Services approved for increase in
authorized capital of the Company from 375 million equity shares to 800 million equity shares.
Stock Split (in the form of stock dividend)
On August 21, 2006, the shareholders of Satyam Computer Services approved a two-for-one stock split
(in the form of stock dividend) which was effective on October 10, 2006. Consequently, Satyam
capitalized an amount of US$17.7 million from its retained earnings to common stock. All references
in the financial statements to number of shares, per share amounts, stock option data, and market
prices of Satyam Computer Services' equity shares have been retroactively restated to reflect the
stock split unless otherwise noted.
F-34
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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. The Board of Directors declares interim dividends without
the need for 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 retained
earnings available for distribution to equity shareholders was US$1,062.6 million, US$786.9 million
and US$559.8 million for the years ended March 31, 2007, 2006 and 2005 respectively.
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.
19. Contingencies and Commitments
a) Funding and Warrant commitments — Nipuna
Satyam Computer Services has guaranteed payment of all sums payable by Nipuna to the Investors on
redemption of the 0.05% cumulative convertible redeemable preference shares. Satyam Computer
Services, Nipuna and the investors had also entered into a warrant agreement whereby Nipuna agreed
to issue to the Investors, one warrant in consideration of and based upon every US$0.1 million
referral revenues received by Nipuna or its subsidiaries. As of March 31, 2007, there were no
referral revenues and hence no warrants have been issued.
b) Citisoft Plc and Knowledge Dynamics Pte Ltd.
For commitments relating to Citisoft and Knowledge Dynamics refer note 3.
c) Bank guarantees
Bank guarantees outstanding are US$23.1 million and US$13.4 million as of March 31, 2007 and 2006
respectively. Bank guarantees are generally provided to government agencies, 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.
d) Capital commitments
Contractual commitments for capital expenditure pending execution were US$38.2 million and US$26.7
million as of March 31, 2007 and 2006 respectively. Contractual commitments for capital
expenditures are relating to acquisition of premises and equipment.
e) Operating leases
Satyam has certain operating leases for land, office premises and guesthouses. Rental expenses for
operating leases are accounted for on a straight line method. Rental expense amounted to US$23.7
million, US$17.5 and US$12.5 million for the years ended March 31, 2007, 2006 and 2005
respectively.
Future minimum annual lease commitments for non-cancelable lease arrangements, including those
leases for which renewal options may be exercised as of March 31, 2007 are US$4.6 million in fiscal
2008, US$2.7 million in fiscal 2009, US$1.0 million in fiscal 2010, US$0.6 million in fiscal 2011
and thereafter.
f) Venture Global Engineering LLC, USA
Satyam Computer Services had filed a request for arbitration with the London Court of International
Arbitration ("LCIA") naming Venture Global Engineering LLC, USA ("VGE") as respondent. The
Arbitration concerned a dispute between Satyam Computer Services and VGE in connection with their
joint venture Satyam Venture Engineering Services Private Limited ("SVES").
The LCIA Arbitrator issued his Final Award on April 3, 2006 in favour of Satyam Computer Services.
Satyam Computer Services has filed a petition to recognize and enforce the Award in the United
States District Court in Michigan. VGE has separately filed a declaratory judgment action seeking
to refuse enforcement of the Award in the United States District Court in Illinois. Management
believes that this will not have any adverse effect upon Satyam's results of operations, financial
condition and cash flows.
F-35
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
20. 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. The following table
gives details in respect of percentage of revenues generated from top two and top five customers:
Year ended March 31,
2007
2006
2005
Revenues generated from top two customers
Customer I
6.34
%
8.80
%
10.81
%
Customer II
4.41
%
5.14
%
7.35
%
Total revenues from top five customers
21.04
%
24.21
%
29.21
%
21. Financial Instruments
Forward and options contracts
Satyam Computer Services enters into foreign exchange forward and options contracts where the
counter party is generally a bank. Satyam Computer Services considers the risks of non-performance
by the counter party as not material.
The following tables give details in respect of our outstanding foreign exchange forward and
options contracts:
(US$ in millions)
As of March 31,
2007
2006
Aggregate contracted principal amounts of contracts outstanding:
Forward contracts
$
100.0
$
79.0
Options contracts
352.6
137.0
Total
$
452.6
$
216.0
Balance sheet exposure:
Forward contracts
$
2.1
$
0.4
Options contracts
2.4
(1.8
)
Total
$
4.5
$
(1.4
)
The outstanding foreign exchange forward and options contracts as of March 31, 2007 mature
between one to fourteen months.
Gains/(losses)
on foreign exchange forward and options contracts are included under
the heading other
income/(expense) in the statement of income are as stated below:
(US$ in millions)
Year ended March 31,
2007
2006
2005
Forward contracts
$
2.6
$
0.8
$
(0.5
)
Options contracts
3.6
(1.6
)
0.2
Total
$
6.2
$
(0.8
)
$
(0.3
)
Fair value
The carrying amounts reported in the balance sheets for cash and cash equivalents, trade and other
receivables, investments, amounts due to or from related parties, short-term debts, accounts
payable and other liabilities approximate their respective fair values due to their short maturity
and due to no change in the interest rates for bank deposits. The approximate fair value of
long-term debts, as determined by using current interest rates was US$23.8 million and US$20.3
million as of March 31, 2007 and 2006 respectively as compared to the carrying amounts of US$23.8
million and US$20.3 million as of March 31, 2007 and 2006 respectively.
F-36
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
22. Schedules of Balance sheet
a)
Cash and Cash Equivalents
The cash and cash equivalents consist of:
(US$ in millions)
As of March 31,
2007
2006
Cash and bank balances
$
138.2
$
258.9
Cash equivalents
14.0
33.9
Cash and cash equivalents
$
152.2
$
292.8
b)
Accounts receivable and allowance for doubtful debts
Accounts receivable consist of:
(US$ in millions)
As of March 31,
2007
2006
Customers (trade)
$
386.9
$
238.1
Related parties
0.1
1.0
Less: Allowance for doubtful debts
(22.8
)
(19.1
)
Accounts receivable, net
$
364.2
$
220.0
The allowance for doubtful debt 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)
Prepaid Expenses and Other Receivables
Prepaid expenses and other receivables consist of:
(US$ in millions)
As of March 31,
2007
2006
Interest accrued on bank deposits
—
$
24.9
Prepaid expenses
$
8.1
5.3
Directors liability insurance
0.3
0.4
Advance for expenses
9.3
12.0
Loans and advance to employees
13.8
6.2
Other advances and receivables
9.4
2.4
Less: Allowance for doubtful advances
(3.8
)
(2.3
)
Prepaid expenses and other receivables
$
37.1
$
48.9
Prepaid expenses principally include the un-expired portion of annual rentals paid for use of
leased telecommunication lines, satellite link charges, and insurance premiums.
Others advances and receivables include the current portion of the restricted cash in the form of
deposits placed with banks to obtain bank guarantees amounted to US$2.1 million and US$0.4 million
as of March 31, 2007 and 2006 respectively.
d)
Other Assets
Other assets consist of:
(US$ in millions)
As of March 31,
2007
2006
Interest accrued on bank deposits
$
15.1
—
Deposits
20.8
$
17.0
Loans and advances to employees due after one year
0.9
0.8
Deferred taxes on income
3.3
2.2
Others
1.0
1.4
Less: Allowance for doubtful advances
(1.6
)
(1.5
)
Other Assets
$
39.5
$
19.9
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$0.3 million and US$0.7 million as of March 31,
2007 and 2006 respectively. Telephone and other deposits are primarily attributable to deposits
with government organizations principally to
obtain leased telephone lines and electricity supplies and advance payments to vendors for the
supply of goods and rendering of services.
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Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
e)
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of:
(US$ in millions)
As of March 31,
2007
2006
Accrued expenses
$
99.0
$
79.6
Unclaimed dividend
1.5
1.1
Provision for taxation, net of payments
15.5
8.5
Provision for gratuity and unutilised leave
29.5
12.0
Deferred taxes on income
3.1
2.8
Accrued expenses and other current liabilities
$
148.6
$
104.0
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Table of Contents
Satyam Computer Services Limited
Financial Statement Schedule
Financial Statement Schedule -Valuation and qualifying accounts
1. Change in valuation allowance on deferred tax assets:
(US$ in millions)
Year ended March 31,
2007
2006
2005
At the beginning of the year
$
24.0
$
21.1
$
17.6
Change during the year
1.7
3.3
3.5
Change due to foreign exchange
0.9
(0.4
)
—
At the end of the year
$
26.6
$
24.0
$
21.1
2. Allowance for doubtful accounts on trade accounts receivable:
(US$ in millions)
Year ended March 31,
2007
2006
2005
At the beginning of the year
$
19.1
$
17.5
$
13.9
Additions
3.6
4.2
7.5
Write offs, net of recoveries
(0.6
)
(2.2
)
(3.8
)
Change due to foreign exchange
0.7
(0.4
)
(0.1
)
At the end of the year
$
22.8
$
19.1
$
17.5
3. Allowance for doubtful advances:
a)
Prepaid Expenses and Other Receivables
(US$ in millions)
Year ended March 31,
2007
2006
2005
At the beginning of the year
$
2.3
$
1.7
$
1.6
Additions
1.3
0.6
0.1
Write offs, net of recoveries
—
—
—
Change due to foreign exchange
0.2
—
—
At the end of the year
$
3.8
$
2.3
$
1.7
b)
Other Assets
(US$ in millions)
Year ended March 31,
2007
2006
2005
At the beginning of the year
$
1.5
$
1.5
$
1.5
Additions
—
—
—
Write offs, net of recoveries
—
—
—
Change due to foreign exchange
0.1
—
—
At the end of the year
$
1.6
$
1.5
$
1.5
F-39