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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
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<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><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES
EXCHANGE ACT OF 1934</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.</B></TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For
the transition period from &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95; to &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;
</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD><B>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 <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></TD>
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    <TD align="left" valign="top"><B>For the fiscal year ended March&nbsp;31, 2006</B>
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    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><B>Commission file number 001-15190</B></TD>
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<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Satyam Computer Services Limited</B>
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<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">N/A
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    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Republic of India</TD>
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    <TD align="center" valign="top">(Translation of Registrant&#146;s Name Into English)
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    <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: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV><BR>
Satyam Technology Center<BR>
Bahadurpallay Village<BR>
Qutbullapur Mandal, R.R. District- 500855<BR>
Hyderabad, Andhra Pradesh<BR>
India<BR>
(91)&nbsp;40-5523 3505<BR>
(Address and Telephone Number of Principal Executive Offices)<BR>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV><BR>
Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act: None</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:<BR>
American Depositary Shares, each represented by two Equity Shares, par value Rs.2 per share.<BR>
(Title of Class)<BR>
Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act:<BR>
None<BR>
(Title of Class)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule&nbsp;405
of the Securities Act.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">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 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: 324,449,539
equity shares, including 64,680,600 underlying equity shares for 32,340,300 ADSs, were
issued and outstanding as of March&nbsp;31, 2006.
</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 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.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 obligation under those
Sections. 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>

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    <TD align="left" valign="top">Large accelerated filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Non-accelerated filer<FONT face="Wingdings">&#111;</FONT></TD>
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<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; margin-top: 18pt">Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT> Item&nbsp;18<FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has filed all documents and reports required
to be filed by Sections&nbsp;12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>


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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SATYAM COMPUTER SERVICES LIMITED</B>

</DIV>
<DIV align="left">
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<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">ITEM 3. KEY INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">ITEM 4. INFORMATION ON THE COMPANY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">ITEM 4A. UNRESOLVED STAFF COMMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">ITEM 8. FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">ITEM 9. THE OFFER AND LISTING</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">ITEM 10. ADDITIONAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">ITEM 15. CONTROLS AND PROCEDURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">ITEM 16B. CODE OF ETHICS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#122">ITEM 17. FINANCIAL STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">ITEM 18. FINANCIAL STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">ITEM 19. EXHIBITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv4w2.htm">Ex-4.2 Associate Stock Option Plan B as amended and restated.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv4w3.htm">Ex-4.3 Associate Stock Option Plan ADS as amended and restated.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv8w1.htm">EX-8.1 List of Subsidiaries</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv10w1.htm">Ex-10.1 Consent of Price Waterhouse,Independent Registered Public Accounting Firm.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv12w1.htm">Ex-12.1 Certification of Chief Executive Officer under Section 302 of the Sarbane Oxley Act.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv12w2.htm">Ex-12.2 Certification of Chief Financial Officer under Section 302 of the Sarbane Oxley Act.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv13w1.htm">Ex-13.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="u92738exv13w2.htm">Ex-13.2 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act.</A></FONT></TD></TR>
</TABLE>
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<P align="center" style="font-size: 10pt">2
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<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise stated in this Annual Report or unless the context otherwise requires,
references in this Annual Report on Form 20-F, or &#147;Annual Report&#148;, to &#147;we,&#148; &#147;our,&#148; &#147;us,&#148; &#147;Satyam&#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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this Annual Report, references to &#147;US&#148;, &#147;Dollars&#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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;31, 2006 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;31, 2006 was Rs. 44.48 per
$1.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 3. KEY INFORMATION&#151;RISK
FACTORS&#148;, &#147;ITEM 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 QUARTERLY 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>

<P align="center" style="font-size: 10pt">3
</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, 2006 and the balance sheet data as of March&nbsp;31, 2006, 2005, 2004, 2003 and
2002 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.
Consequently, financial data as of March&nbsp;31, 2005, 2004 and 2003 and for the year ended March&nbsp;31,
2006, 2005 and 2004 reflect our interest in Sify accounted for under the equity method and are not
comparable to the financial data as of March&nbsp;31, 2002 and for the years ended March&nbsp;31, 2003, and
2002 which reflect our interest in Sify accounted for on a consolidated basis. 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. As a result of the above, financial data as of
March&nbsp;31, 2006 and for the year ended March&nbsp;31, 2006 are not comparable to financial data as of
March&nbsp;31, 2005, 2004, 2003 and 2002 and for the years ended March&nbsp;31, 2005, 2004, 2003 and 2002.
</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="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 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</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">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">414.5</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">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>
    <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: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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></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">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">566.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414.5</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(240.3</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: 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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174.2</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(139.6</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.0</TD>
    <TD nowrap>)</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(81.1</TD>
    <TD nowrap>)</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 nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.3</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">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">19.8</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: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">Total operating expenses</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(237.7</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: 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">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>&nbsp;</TD>
    <TD align="right">83.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63.5</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.9</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.6</TD>
    <TD>&nbsp;</TD>
</TR>
<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>&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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income/(expenses), net</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</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" 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">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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.9</TD>
    <TD nowrap>)</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.4</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>
</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in earnings/ (losses)&nbsp;of associated companies, net of taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.4</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: 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">$</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">$</TD>
    <TD align="right">82.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42.4</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: 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">4
</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="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 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</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">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:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></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">0.35</TD>
    <TD>&nbsp;</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">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; 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:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.28</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:30px; text-indent:-15px">Basic</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307.1</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:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividend per equity share</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividend per ADS</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.02</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 $Nil, $0.8&nbsp;million, $0.9
million, $1.6&nbsp;million and $7.2&nbsp;million in fiscal 2006, 2005, 2004, 2003 and 2002 respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</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 expense of $0.8&nbsp;million, $1.1&nbsp;million, $0.8
million, $2.9&nbsp;million and $3.6&nbsp;million in fiscal 2006, 2005, 2004, 2003 and 2002 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="40%">&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 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</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="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>
</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">292.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">243.4</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">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>
    <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 assets</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">515.6</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">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>
    <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">Preferred stock of subsidiary</DIV></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>
    <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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">394.4</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">(1)</SUP></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">419.1</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 common stock and additional paid-in capital but excludes shares
held by Satyam Associate Trust.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>SFAS 142 pro forma disclosure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective April&nbsp;1, 2002, Satyam adopted Statement of Financial Accounting Standards No.&nbsp;142
(&#147;SFAS 142&#148;), <I>Goodwill and Other Intangible Assets. </I>Due to the adoption of SFAS 142, Satyam ceased
amortizing goodwill. The effect of this accounting change is reflected prospectively. The
following pro forma disclosure presents the impact of SFAS 142 on net income, net income per
share, and the related tax effect had the standard been in effect for the year ended March&nbsp;31,
2002:
</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="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="2" style="border-bottom: 0px 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>2002</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>(dollars in millions</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>except per share</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>amount)</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">Reported net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">42.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of excess of cost of investment
over equity in net assets of associated companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Adjusted net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63.0</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: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted earnings per share:</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:30px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As adjusted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.21</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">5
</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>Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Any investment in our ADSs involves a high degree of risk. You should carefully consider the
following information about these risks, together with the other information contained in this
Annual Report, before you decide to buy our ADSs. If any of the following risks actually occur,
our company could be seriously harmed. In any such case, the market price of our ADSs could
decline, and you may lose all or part of the money you paid to buy our ADSs.</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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, 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 2006 our total revenues
increased by 38.1% as compared to fiscal 2005, and in fiscal 2005 our total revenues increased by
40.1% as compared to fiscal 2004. As of March&nbsp;31, 2006, we had 28,624 employees, whom we refer to
as associates, worldwide as compared to 20,690 associates as of March&nbsp;31, 2005. 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<P align="center" style="font-size: 10pt">6
</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 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">&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Spending on IT in most parts of the world has recently increased 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2006, 2005 and 2004, approximately 64.9%, 68.3% and 73.3%, respectively, of our
total revenues were derived from the United States. For the same periods, we earned 28.6%, 29.2%
and 32.0% of our IT revenues from the manufacturing industry and 18.5%, 17.8% and 18.3%, of our IT
revenues from the banking and finance industry respectively. If the current economic recovery 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, recent legislation has come into effect in the United
Kingdom in April&nbsp;2006 requiring in certain circumstances offshore outsourcing providers have 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The markets for IT services and 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, BearingPoint, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also compete with software firms such as Oracle and SAP, service groups of computer
equipment companies, in-house IT departments of large corporations, programming companies and
temporary staffing firms. Nipuna, through which we provide BPO services, faces competition from
firms like Progeon Limited and Wipro BPO, formerly known as Wipro Spectramind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 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 falls below 5% after an initial public offering. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A significant part of our competitive advantage has historically been the cost advantage
relative to service providers in the United States and Europe. Since wage costs in this industry
in India are presently increasing at a faster rate than those in the United States and Europe, our
ability to compete effectively will become increasingly dependent on our reputation, the quality
of our services and our expertise in specific markets. Many of our competitors have significantly
greater financial, technical and marketing resources and generate greater revenues than us, and we
cannot assure you that we will be able to compete 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: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive a significant portion of our revenues from a limited number of corporate customers.
In fiscal 2006, 2005 and 2004, our largest customer together with its affiliates, accounted for
8.8%, 10.8% and 14.3%, respectively, of our total revenues. In fiscal 2006, 2005 and 2004, our
second largest customer accounted for 5.1%, 7.4% and 9.9%, respectively, of our total revenues. In
fiscal 2006, 2005 and 2004, our five largest customers accounted for 24.2%, 29.2% and 36.4%
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006, 2005 and 2004, we
derived 35.1%, 34.2% and 31.7%, 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>
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 revenues than previously anticipated.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We continue to consider the viability of introducing performance-based or variable-pricing
contracts. Should we increase our use of 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>

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<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of our customer contracts provide that, during the term of the contract and for a
certain period thereafter ranging from six to 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: 6pt"><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 2006, 2005 and 2004, we experienced associate attrition in the IT services
segment at a rate of 19.2%, 16.5% and 17.5%, 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>
</DIV>


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

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</DIV>

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<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we had contractual commitments of approximately $26.7&nbsp;million for
capital expenditures, and we estimate spending a further $75.0&nbsp;million until March&nbsp;2007. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The vast majority of our employees 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, 2006,
the majority of our associates located outside India were in the United States and held either
H-1B visas, allowing the employee to remain in the United States during the term of the work
permit and work as long as he or she remains an employee of the sponsoring firm, or L-1 visas,
allowing the employee to stay in the United States 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
recent 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 maintaining work visas for our associates working in the United States.
The CIS announced on August&nbsp;10, 2005 that it had received sufficient applications to fill up all
65,000 visas that were available for the year. In November&nbsp;2005, the CIS announced that it was
considering increasing the H1B by adding another 30,000 visas; however this has not yet happened.
</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
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 employees 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 employees 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">business, distract our management and employees and increase our expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 6pt"><B><I>System failure could disrupt our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 control 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive officers and directors, together with members of their immediate families,
beneficially owned, in the aggregate approximately 8.59% of our outstanding equity shares as of
March&nbsp;31, 2006. As a result, acting together, this group has the ability to exercise significant
control over most matters requiring our shareholders&#146; approval, including the election and removal
of directors and significant corporate transactions. These insider shareholders may exercise
control even if they are opposed by our other shareholders. Without the consent of these insider
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 the Company and
all of the shareholders.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, 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 significantly 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 the utility of goodwill. 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 under U.S. GAAP. Such impact on net income may result in a
reduction of the market value of our shares.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 6pt"><B><I>Stock-based compensation expenses may significantly reduce our net income under U.S. GAAP.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although Satyam has suspended, except in certain cases, new grants of stock options as of
April&nbsp;1, 2005, our reported income under U.S. GAAP has been and will continue to be affected by
the grant of warrants or options under our various employee benefit plans. Under the terms of our
existing plans, 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. These grants require us to record non-cash compensation expenses under
currently applicable U.S. GAAP, amortized over the vesting period of the warrants or options.
Depending on the market value or fair value of our equity shares on the dates the outstanding
grants were made and future grants are made, amortization of deferred stock-based compensation may
contribute to reducing our operating income and net income under U.S. GAAP. Our subsidiaries also
have stock option schemes which have and will continue to generate stock-based compensation
expenses and have and will reduce our operating income and net income.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our earnings will be adversely affected once we change our accounting policies with respect to the
expensing of stock options.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently we account for share-based compensation transactions using the intrinsic value
method as prescribed by Accounting Principles Board, or APB, Opinion No.&nbsp;25, <I>Accounting for Stock
Issued to Employees, </I>and have adopted the pro forma disclosure provisions of the Statement of
Financial Accounting Standard, or SFAS No.&nbsp;123<I>, Accounting for Stock-Based Compensation. </I>On
December&nbsp;16, 2004, the FASB issued FAS 123R, <I>Share-Based Payment, an amendment of FASB Statements
No.&nbsp;123 and 95</I>, which requires that such transactions be accounted for using a fair-value-based
method and recognized as expenses in our consolidated statement of operations. As of the required
effective date, the standard requires that the modified prospective method be used, which requires
that the fair value of new awards granted from the beginning of the year of adoption (plus
unvested awards at the date of adoption) be expensed over the vesting period. In addition, the
statement encourages the use of the &#147;binomial&#148; approach to value stock options, which differs from
the Black-Scholes option pricing model that we currently use in the footnotes to our consolidated
financial statements. Many companies have or are in the process of changing their accounting
policies to expense the fair value of stock options. This change in the accounting policy with
respect to the treatment of employee stock option grants will adversely affect our earnings and
will have a significant impact on our consolidated statement of operations as we will be required
to expense the fair value of our stock option grants rather than expensing the intrinsic value of
stock options as is our current practice. FAS 123R has become applicable to Satyam for annual
periods beginning after June&nbsp;15, 2005. Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changing laws, regulations and standards relating to accounting, corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002, new U.S. Securities and Exchange
Commission, or SEC, regulations, the NYSE, rules, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In particular, our efforts 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 we
do not anticipate any material weaknesses or significant deficiencies, our independent auditors
may be 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, under revised corporate governance standards adopted by The Stock Exchange,
Mumbai, or the BSE, and The National Stock Exchange of India Limited, or the 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a foreign private issuer, we are subject to requirements under the Securities Act of 1933,
as amended, or Securities Act, and the Securities Exchange Act of 1934, as amended, or 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 ordinary 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are incorporated in India, and a substantial portion of our assets and our employees are
located in India. Consequently, our financial performance and the market price of our ADSs will be
affected by changes in exchange rates and controls, interest rates, Government of India policies,
including taxation policies, as well as political, social and economic developments affecting
India.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The Government of India 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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% to 90% for the fiscal 2003, and is
expected to expire between fiscal 2006 and fiscal 2010. Exemption for two of our STP units in
Hyderabad expired during fiscal 2006. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All facilities registered in the exemption program before March&nbsp;31, 2001, which include all
of our existing facilities in India and registrations for two new facilities which have not yet
been constructed, will continue to benefit from this program under present law. Over time, as we
construct additional facilities, however, the overall benefits of this tax program to our company
will decrease with a consequential increase in our effective tax rate. When our tax holidays
expire or terminate, our tax expense will materially increase, reducing our profitability. We
cannot assure you
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as to what action the present or future governments of India will take regarding tax
incentives for the IT industry.
</DIV>
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
reconversion 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
reconversion 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the past decade, the Government of India has pursued policies of economic
liberalization, including significantly relaxing restrictions on the private sector. Nevertheless,
the role of the Indian central and state governments in the Indian economy as producers, consumers
and regulators has remained significant. 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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006, 2005 and 2004, our U.S.
dollar-denominated revenues represented 77.6%, 81.8% and 84.5%, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 2006 and 2005, we had outstanding
forward and options contracts in the amount of $216.0&nbsp;million and $301.5&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Government of India 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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%
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
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely upon a combination of non-disclosure and other contractual arrangements and
copyright, trade secret and trademark laws to protect our intellectual property rights. Ownership
of software and associated deliverables created for customers is generally retained by or assigned
to our customers, and we do not retain an interest in such software and deliverables.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have applied for the registration of &#147;Satyam&#148; and other related marks as trademarks in
India, the United States and 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that the risk of infringement claims against us will increase if more of our
competitors are able to obtain patents for software products and processes. Any such claims,
regardless of their outcome, could result in substantial cost to us and divert management&#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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<P align="center" style="font-size: 10pt">18
</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>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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2001 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="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>&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">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">902.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
</TR>
<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">291.9</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">175.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</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">391.0</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">127.3</TD>
    <TD>&nbsp;</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">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">442.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250.0</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">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">862.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007 (Through April&nbsp;21, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">890.0</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">755.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;21, 2006<B>, </B>the closing price of our shares on the BSE was Rs. 808.15 ($ 18.2). For
comparison purposes, these prices have been adjusted to give effect to our August&nbsp;25, 2000
five-for-one stock split. 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">(i)</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">(ii)</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, would not
be enforceable in India. However, the party in whose favor such final judgment is rendered may
bring a new suit in a competent court in India based on a final judgment which has been obtained
in the United States. If and to the extent Indian courts were of the opinion that fairness and
good faith so required, it would, under current practice, give binding effect to the final
judgment which had been rendered in the United States unless such a judgment 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>


<P align="center" style="font-size: 10pt">19
</DIV>

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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 redeem receipts in exchange for underlying
equity shares. The period of holding of such equity shares, for determining whether the gain is
long-term or short-term, commences on the date of the giving of such notice by 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Further, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Companies Act, 1956 of India, or the Companies Act, a company incorporated in India
must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate
number of shares to maintain their existing ownership percentages before the issuance of any new
equity shares, unless the preemptive rights have been waived by adopting a special resolution by
holders of three-fourths of the shares which are voted on the resolution. As U.S. holders of ADSs
represent 19.94% of our outstanding equity shares as at March&nbsp;31, 2006, you may be unable to
exercise preemptive rights for equity shares underlying ADSs unless a registration statement under
the Securities Act of 1933, as amended, or the Securities Act, is effective with respect to the
rights or an exemption from the registration requirements of the Securities Act is available. Our
decision to file a registration statement will depend on the costs and potential liabilities
associated with any given registration statement as well as the perceived benefits of enabling the
holders of our ADSs to exercise their preemptive rights and any other factors that we deem
appropriate to consider at the time the decision must be made. We may elect not to file a
registration statement 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
</DIV>

<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">would be reduced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 shareholder present in person and holding at
least 10% of the total voting power or on which an aggregate sum of not less than Rs.50,000 has
been paid-up, at the meeting demands that a poll be taken. 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.
</DIV>

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

<P align="center" style="font-size: 10pt">21
</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>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, 2006, we had an aggregate of equity shares
outstanding of 323,256,399 (excluding 1,193,140 equity shares held by the Satyam Associate Trust),
which includes underlying equity shares of 64,680,600 represented by 32,340,300 ADSs. In addition,
as of March&nbsp;31, 2006 we had outstanding options to purchase approximately 6,057,286 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, including Regulation&nbsp;S.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Forward-looking statements contained in this Annual Report may not be realized.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not intend to update any of the forward-looking statements after the date of this
Annual Report to conform such statements to actual results.
</DIV>

<P align="center" style="font-size: 10pt">22
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Our headquarters are
located in Hyderabad, India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began providing IT services to businesses in 1988 and are currently the fourth largest
Indian IT software and services company, based on the amount of export revenues generated during
fiscal 2005. Our revenues grew to $1,096.3&nbsp;million in fiscal 2006 from $459.2&nbsp;million in fiscal
2003, representing a compound annual growth rate of 33.7%. For the same period, our net income
grew from $82.3&nbsp;million to $249.4&nbsp;million. The number of our employees, whom we refer to as
associates, grew from 9,838 as of March&nbsp;31, 2003 to 28,624 as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 2006, we had 506 active customers,
including 156 Fortune Global 500 or Fortune U.S. 500 companies and 45 companies that generated
more than $5&nbsp;million in annual revenues in fiscal 2006. 90.6% of our revenues for fiscal 2006 and
92.1% of our revenues for fiscal 2005 were from repeat business given by our existing customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 recently added services such as research,
analytics and animation to its portfolio of service offerings. As of March&nbsp;31, 2006, Nipuna had
1,765 associates and 25 customers, of which 9 were Fortune Global 500 and Fortune U.S. 500
companies.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At our Board meeting held on April&nbsp;21, 2006, our board of directors recommended the issuance
of bonus shares in the ratio of 1:1 (one equity share for every one share held) for all existing
shares including American Depository Shares. This proposed bonus issue is subject to approval by
our shareholders at the upcoming annual general meeting of shareholders, expected to be held in
August&nbsp;2006.
</DIV>

<P align="center" style="font-size: 10pt">23
</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>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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Global IT services spending has been estimated to total $441.0&nbsp;billion in 2005, representing
an increase of approximately 5.5 % over 2004, and is projected to grow at a compound annual growth
rate of 5.9% to reach $556&nbsp;billion by 2009, according to International Data Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the growth of global IT services spending is driven by the following factors and
trends:
</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>Increased 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.</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><B><I>Impact 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.</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><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.</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><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.</TD>
</TR>

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


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;India is considered to be the most favored destination for offshore IT service delivery. The
NASSCOM-McKinsey Report of 2002 estimates that export revenue generated from the software and
service industry in India was approximately $15.5&nbsp;billion in 2004 and is expected to reach $50.0
billion by 2008 representing a compound annual growth rate of 34.0%. The key factors that are
expected to contribute to this growth are:
</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>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</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">24
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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><B><I>Large 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 2004, educational institutes
in India produce approximately 290,000 engineering students and 139,000 computer software
engineers each year. 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.</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><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.</TD>
</TR>

</TABLE>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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>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.</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><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 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.</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><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.</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><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.</TD>
</TR>

</TABLE>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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>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-</TD>
</TR>


</TABLE>
</DIV>
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</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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><B><I>Flexible, highly evolved delivery model. </I></B>We provide our services through 20 centers
located in Australia, Canada, China, Hungary, India, Japan, Malaysia, Singapore, United
Arab Emirates, 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, nearshore 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.</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><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 2006 and fiscal 2005, 39.2% and 34.3%
respectively, of our revenues, was generated from consulting and enterprise business
solutions.</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><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, 2006, 156 of our 506 customers were Fortune
Global 500 or Fortune U.S. 500 corporations. 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 2006 and fiscal 2005, 90.6% and 92.1%
respectively, of our revenues, was generated from existing customers.</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><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</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">26
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have a large pool of highly skilled, well-trained technical associates spanning 60
nationalities. As of March&nbsp;31, 2006, we employed 26,711 technical associates in the IT
services area, of which 51% had bachelor&#146;s degrees in engineering and 4% had master&#146;s
degrees in engineering, technology or computer applications. 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.</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><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.</TD>
</TR>

</TABLE>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our goal is to be a leading global provider of comprehensive IT solutions and services. We
intend to accomplish our goal by:
</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>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.</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><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 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.</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><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</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">27
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</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><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.</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><B><I>Attracting 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.</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><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.</TD>
</TR>

</TABLE>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

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

</DIV>

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

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We leverage our integrated global delivery model, which we refer to as the &#147;RightSourcing
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>

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>


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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 15 offsite centers in
locations in Australia, Canada, China, Hungary, Japan, Malaysia, Singapore, 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 &#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 enables 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 domain specific certifications like AS9100/EN9100 for ES group &#150;
Aerospace domain, PCMM Level 5 Assessment for Pune Location, BS15000/ISO20000 certification for
N&#038;S across India and BS15000 Global Certification for IMS business. We have also adopted Six Sigma
as a way of improving our processes and providing the highest levels of quality to our customers.
Our 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 also 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. Maintaining a high level of customer satisfaction
requires sophisticated project management techniques to deliver services seamlessly
</DIV>
<P align="center" style="font-size: 10pt">30
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">across multiple locations and time zones. We have developed and applied a sophisticated global
project management methodology to help ensure timely, consistent and accurate delivery of our IT
services to our customers. XCEED Optima (Operational Projects Real Time Management), the
enterprise wide project management solution for our Company is a joint initiative of IIS and
Quality. Optima is based on cProjects, a new Enterprise Project Management solution from SAP, the
world leaders in ERP and is customized to meet our specific needs.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We market our services primarily to companies in the North America, Europe, the Middle East
and the Asia-Pacific region. We have a global customer base which, as of March&nbsp;31, 2006, consisted
of 506 customers including 156 Fortune Global 500 and Fortune U.S. 500 companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006, 2005 and 2004 accounted for 90.6%, 92.1% and
90.7% of IT services revenues, respectively. In fiscal 2006, 2005 and 2004, our largest customer,
together with its affiliates, accounted for 8.8%, 10.8% and 14.3%, respectively, of our total
revenues. In fiscal 2006, 2005 and 2004, our second largest customer accounted for 5.1%, 7.4% and
9.9% respectively, of our total revenues. Our top five customers accounted for 24.2%, 29.2% and
36.5% of our total revenues in fiscal 2006, 2005 and 2004 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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 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>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>
</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">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</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">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</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">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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 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>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>
</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">28.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">32.0</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">18.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</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">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.7</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">18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</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">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</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">3.1</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">1.9</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">2.6</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">2.1</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">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.5</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>

<P align="center" style="font-size: 10pt">31
</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 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, 2006, we employed 243 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nipuna Services Limited, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 falls below 5% after an
initial public offering. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, Nipuna had 25 customers including 9 Fortune Global 500 and Fortune U.S.
500 companies. For fiscal 2006, 2005 and 2004, Nipuna had revenues of $20.0&nbsp;million, $10.0&nbsp;million
and $2.4&nbsp;million respectively. Nipuna handles more than 71 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. Some of Nipuna&#146;s arrangements with its customers have Service Level Agreements, or SLAs,
as defined, which if Nipuna were to fail to meet, would result in loss of revenue.
</DIV>

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

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nipuna also provides IT help desk support to its customers.
</DIV>

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

<P align="center" style="font-size: 10pt">32
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have in the past entered into, and plan to continue to enter into, strategic alliances
with leading technology vendors and system integrators to deliver IT solutions across a wide array
of technologies and platforms. We have partnered with some of the leading names in key application
areas such as ERP (SAP &#038; Oracle), CRM, Integration Middleware, Business Intelligence (Business
Objects and Informatica) and Collaborative Commerce. Some of our other prominent alliance partners
include 4S, 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. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;8 &#150; Financial information &#150; Legal Proceedings. See
also note 23 to our fiscal 2006 financial statements. Also 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.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 2006, we had 28,624 associates including
Nipuna&#146;s 1,765 associates representing a compound annual growth rate in the number of our
associates of 33.5% 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our growth has been driven by our ability to attract top quality talent and effectively
engage them. We strongly believe in caring for our associates&#146; welfare and were selected as one of
the Top 10 Best Employers in India by BT-TNS-Mercer &#038; CNBC-Hewitt in 2004.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We devote significant resources for training our associates. We established the Satyam
Learning Center, which promotes our culture of learning and serves as a catalyst for us to sustain
our technological and managerial edge. We require our technical 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
</DIV>

<P align="center" style="font-size: 10pt">33
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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. Trainers for our leadership training
include professors from the Harvard Business School. Our leadership training 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006, 2005 and 2004, we
experienced associate attrition in IT services at a rate of 19.2%, 16.5% and 17.5%, respectively,
which included involuntary attrition ranging from 4% to 5% as part of our systematic quality
campaign.
</DIV>

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

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

<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, BearingPoint, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Progeon and Wipro
BPO, formerly known as Wipro Spectramind.
</DIV>

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

<P align="center" style="font-size: 10pt">34
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have dedicated telecommunication leased lines from reputed service providers such as AT&#038;T,
Sprint, MCI, Telstra, VSNL, Bharti and Software Technology Park of India which permit 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We monitor the network performance and continually upgrade SatyamNet to enhance and optimize
network efficiency across all operating locations. We currently have 20Mbps International Private
Leased Circuits (IPLC)&nbsp;and 30Mbps Internet bandwidth in India. In addition, we have 12Mbps high
speed links connecting various cities in India, with our intra-city links being connected by
multiple 2 Mbps lines totaling to 130Mbps across the country. We upgrade the bandwidth based on
our requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate headquarters, the Satyam Technology Center, is located in Hyderabad, India. We
own this facility, which provides a modern workspace for approximately 1,400 software associates
in two buildings covering an aggregate area of approximately 173,000 square feet, which are linked
to our other facilities through SatyamNet. The Satyam Technology Center also has recreational
facilities and housing for up to 500 associates which covers an area of approximately 140,000
square feet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also have additional offshore software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad and Pune in India with facilities aggregating approximately
570,000 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each facility is equipped with computers, servers, telecommunications lines and back-up
electricity generation facilities sufficient to ensure an uninterrupted power supply.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The delivery centers of Nipuna are located in Hyderabad and Bangalore and cover an area of
75,000 square feet and 52,000 square feet, respectively.
</DIV>

<P align="center" style="font-size: 10pt">35
</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>Intellectual Property</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ownership of software and associated deliverables created for customers is generally retained
by or assigned to the customer, and we do not usually retain an interest in such software or
deliverables. We also develop software products and software tools which are licensed to customers
and remain our property. We rely upon a combination of non-disclosure and other contractual
arrangements and copyright, trade secret, patent and trademark laws to protect our proprietary
rights in technology. We currently require our technical associates to enter into non-disclosure
and assignment of rights agreements to limit use of, access to and distribution of our proprietary
information. The source code for our proprietary software is generally protected as trade secrets
and as unpublished copyright works. We have applied for the registration of &#147;Satyam&#148; as trademarks
in India and United States. We generally apply for trademarks and service marks to identify our
various service and product offerings. Although we believe that our services and products do not
infringe the intellectual property rights of others, we cannot assure you that such a claim will
not be asserted against us in the future.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our IT services 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regulation of our business by the Indian government affects our business in several ways. We
benefit from certain tax incentives promulgated by the Government of India, including a ten-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 Reserve Bank of India and/or the Ministry of
Finance of the Government of India 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 Reserve Bank of India.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 datawarehousing 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 2006 and 2005, we spent 0.05%, and 0.08% of our total
revenues on R&#038;D activities.
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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

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

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<DIV style="font-family: 'Times New Roman',Times,serif">
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 wholly-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, 2005. Our total revenues for fiscal 2006 were $1,096.3&nbsp;million and
over the past three fiscal years our revenues have grown at a compound annual growth rate of
33.7%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 US$5.60 per equity share
aggregating to US$62.3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenues and profitability have grown rapidly in recent years. In fiscal 2006, our total
revenues increased by 38.1% as compared to fiscal 2005. Our revenues grew to $1,096.3&nbsp;million in
fiscal 2006 from $793.6&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 North America 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 2006, 2005 and 2004, our five largest customers accounted for 24.2%,
29.2% and 36.4%, respectively, of our total revenues. As of March&nbsp;31, 2006, we had 28,624
employees (including employees of Nipuna), whom we refer to as associates, worldwide as compared
to 20,690 associates as of March&nbsp;31, 2005. 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 Canada, Germany, Italy, the Netherlands, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upto March&nbsp;31, 2005, Satyam provided segmental disclosures based on three business groups: IT
services, Business Process Outsourcing, and Software Products. Subsequent to March&nbsp;31, 2005,
</DIV>

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">executive management evaluates Satyam&#146;s operating segments based on the following
two-business groups, since the revenues from Software Product segment are no longer meaningful and
management does not evaluate this segment any longer:
</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="1%" 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 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 for the year ended March&nbsp;31, 2006 includes the results of
Citisoft and Knowledge Dynamics which were acquired during the year.</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="1%" 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 falls below 5% after an initial public offering.</TD>
</TR>

</TABLE>
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the total revenues (excluding inter-segment revenues) for our
business segments for fiscal 2006, 2005 and 2004:
</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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</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">$</TD>
    <TD align="right">1,082.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BPO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,096.3</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">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">566.4</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">39
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</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">$</TD>
    <TD align="right">541.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">429.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">54.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">339.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">60.1</TD>
    <TD nowrap>%</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.8</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.1</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><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">1,082.7</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">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenues by contract type</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents our IT services revenues (excluding
inter-segment revenues) by type of contract 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</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">$</TD>
    <TD align="right">702.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">64.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">386.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed-price basis</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">269.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,082.7</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">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenues based on offshore and onsite/offsite</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;offsite centers located in Australia, Canada, China, Hungary, Japan,
Malaysia, Singapore, United Arab Emirates, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents our IT services revenues (excluding inter-segment revenues)
based
</DIV>

<P align="center" style="font-size: 10pt">40
</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">on the location where services are performed 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</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">$</TD>
    <TD align="right">496.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">248.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Onsite
/Offsite</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">586.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenues by top customers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our top two customers accounted for 14.1 % of our IT services&#146; revenues in fiscal 2006, as
compared to 18.3% and 24.2% of IT services revenues in fiscal 2005 and 2004 respectively. Our top
five customers accounted for 24.5% of IT services&#146; revenues in fiscal 2006 as compared to 29.5%
and 36.5% of IT services&#146; revenues in fiscal 2005 and 2004 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenues based on customer location</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have experienced increasing volumes of business from customers located in North America
and Europe, attributable to both new customers and additional business from existing customers. We
expect that most of our revenues will be generated in North America followed by Europe in fiscal
2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table gives the composition of our IT services revenues (excluding
inter-segment revenues) based on the location of our customers 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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Geographic</B></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>
    <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>
    <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 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">North America</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">414.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">73.3</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.7</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</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:15px; text-indent:-15px">India</DIV></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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.0</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">Rest of the world</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.3</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2</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">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></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">$</TD>
    <TD align="right">786.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.1</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cost of revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of revenues consists primarily of salary and other compensation and benefits,
stock-based compensation expense, depreciation, data communication expenses, computer maintenance,
cost of software, sub-contracting charges, expenses relating to the opening of new onsite,
offsite, nearshore and offshore centers, and foreign travel expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 85.0%, 82.1% and
81.4% in fiscal 2006, 2005 and 2004 respectively. The utilization levels for our technical
associates have been increasing in recent periods, mainly on account of new business and an
increase in business from existing customers, and we expect this trend to continue in the near
future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Selling, general and administrative expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses generally include compensation costs of sales,
management and administrative personnel, travel costs, advertising, business promotion,
</DIV>

<P align="center" style="font-size: 10pt">41
</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">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we have four wholly-owned subsidiaries, Nipuna Services Ltd., or
Nipuna, Satyam Technologies Inc., or STI, Satyam Computer Services (Shanghai) Company Limited, or
Satyam Shanghai and Knowledge Dynamics Pte Ltd, or Knowledge Dynamics as well as one
majority-owned subsidiary, Citisoft Plc, or Citisoft. These five subsidiaries have been
consolidated in our consolidated financial statements as of March&nbsp;31, 2006. The results of
Citisoft&#146;s operations have been consolidated by us from the acquisition date of May&nbsp;12, 2005 and
the results of Knowledge Dynamics Pte Ltd have been consolidated by Satyam Computer Services from
the acquisition date of October&nbsp;1, 2005.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;12, 2005, Satyam 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 acquisition has been accounted for by following the
purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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$3.1&nbsp;million payable on April&nbsp;30,
2006. Satyam Computer Services is also required to pay a maximum earn out consideration amounting
to US$ 3.9&nbsp;million on April&nbsp;30, 2006 based on achievement of targeted revenues and profits. The
deferred consideration for the acquisition of the 75% equity interest has been accounted for as
part of the purchase consideration and shown as a current liability in the balance sheet. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satyam Computer Services has a call option and the minority shareholders have a put option to
acquire or sell (as applicable) 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&nbsp;30, 2007 would amount to US$2.8&nbsp;million and a maximum earn-out consideration
amounting to US$2.4&nbsp;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$3.7&nbsp;million based on
achievement of targeted revenues and profits. Satyam Computer Services records the put option at
fair value at each balance sheet date, with the initial fair value of the put option included as
part of the consideration for its 75.0% interest in Citisoft. The difference between the fair
values at each valuation date is charged to selling, general and administration expenses in
statement of income. On the basis of an independent valuation, the value of put option was US$ 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 US$1.6&nbsp;million on April&nbsp;30, 2006 and a maximum of
US$1.6&nbsp;million each on April&nbsp;30, 2007 and 2008 based on achievement of targeted revenues and
profits. As of March&nbsp;31, 2006 Satyam Computer Services has accrued US$1.4&nbsp;million as a current
liability and charged US$1.4&nbsp;million to the statement of income as part of cost of revenues.
</DIV>

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

<P align="center" style="font-size: 10pt">42
</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="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</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>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"><B>Purchase price</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.2</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>
</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>
</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>
</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>
</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>
</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>
</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>
</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>
</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>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. The acquisition has
been accounted for by following the purchase method of accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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$0.8&nbsp;million and US$0.7&nbsp;million payable on April&nbsp;30, 2006 and
2007 respectively. Satyam Computer Services is also required to pay a maximum earn-out
consideration amounting to US$0.3&nbsp;million, US$0.8&nbsp;million and US$1.1&nbsp;million on April&nbsp;30, 2006,
2007 and 2008 respectively based on the achievement of targeted revenues and profits. 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 shown as a current liability and
US$0.7&nbsp;million as non current liability in the balance sheet. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="center" colspan="2"><B>US$ in</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>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"><B>Purchase price</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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><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>
</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><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>
<!-- End Table Body -->
</TABLE>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to our subsidiaries, during fiscal 2006, we also owned 31.6% of the equity shares
of Sify. 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 US$5.60 per equity share
aggregating to US$62.3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 US$43.6&nbsp;million has been
recognized as gain in the statement of income during year ended March&nbsp;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt">43
</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>Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 is expected to expire between fiscal 2006 and fiscal 2010. Exemption for two of our
STP units in Hyderabad expired during the year ended March&nbsp;31, 2006. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 $24.0
million as March&nbsp;31, 2006, 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.
</DIV>

<P align="center" style="font-size: 10pt">44
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>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>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</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>(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">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">$</TD>
    <TD align="right">1,083.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">565.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.9</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</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:30px; text-indent:-15px">Inter&#150;segment</DIV></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>
    <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">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap 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">Total revenues</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">566.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(343.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(60.6</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter&#150;segment</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&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">(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>&nbsp;</TD>
    <TD align="right">(63.9)</TD>
    <TD>&nbsp;</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">(60.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap 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">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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.3</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">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>
    <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 valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter&#150;segment</DIV></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>
    <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">(0.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap 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">Total gross profit</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&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><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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(97.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.2</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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.5</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:30px; text-indent:-15px">Inter&#150;segment</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" 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">Total selling, general and administrative expenses</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</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">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>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">125.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.1</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">(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>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)</TD>
</TR>
 <TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inter&#150;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 style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" align="left" style="border-top: 1px solid #000000">&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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" 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 income</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.3</TD>
    <TD>&nbsp;</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">Interest expense</DIV></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>
    <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 investments</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</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>&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>
    <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">(1.6</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 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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.2</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">(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>
    <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">(4.0</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">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>
    <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 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>
    <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">(0.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" nowrap align="left" style="border-top: 1px solid #000000">&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">$</TD>
    <TD align="right">249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">111.9</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23" 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">Depreciation</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.3</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</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 expenses of $Nil, $0.8&nbsp;million and $0.9
million during the years ended March&nbsp;31, 2006, 2005 and 2004, respectively, in the IT
services segments.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</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 $0.8&nbsp;million, $1.1&nbsp;million and
$0.8&nbsp;million during the years ended March&nbsp;31, 2006, 2005 and 2004, respectively, in the IT
services segments.</TD>
</TR>

</TABLE>


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

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






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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.
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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2006, revenues (IT services excluding inter-segment revenues) from consulting
and enterprise business solutions has grown by $159.8&nbsp;million, revenues from application
development and maintenance has increased by $111.9&nbsp;million, followed by extended engineering
solutions and infrastructure management services, which grew 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the total increase of $302.7&nbsp;million in total revenue in fiscal 2006, $168.9&nbsp;million
increased in North America followed by $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 North America 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&nbsp;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
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)
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
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)&nbsp;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&nbsp;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&nbsp;million, or
5.1% of revenues, in fiscal 2006 from $38.1&nbsp;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
</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">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&nbsp;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 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><I>Interest </I>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 Indian equity shares of 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 amounting to $0.8
million in fiscal 2006 as compared to a loss of $0.3&nbsp;million in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Income taxes</I></B><B>. </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 losses of associated
companies was $0.8&nbsp;million in fiscal 2006 as compared to $1.1&nbsp;million in fiscal 2005. Equity in
losses of Sify and CA Satyam amounted to $1.3&nbsp;million and $15 thousand respectively in fiscal 2006
as compared to $1.7&nbsp;million and $63 thousand respectively in fiscal 2005. These losses were
partially offset by equity in profit of Satyam Venture amounting to $0.5&nbsp;million in fiscal 2006 as
compared to equity in loss of $0.7&nbsp;million 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
$249.4&nbsp;million 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>


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




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Comparison of results for fiscal 2005 and fiscal 2004</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Revenues. </I></B>Our revenues increased by 40.1% to $793.6&nbsp;million in fiscal 2005 from $566.4&nbsp;million in
fiscal 2004. This revenue growth of $227.2&nbsp;million in fiscal 2005 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 42.4% to $731.2&nbsp;million in fiscal 2005 from $513.6&nbsp;million in fiscal
2004. Revenues from new customers increased by 18.2% to $62.4&nbsp;million in fiscal 2005 from $52.8
million in fiscal 2004. We added 108 customers both in fiscal 2005 and 2004 including 17 and 25
from the Fortune Global 500 and Fortune U.S. 500 list in fiscal 2005 and 2004, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2005, revenues (IT services excluding inter-segment revenues) from application
development and maintenance has grown by $90.4&nbsp;million or 26.7%, revenues from consulting and
enterprise business solutions has increased by $89.8&nbsp;million or 49.9%, followed by revenues in
extended engineering solutions and infrastructure management services, which grew by $34.3&nbsp;million
and $7.2&nbsp;million or 164.1% and 28.7% respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials
basis decreased to 65.8% in fiscal 2005 from 68.3% in fiscal 2004. Revenues from IT services
provided on a fixed-price basis increased to 34.2% in fiscal 2005 from 31.7% in fiscal 2004. The
increase in fiscal 2005 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The onsite revenues in fiscal 2005 increased as a result of new engagements in consulting and
enterprise business solutions, 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. Revenues from new customers increased
by 18.2% to $62.4&nbsp;million in fiscal 2005 from $52.8&nbsp;million in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the total increase of $227.2&nbsp;million in total revenue in fiscal 2005, $127.5&nbsp;million was
on account of increase in revenues from North America followed by $53.9&nbsp;million increase in
revenue from Europe and $31.8&nbsp;million in rest of the world; revenues in India increased by $11.2
million and in Japan by $2.8&nbsp;million. Our increased business in North America 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 47.5% to $506.8&nbsp;million in fiscal 2005 from
$343.6&nbsp;million in fiscal 2004. Cost of revenues represented 63.9% of revenues in fiscal 2005 and
60.7% in fiscal 2004. This increase by $163.2&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 utilization levels for IT services were 82.1% and 81.4% in fiscal
2005 and 2004, respectively. Associate compensation and benefits expenses increased by 56.7% to
$401.2&nbsp;million, or 50.6% of revenues in fiscal 2005 from $256.0&nbsp;million, or 45.2% of revenues in
fiscal 2004. The increase in the associate compensation and benefits is due to: (i)&nbsp;increase in
the total number of technical associates by 5,790 to 19,240 in fiscal 2005 from 13,450 in fiscal
2004; (ii)&nbsp;increase in number of onsite technical associates by 845 to 4,301 in fiscal 2005 from
3,456 in fiscal 2004 for which we pay a higher compensation; and (iii)&nbsp;an increase of existing
salaries (approximately 17%) during the period. Traveling expenses increased 23.3% to $39.1
million, or 4.9% of revenues, in fiscal 2005 from $31.7&nbsp;million, or 5.6% of revenues, in fiscal
2004. Communication expenses increased 37.3% to $7.0&nbsp;million or 0.9% of revenues in fiscal 2005
from $5.1&nbsp;million in fiscal 2004. Other expenses comprised mainly of rent, power and fuel and
maintenance expenses. Other expenses increased by 27.9% to $38.1&nbsp;million, or 4.8% of revenues, in
fiscal 2005 from $29.8&nbsp;million in fiscal 2004. Depreciation expense increased 2.5% to $20.6
million, or 2.6% of revenues, in fiscal 2005 from $20.1&nbsp;million in fiscal 2004. Stock-based
compensation expense decreased by 8.8% to $775 thousand in fiscal 2005 from $850 thousand in
fiscal 2004.
</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 22.3% to $124.3&nbsp;million in fiscal 2005 from $101.6&nbsp;million in fiscal 2004. Selling,
general and administrative expenses represented 15.7% of revenues in fiscal 2005 and 17.9% of
revenues in fiscal 2004. This increase of $22.7&nbsp;million in fiscal 2005 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 40.8% to $52.8&nbsp;million, or 6.7% of revenues, in fiscal 2005 as compared to
$37.5&nbsp;million or 6.6% of revenues in fiscal 2004 primarily on account of increase in number of
non-technical associates to 1,450 from 1,006, incentives amounting to $3.7&nbsp;million and salary
increments
</DIV>


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(approximately 17%) given to associates during the year. Communication expenses increased 35.0%
to $8.1&nbsp;million or 1.0% of revenues in fiscal 2005 as compared to $6.0&nbsp;million or 1.1% of revenue
in fiscal 2004. Traveling expenses increased 5.7% to $9.2&nbsp;million or 1.2% of revenues in fiscal
2005 from $8.7&nbsp;million or 1.5% of revenue in fiscal 2004. Traveling expenses increased primarily
due to increase in travels by our non-technical associates. Stock-based compensation expense
increased 54.7% to $1.2&nbsp;million in fiscal 2005 from $771 thousand in fiscal 2004. Other expenses
comprised primarily of depreciation, professional charges, marketing expense, rent, power and fuel
and maintenance expenses. Other expenses increased 9.0% to $53.1&nbsp;million or 6.7% of revenue in
fiscal 2005 from $48.7&nbsp;million, or 8.6% of revenues in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Operating income. </I></B>Our operating income was $162.5&nbsp;million in fiscal 2005, representing an
increase of 34.2% over the operating income of $121.1&nbsp;million for fiscal 2004. As a percentage of
revenues, operating income decreased to 20.5% in fiscal 2005, from 21.4% in fiscal 2004. This
decrease in operating income as a percentage of revenue was due to (i)&nbsp;increase in the associate
compensation and benefits expenses by $160.5&nbsp;million to $454.0&nbsp;million or 57.2% of revenue in
fiscal 2005 from $293.5&nbsp;million, or 51.8% of revenues, in fiscal 2004 and (ii)&nbsp;offset by decrease
in the traveling, communication, 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 $22.3&nbsp;million in fiscal 2005 representing an
increase of 9.9% from $20.3&nbsp;million in fiscal 2004. This increase was due to increase in deposits
with banks by $79.5&nbsp;million to $411.6&nbsp;million in fiscal 2005 from $332.1&nbsp;million in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain on sale of shares in associated company/others. </I></B>In fiscal 2005, gain on sale of investments
was $Nil as compared to $2.7&nbsp;million in fiscal 2004. The gain of $2.7&nbsp;million in fiscal 2004 was
on account of the gain on sale of 1,000,000 Indian equity shares of Sify amounting to $2.6
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Gain/(loss) on foreign exchange transactions. </I></B>In fiscal 2005 and fiscal 2004, 81.8% and 84.5%
respectively, of our revenues were generated in U.S. dollars. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2005 was Rs. 44.85 against Rs. 45.96 in fiscal 2004. As at March
31, 2005, the Indian rupee depreciated to Rs. 43.62 against 43.40 at March&nbsp;31, 2004. As at March
31, 2004, the Indian rupee appreciated to Rs. 43.40 against Rs. 47.53 as at March&nbsp;31, 2003. As a
result of the average exchange rate during fiscal 2005 being lower than during fiscal 2004, loss
on foreign exchange transactions was $4.6&nbsp;million in fiscal 2005 as compared to a loss of $8.9
million in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Other income/(expenses), net. </I></B>Other income was $326 thousand in fiscal 2005, representing a
decrease of 85.6 % from $2.3&nbsp;million in fiscal 2004. The decrease in the other income is
primarily on account of loss on forward and options contracts amounting to $339 thousand in fiscal
2005 as compared to a gain of $2.4&nbsp;million in fiscal 2004. This decrease was partly offset by
increase in other income, net of other expenses to $665 thousand in fiscal 2005 as compared to a
loss of $91 thousand in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Income taxes. </I></B>Income taxes were $25.3&nbsp;million in fiscal 2005, representing an increase of 12.4%
from $22.5&nbsp;million in fiscal 2004.
</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 losses of associated
companies was $1.1&nbsp;million in fiscal 2005 as compared to $2.6&nbsp;million in fiscal 2004. Equity in
losses of Sify and CA Satyam amounted to $1.7&nbsp;million and $63 thousand respectively in fiscal 2005
as compared to $2.2&nbsp;million and $398 thousand respectively in fiscal 2004. These losses were
partially offset by equity in profit of Satyam Venture amounting to $706 thousand in fiscal 2005
as compared to equity in loss of $3 thousand in fiscal 2004.
</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 $153.8&nbsp;million in fiscal 2005,
representing an increase of 37.4% over net income of $111.9&nbsp;million in fiscal 2004. As a
percentage of total revenues, net income decreased to 19.4% in fiscal 2005 from 19.8% in fiscal
2004.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net cash provided by operating activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities was $162.7&nbsp;million, $171.3&nbsp;million and $89.2
million in fiscal 2006, 2005 and 2004, respectively.
</DIV>

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


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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and increase in net accounts receivable and unbilled revenues. Net accounts receivable and
unbilled revenues increased by $81.9&nbsp;million primarily as a result of an increase in our revenues
and increase in collection period. Accounts payable and accrued expenses increased by $38.1
million primarily on account of accrued compensation and benefits of $7.7&nbsp;million, increase in
sub-contracting charges payable by $1.6&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 $19.6&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
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2004, non-cash adjustments to reconcile the $111.9&nbsp;million net income to net cash
used in operating activities consisted primarily of depreciation expense of $24.4&nbsp;million. Net
accounts receivable and unbilled revenues increased by $22.5&nbsp;million primarily as a result of an
increase in our revenues. Increase in other working capital assets of $25.4&nbsp;million was primarily
on account of interest accrued on deposits placed with banks. Unearned and deferred revenues
increased because of advance billing on customers for services to be rendered in future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net cash used in investing activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was $5.2&nbsp;million in fiscal 2006 against net cash used
in investing activities of $115.5&nbsp;million and $60.0&nbsp;million in fiscal 2005 and 2004 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This decrease in net cash used in investing activities was primarily due to sale of shares
in 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities in fiscal 2005 increased by $55.5&nbsp;million to $115.5
million from $60.0&nbsp;million in fiscal 2004. This increase was primarily due to increase in
investments in bank deposits by $ 33.9&nbsp;million to $79.3&nbsp;million in fiscal 2005 as compared to
$45.4&nbsp;million in fiscal 2004, increase in purchases of premises, plant and equipment by $22.2
million to $39.0&nbsp;million in fiscal 2005 from $16.8&nbsp;million in fiscal 2004 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities in fiscal 2004 decreased by $212.0&nbsp;million to $60.0
million from $272.0&nbsp;million in fiscal 2003. This decrease was primarily related to a decrease in
investments in bank deposits and acquisitions and investments in associate companies. Investments
made in bank deposits in fiscal 2004 were $45.4&nbsp;million as compared to $259.3&nbsp;million in fiscal
2003. Net cash used for acquisitions and investment in associate companies decreased from $5.1
million in fiscal 2003 to zero in fiscal 2004. These decreases were partially offset by an
increase in purchase of premises and equipment by $5.8&nbsp;million in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net cash provided by/ (used in) financing activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was $6.1&nbsp;million in fiscal 2006 against net cash
used in financing activities was $12.9&nbsp;million and $ 11.6&nbsp;million in fiscal 2005 and 2004
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2006, $6.1&nbsp;million is used in financing activities. We received cash from issuance
of associate stock options of $31.0&nbsp;million, $3.6&nbsp;million from short term debt by our subsidiary
and $16.3&nbsp;million from long term debts by Nipuna. We used cash in repayment of loans amounting to
$3.9&nbsp;million. Cash dividends paid amounted to $41.3&nbsp;million in fiscal 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2005, $26.8&nbsp;million was raised from financing activities, primarily 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&nbsp;million in fiscal 2005 as compared to $26.2&nbsp;million in fiscal 2004.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2004, $20.5&nbsp;million was raised from financing activities, primarily from the
issuance of preferred stock (net of issuance costs) of $9.4&nbsp;million by our subsidiary and $9.3
million by associate stock options. We used cash to repay loans amounting to $2.5&nbsp;million and to
pay of dividend amounting to $26.2&nbsp;million in fiscal 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we had cash and cash equivalents of $292.8&nbsp;million, rupee denominated
loans from the Satyam Associate Trust of $1.3&nbsp;million secured by our shares held by the Satyam
Associate Trust, U.S. dollar denominated loans of Nipuna amounting to $16.1&nbsp;million and other
outstanding loans of $7.0&nbsp;million with maturities ranging from one to three years. As of March
31, 2006, we had an unused working capital line of credit of $7.7&nbsp;million from banks and unused
non-funded lines of credit of $4.4&nbsp;million from banks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table describes our outstanding credit facilities as of March
31, 2006
</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="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="23%">&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"><B>Amount</B></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="center" style="border-bottom: 1px solid #000000"><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" style="border-bottom: 1px solid #000000"><B>outstanding</B></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="center" 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="7"><B>(dollars in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Rupee loan of Satyam Associates Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cholamandalam</TD>
    <TD>&nbsp;</TD>

<TD align="right" valign="top" nowrap>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10.25%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fixed</TD>
</TR>
<TR valign="bottom">
    <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="right" valign="top">5.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>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">External commercial borrowing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BNP Paribas</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">10.5</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">Export packing credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BNP Paribas</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">4.1</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" style="background: #cceeff">
    <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 align="right" valign="top">2.9</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="1" align="center" valign="top" style="border-top: 1px solid #000000">&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">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="right" valign="top" nowrap><B>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.4</B></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="1" align="center" valign="top" style="border-top: 3px double #000000">&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate capital expenditures of approximately $75.0&nbsp;million in fiscal 2007,
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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have guaranteed payment of all sums payable by Nipuna to its two strategic investors,
Olympus Capital and Intel Capital, upon redemption of the $20&nbsp;million preference shares in Nipuna
held by them. These preference shares are to be mandatorily redeemed or converted into equity
shares no later than June&nbsp;2006, if Nipuna achieves certain targets for revenues and profits by
March&nbsp;31, 2006. If these targeted revenues and profits are not achieved along with other
triggering events, the investors have an option to either redeem the preference shares or convert
them. Although certain triggering events for early redemption as per the agreement have occurred
during the period January&nbsp;2004 to December&nbsp;2004, the investors waived their right of early
redemption. Further Nipuna has not achieved the targeted revenues and profits upto March&nbsp;2006. If
not earlier converted, these preference shares are redeemable on maturity in June&nbsp;2007 at a
redemption premium, which could range between 7.5% to 13.5% per annum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, depending upon certain triggering events, we may be required to subscribe to
US$20&nbsp;million in convertible debentures of Nipuna which would be convertible upon the election of
Nipuna into ordinary shares at any time. On January&nbsp;6, 2005, Nipuna obtained approval from a bank
for long-term borrowings up to US$20&nbsp;million with an interest of 0.95% above a six-month LIBOR.
Satyam Computer Services has given a corporate guarantee to the bank for this borrowing. As per
the terms of the facility, Nipuna was required to draw the funds prior to September&nbsp;30, 2005 and
Nipuna has got a further extension upto June&nbsp;30, 2006. The borrowing is repayable in 3&nbsp;years from
each draw down of the borrowing. As of March&nbsp;31, 2006, Nipuna has availed $16.1&nbsp;million under the
above arrangement. We expect that we will not be required to subscribe to the convertible
debenture described above
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our contractual obligations and commitments to make future
payments as of March&nbsp;31, 2006. The following table excludes our accounts payable, accrued
operating expenses and other current liabilities which are payable in normal course of operations.
We believe that the conversion of the Nipuna preference shares is more probable than redemption
and therefore have not included such redemption and the redemption premium payable, if redeemed as
per the terms of the agreement, in the following table.
</DIV>

<P align="center" style="font-size: 10pt">51
</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="40%">&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 nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Payments due as at March 31, 2006,</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: 0px solid #000000"><B>Within 1</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>1-3</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>3-5</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>After 5</B></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 nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</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">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.3</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">4.1</TD>
    <TD>&nbsp;</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">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1</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">26.7</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">26.7</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">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</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">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Letters of credit</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:30px; text-indent:-15px">Gratuity Plan</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">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Citisoft deferred and earn-out
consideration and EBT funding
<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.0</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">23.5</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
<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></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">2.7</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">3.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" 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 contractual cash obligations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>48.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>29.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>22.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>19.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>119.6</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" 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: 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>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"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Earn-out consideration of Knowledge Dynamics is based on certain
conditions.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on past performance and current expectations, we believe that our cash and cash
equivalents, short-term investments, 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.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have three associate stock option plans: our Associated Stock Option Plan, or ASOP,
established in May&nbsp;1998; our Associated Stock Option Plan B, or ASOP B, established in May&nbsp;1999;
and our Associated Stock Option Plan ADS, or ASOP ADS, established in May&nbsp;1999. 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ASOP</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for the ASOP as a fixed plan in accordance with Accounting Principles Board, or
APB, Opinion No.&nbsp;25. Under U.S. GAAP, the difference between the exercise price and the market
price on the date the warrants are granted to associates is required to be recognized as a
non-cash compensation charge and amortized over the vesting period of the equity shares underlying
the warrants. Under U.S. GAAP, in fiscal 2006 and 2005, we recognized deferred stock-based
compensation of $0.4&nbsp;million and $2.2&nbsp;million, and amortized and charged to earnings $0.4&nbsp;million,
$1.9&nbsp;million during the same periods, respectively.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ASOP B is substantially similar to the ASOP and is administered by the compensation
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 (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. Under U.S. GAAP, in fiscal 2006 and 2005, we
recognized deferred stock-based compensation of $0.5&nbsp;million and $(28) thousand and amortized and
charged to earnings $0.4&nbsp;million and $(27) thousand during the same periods, respectively.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. We
account for the ASOP ADS as a fixed option plan.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Nipuna ESOP options are granted at fair value to associates as determined by an
independent valuer as of the date of grant. We account for the Nipuna ESOP as a fixed option plan.
We expect that the exercise prices of options granted in the future under the plan will not be
less than the fair market value and therefore we do not expect to incur compensation expense with
</DIV>

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">respect to those future grants under current accounting rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Effect of recently issued accounting pronouncements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;16, 2004, the FASB issued FAS 123R, Share-Based Payment, an amendment of
FASB Statements No.&nbsp;123 and 95, that addressed the accounting for share-based payment transactions
in which an enterprise receives employee services in exchange for either equity instruments of the
enterprise or liabilities that are based on the fair value of the enterprise&#146;s equity instruments
or that may be settled by the issuance of such equity instruments. This statement eliminates the
ability to account for share-based compensation transactions using the intrinsic value method as
prescribed by Accounting Principles Board, or APB, Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees,&#148; and requires that such transactions be accounted for using a fair-value-based method
and recognized as expenses in our consolidated statement of operations. As of the required
effective date, the standard requires that the modified prospective method be used, which requires
that the fair value of new awards granted from the beginning of the year of adoption (plus
unvested awards as of the effective date) be expensed over the vesting period. In addition, the
statement encourages the use of the &#147;binomial&#148; approach to value stock options, which differs from
the Black-Scholes option pricing model that we currently use in the footnotes to our consolidated
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The revised FAS 123R as issued by FASB will have a significant impact on our consolidated statement
of income as Satyam Computer Services, our subsidiaries and our associated companies will be
required to expense the fair value of our stock option grants rather than expensing the intrinsic
value of stock options as is our current practice. FAS 123R is applicable to Satyam for annual
periods beginning after June&nbsp;15, 2005. Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, FASB Issued FAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections &#151; a
replacement of APB No.&nbsp;20 and FAS No.&nbsp;3&#148;. FAS 154 provides guidance on the accounting for and
reporting of accounting changes and error corrections. It establishes, unless impracticable,
retrospective application as the required method for reporting a change in accounting principle in
the absence of explicit transition requirements specific to the newly adopted accounting
principle. FAS 154 also provides guidance for determining whether retrospective application of a
change in accounting principle is impracticable and for reporting a change when retrospective
application is impracticable. The correction of an error in previously issued financial
statements is not an accounting change. However, the reporting of an error correction involves
adjustments to previously issued financial statements similar to those generally applicable to
reporting an accounting change retrospectively. Therefore, the reporting of a correction of an
error by restating previously issued financial statements is also addressed by FAS 154. FAS 154
shall be effective for accounting changes and corrections of errors made in fiscal years beginning
after December&nbsp;15, 2005. The adoption of this standard is not expected to have a material impact
on Satyam&#146;s consolidated financial statements.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

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

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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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenue recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues earned from services performed on a &#147;time-and-material&#148; basis are recognized as the
services are performed. IT services performed on time bound fixed-price engagements require
accurate estimation of the costs which include salaries and related expenses of technical
associates, related communication expenses, travel costs, scope and duration of each engagement.
Revenue and the related costs for these projects are recognized on percentage of completion, with
revisions to estimates reflected in the period in which changes become known. Provisions for
estimated losses on such engagements are made during the period in which a loss becomes probable
and can be reasonably estimated. We recognize revenue based on the completed-contract method where
the work to complete cannot be reasonably estimated.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#149;</B> significant underperformance relative to expected historical or projected future operating
results;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#149;</B> significant changes in the manner of our use of the acquired assets or the strategy for our
overall business;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#149;</B> significant negative industry or economic trends;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#149;</B> significant decline in our stock price for a sustained period; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#149;</B> our market capitalization relative to net book value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
a projected discounted cash flow method using a discount rate determined by our management to be
commensurate with the risk inherent in our current business model.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective April&nbsp;1, 2002, we adopted SFAS 142 which requires, among other things, the
discontinuance of amortization related to goodwill and indefinite lived intangible assets. These
assets will then be subject to an impairment test at least annually. We are required to perform
goodwill impairment tests on an annual basis and between annual tests in certain circumstances. We
performed an initial impairment review of goodwill on the adoption of SFAS 142 and also carried
out an annual impairment review in 2006. Based on these tests there is no impairment of goodwill
during the year ended March&nbsp;31, 2006.
</DIV>

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

<P align="center" style="font-size: 10pt">54
</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">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>Effects of Inflation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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 nowrap align="center" style="border-bottom: 1px solid #000000"><B>Month</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Month end</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Average</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD style="border-bottom: 1px solid #000000">&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">(Rupees)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December-04</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.44</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.44</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">    <TD><DIV style="margin-left:15px; text-indent:-15px">December-05</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.09</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: 12pt"><B>Risk Management Policy</B>
</DIV>


<P align="center" style="font-size: 10pt">55
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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 nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>As at 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>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>
</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"><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">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 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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>216.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>301.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>44.5</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 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>
<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 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>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The outstanding foreign exchange forward and options contracts as of March&nbsp;31, 2006
mature between one to eleven months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains/(losses) on foreign exchange forward and options contracts included under the head
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="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 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" 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>
</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"><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">$</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(0.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>0.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>2.4</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>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not engage in any off-balance sheet arrangements.
</DIV>

<P align="center" style="font-size: 10pt">56
</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>Foreign Currency Transactions/ Translation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal 2006, 2005 and 2004, 77.6%, 81.8% and 84.5%, 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The average exchange rate of rupee to U.S. dollar in fiscal 2006 was Rs. 44.18 against Rs.
44.85 in fiscal 2005. As at March&nbsp;31, 2006, the rupee depreciated to Rs. 44.48 against Rs. 43.62
as at March&nbsp;31, 2005. As at March&nbsp;31, 2005, the rupee depreciated to Rs. 43.62 against Rs.43.40 as
at March&nbsp;31, 2004. As a result, 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>

<P align="center" style="font-size: 10pt">57
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<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, 2006:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="33%">&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="54%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><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">50</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">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">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">V.P. Rama Rao
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">72</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1),(2),(3)</TD>
</TR>
<TR valign="bottom">
    <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">67</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">Krishna G. Palepu
</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</TD>
</TR>
<TR valign="bottom">
    <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">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(2)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(1), (2)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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="30%">&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="57%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><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">Anand T. R
</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, Vertical
Business Unit &#151; TIMES</TD>
</TR>
<TR valign="bottom">
    <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">50</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" style="background: #cceeff">
    <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">53</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">
    <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">47</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" style="background: #cceeff">
    <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">49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Director and Senior Vice President, Horizontal
Competency Unit &#151; SAP, Engineering and Spatial
Services</DIV></TD>
</TR>
<TR valign="bottom">
    <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">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Internal Information Systems and
Platinum Processes Group</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">47</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">Prabhat G.B
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">40</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Horizontal Business Unit &#151; Business Solution</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">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President, Commercial and Healthcare Businesses</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">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; 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">45</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">45</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">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Director and Senior Vice President &#151; Vertical
Business Unit &#151; Manufacturing, Energy, Oil and
Gas and Utilities</DIV></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">54</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">45</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:15px; text-indent:-15px">Director and Senior Vice President &#151; Regional
Business Unit-India, Middle, Africa &#038; Asia Pacific</DIV></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">41</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice President &#150; Commercial
and Contract Management</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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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.
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
</DIV>

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

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



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

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

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 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.&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jayaraman G. </I></B>has been our Sr.Vice President, Corporate Governance and Company Secretary since
April&nbsp;2005. From March&nbsp;2000 to September&nbsp;2000 he was Assistant Vice President and Company
Secretary and 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 associate member of the Institute of Company
Secretaries of India.
</DIV>

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

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

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Prabhat G. B. </I></B>has been our Director, Horizontal Business Unit &#151; Business Solution since
November&nbsp;2000. He is responsible for leading our business into the higher-end consulting service
offerings. He was co-founder and Director, Strategic Business Unit of Satyam Renaissance
Consulting from 1995, prior to which he worked for nearly 10&nbsp;years for the TVS Group. Mr.&nbsp;Prabhat
holds a Master of Science (Computer Sciences) degree from the Indian Institute of Technology,
Chennai.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ram Mynampati </I></B>has been our President, Commercial and Healthcare Businesses since October
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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 Chartered Accountant with experience in Financial Services and
Accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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.&nbsp;Boddupalli has a Bachelor degree of Technology in Electronics &#038; Communications 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>

<P align="center" style="font-size: 10pt">61
</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>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: 6pt"><B><I>V 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: 12pt"><B>Compensation</B>
</DIV>


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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Companies Act, our shareholders must approve the salary, bonus and benefits of all
associate directors at an annual general meeting of shareholders. At our general meeting held on
July&nbsp;23, 2004, our shareholders approved the employment terms and conditions for each of our
associate directors including the monthly salary, benefits, medical reimbursement and pension fund
contributions. These terms are made for a five-year period. The employment terms of Mr.&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006 for services rendered
in all capacities to us. Mr.&nbsp;Raju was appointed as managing director and chief executive officer
of our company in 1991. With the exception of four executive officers who are serving overseas,
none of our other executive officers earned a combined salary and bonus in excess of $100,000
during any of the last three fiscal years. With respect to the four key managerial personnel, we
have not provided individual compensation information because their compensation is attributed
predominantly to their overseas assignments, and if they were based in India, their individual
compensation would not have exceeded $100,000. In addition, none of our non-executive officers
received compensation from us of greater than $100,000 during fiscal 2006, other than Mr.&nbsp;Krishna
G Palepu who received payments towards professional fees by us of $155,000 during fiscal 2006.The
total remuneration received by our executive officers and directors for their services to us for
the fiscal year ended March&nbsp;31, 2006 was $4.3&nbsp;million. The total remuneration and the amounts in
the following table are in dollars based on the noon buying rate of Rs. 44.48 per dollar
on March&nbsp;31, 2006.
</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="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 nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Others </B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></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="right">$</TD>
    <TD align="right">83,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,856</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">62
</DIV>

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


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px 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, 2006, we granted options to our key managerial personnel to
purchase 326,541 shares under our ASOP B plan and 103,340 ADSs under our ASOP ADS plan. The
expiration dates for these options granted under ASOP B and ASOP ADS ranged from April&nbsp;23, 2010 to
April&nbsp;01, 2013. The exercise prices for the options granted under ASOP B, ranged from Rs512.10 to
Rs. 587.45 and the exercise price for the options granted under ASOP ADS was $22.52 to $31.60.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have three 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;
and our Associated Stock Option Plan ADS, or ASOP ADS, established in May&nbsp;1999. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aspects of the ASOP differ significantly from typical U.S. stock option plans. 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. As of March&nbsp;31, 2006, warrants (net of
forfeited and cancelled) to purchase 11,849,860 equity shares have been granted to associates
pursuant to ASOP, and warrants to purchase 11,796,560 equity shares have been exercised.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 2006, options (net of forfeited and
cancelled) to purchase 31,381,633 equity shares have been granted to associates under this plan
and warrants to purchase 8,578,939 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. The
</DIV>

<P align="center" style="font-size: 10pt">63
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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, 2006,
warrants (net of forfeited and cancelled) for 1,660,971 ADSs representing 3,321,942 equity shares
have been granted to associates under the ASOP ADS, and warrants to purchase 665,300 ADSs
representing 1,330,600 equity shares have been exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 12pt"><B><I>Nipuna ESOP</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Nipuna ESOP options are granted at fair value to associates as determined by an
independent valuer as of the date of grant. The options granted under the Nipuna ESOP vest in
three equal tranches at the end of the second, third and fourth year from the date of grant. As of
March&nbsp;31, 2006, options (net of forfeited and cancelled) for 1,215,506 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association set the minimum number of directors at three and the maximum
number of directors at 12. We currently have seven 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="2%" style="background: transparent">&nbsp;</TD>

<TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Ramalinga Raju and B. Rama Raju are permanent directors and are not subject to retirement
by rotation. Dr.&nbsp;Managalam Srinivasan, Krishna G. Palepu, Vinod K. Dham, V.P. Rama Rao and M
Rammohan Rao 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 V.P. Rama Rao, Dr.&nbsp;Mangalam Srinivasan and M Rammohan Rao each of whom is an
independent director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 V.P. Rama Rao, Dr.&nbsp;Mangalam Srinivasan, Vinod K
Dham and M.&nbsp;Rammohan Rao each of whom is an
independent director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investors&#146; grievance committee of the board of directors formed in January&nbsp;2001 focuses
on strengthening investor relations and addressing investors&#146; concerns. The members of the
committee are V.P. Rama Rao, who is an independent director, and B. Rama Raju, Managing Director
and CEO.
</DIV>

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


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 was 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
$155,000 in fiscal 2006.
</DIV>

<P align="center" style="font-size: 10pt">64
</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>Employment, Severance and Other Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Association provides that directors are appointed by the shareholders by
resolutions passed at general meetings; however, the board of directors has the power to appoint
additional directors for a period up to the date of the next annual general meeting. Key
managerial personnel are appointed by the management. There are no severance agreements with our
key managerial personnel.
</DIV>

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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 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 information with respect to the beneficial ownership of our
equity shares as of March&nbsp;31, 2006 by each of our directors and our chief executive officer and
all of our directors and executive officers as a group. The table gives effect to equity shares
issuable within 60&nbsp;days of March&nbsp;31, 2006 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="46%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="8%">&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="center" style="border-bottom: 1px solid #000000">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">14,593,000 </TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.49</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">13,272,000</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.09</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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" style="background: #cceeff">
    <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">
    <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">28,593,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.88</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 3,874,000 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>Includes 4,047,000 equity shares held by B. Ramalinga Raju&#146;s wife, B.
Nandini Raju. B. Ramalinga Raju disclaims beneficial ownership of any equity
shares held by B. Nandini Raju.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than B. Rama Raju and B Ramalinga Raju, none of our directors or executive
officers beneficially owned more than 1% of our equity shares as of March&nbsp;31, 2006.
</DIV>
<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;No person or group of affiliated persons who is known to us to beneficially own 5%
or more of our equity shares as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, 575,231 of our equity shares, representing 0.18% of our outstanding
shares, were held by a total of 243 holders of record with addresses in the United States. As of
March&nbsp;31, 2006, we have issued 32,340,300 ADSs (representing 64,680,600 equity shares)
and which represent 19.9% of our outstanding equity shares and which are held by approximately 13
beneficial holders.
</DIV>

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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 2006, 2005 and
</DIV>

<P align="center" style="font-size: 10pt">65
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">fiscal 2004, we provided infrastructure and other services to Satyam Venture, which amounted
to $0.5&nbsp;million, $0.3&nbsp;million and $1.2&nbsp;million respectively. For fiscal 2006, 2005 and fiscal
2004, we received services from Satyam Venture, which amounted to $8.6&nbsp;million, $7.1&nbsp;million and
$5.4&nbsp;million respectively. As of March&nbsp;31, 2006 and 2005, we owe $1.8&nbsp;million and $3.1&nbsp;million to
Satyam Venture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2006 and 2005, Sify rendered services to us aggregating to $2.9&nbsp;million and $1.4
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<U> </U>
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have elected to provide financial statements pursuant to Item&nbsp;18 of Form 20-F.
No significant change has occurred since the date of our annual financial statements for fiscal
2006.
</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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;).
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. See note 23 to
our fiscal 2006 financial statements included in this Annual Report.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Rs1,820.5
million ($ 41.3&nbsp;million), Rs. 1,722.7&nbsp;million ($37.6&nbsp;million) and Rs. 1,207.0&nbsp;million ($26.2
million) in fiscal 2006, fiscal 2005 and fiscal 2004 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Owners of ADSs will be entitled to receive dividends payable in respect of the equity shares
represented by such ADSs. Cash dividends in respect of the equity shares represented by the ADSs
will be paid to the depositary in rupees and, will generally be converted by the depositary into
U.S. dollars and distributed, net of depositary fees and expenses, to the holders of such ADSs.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
equity shares are traded in India on Bombay Stock Exchange Limited and the National
Stock Exchange. Our ADSs evidenced by American Depositary
Receipts, or ADRs, are traded in the United States on the New York Stock Exchange. Each ADS
represents two equity shares. The ADRs evidencing ADSs were issued by our depositary, Citibank,
N.A., pursuant to a Deposit Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of our outstanding equity shares (including the underlying shares for ADSs) as of
</DIV>

<P align="center" style="font-size: 10pt">66
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">March, 31, 2006 was 324,449,539. As of March&nbsp;31, 2006, there were 32,340,300 ADSs outstanding
(representing 64,680,600 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Rupee price per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>U.S. dollar price</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>equity share(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>per equity share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fiscal year ended March 31,(2)</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>
    <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>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">331.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.27</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">291.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.68</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">391.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.93</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">442.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.70</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">862.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007(though April&nbsp;21, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">890.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">755.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 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">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">338.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.44</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">394.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.39</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">442.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.15</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">424.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.68</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>
    <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">517.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.38</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">566.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">474.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.80</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">741.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">543.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.08</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">862.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.03</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>
    <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;21, 2006)</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"><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;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">616.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">543.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.04</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">679.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">741.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">649.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.44</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">775.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">719.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">862.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">764.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006(Though April&nbsp;21, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">890.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">755.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.98</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>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.</TD>
</TR>

</TABLE>



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



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">67
</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">



</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="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="7" style="border-bottom: 1px solid #000000"><B>Price per ADS</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>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</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>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">2002 (since May&nbsp;15, 2001)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.05</TD>
    <TD>&nbsp;</TD>
</TR>
<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">13.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.93</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">35.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.25</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">28.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.00</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">24.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007 (through April&nbsp;21, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Fiscal 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>
</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">23.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.00</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">24.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.06</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">28.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.06</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">26.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.75</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>
</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">26.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.00</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">30.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.75</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">37.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.25</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">43.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.60</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;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006(through April&nbsp;21,2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.47</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">68
</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">
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 its
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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table compares our principal corporate governance practices to those required
of U.S. companies.
</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="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Standard for U.S. Listed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Satyam Computer Services</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Limited&#146;s Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A majority of the board
must consist of independent directors. </DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four of our seven directors,
namely Mr. VP Rama
Rao, Dr.&nbsp;Mangalam Srinivasan,
Mr. Vinod K Dham and Mr. M
Rammohan Rao, are independent
within the meaning of the
NYSE standards. </DIV></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"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, at our April&nbsp;21, 2006 meeting
of our Board of Directors, our directors have
proposed that Mr.&nbsp;Ram Mynampati, one of our
key management personnel, to be nominated to
the board of directors, subject to
shareholder approval at the forthcoming
annual general meeting. Mr.&nbsp;Ram Mynampati
would not qualify as an independent director
as he is an employee of our Company. If this
appointment is approved, our Board will
comprise eight directors, four of them will
be independent and four will be
non-independent. This 50:50 split is
permitted under corporate governance in
India.</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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The non-management directors
of each company must meet at regularly
scheduled executive sessions
without management.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: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"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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)&nbsp;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 </DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have an audit committee which
meets all of the requirements
of Rule&nbsp; 10A-3.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">69
</DIV>

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<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="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Standard for U.S. Listed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Satyam Computer Services</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Limited&#146;s Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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></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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The audit committee must consist of at
least three members, and each
member must be independent within
the meaning established by the
NYSE.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee consists of
three members and all the
members are independent under
the NYSE&#146;s rules.</DIV></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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The audit committee must have a written
charter that addresses the
committee&#146;s purpose and
responsibilities.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee has a charter
outlining the committee&#146;s
purpose and responsibilities.</DIV></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"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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></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: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"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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></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: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"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">70
</DIV>

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<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="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Standard for U.S. Listed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Satyam Computer Services</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Limited&#146;s Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have an individual serving
on its 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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each listed company must have an
internal audit function.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a separate department for
its internal audit function.</DIV></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"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Listed companies must have a
compensation committee composed entirely of
independent board members as
defined by the NYSE listing
standards.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The committee must have a written
charter that addresses its purpose and
responsibilities.</DIV>
<DIV style="margin-left:21px; text-indent:-21px"><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>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: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"><B>Nominating/Corporate </B><BR><B>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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Listed companies must have a nominating/corporate
governance committee
composed entirely of independent
board members.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have a
nominating/corporate
governance committee.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="margin-left:21px; text-indent:-21px"><BR>The committee must have a written
charter that addresses its purpose and
responsibilities, which include
(i)&nbsp;identifying qualified individuals to
become board member; (ii)&nbsp;selecting, or
recommending that the board select, the</DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">71
</DIV>

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<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="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Standard for U.S. Listed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Satyam Computer Services</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Limited&#146;s Practice</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;director nominees for the next annual
meeting of shareholders; (iii)&nbsp;developing
and recommending to the board a set of
corporate governance principles applicable
to the company; (iv)&nbsp;overseeing the
evaluation of the board and management;
and (v)&nbsp;conducting an annual performance
evaluation of the committee.</DIV></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: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"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders must be given the
opportunity to vote on all
equity-compensation plans and
material revisions thereto, with
limited exceptions.</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is in compliance with
this requirement.</DIV></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"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Listed companies must adopt and disclose
corporate governance
guidelines. </DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are is 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 ourdomestic
shareholders and ADS
holders annually.</DIV></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"><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: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"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 registration statement on Form F-1 filed with the
Securities and Exchange Commission on May&nbsp;7, 2001 (Registration No.&nbsp;333-13464).
</DIV>

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our Memorandum of Association, the main objectives of our company include, but are not
limited to:
</DIV>

<P align="center" style="font-size: 10pt">72
</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"><B>&#167;</B></FONT></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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 12pt"><B>Managerial Remuneration</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a public company, the total managerial remuneration in any year cannot exceed 11 per cent
of our profits in that year. In addition, the remuneration payable to a managing or any whole-time
director in any year cannot exceed 5 per cent of our net profits in that year. If there is more
than one managing or whole-time director, then the aggregate remuneration to all of them cannot
exceed 10 per cent of our net profits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our authorized share capital is 375,000,000 equity shares, par value Rs. 2 per share. The
equity shares are our only class of share capital. However, our Articles of Association and the
Companies Act permit us to issue preference shares in addition to the equity shares. The rights
attached to a class of shares may, subject to the provisions of the Companies Act, be varied only
with either the written consent of the holders of 75% of the issued shares of that class or by
special resolution passed at a separate meeting of the holders of that class.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We paid out dividends of Rs$41.3&nbsp;million ($1,820.5) Rs. 1,722.7&nbsp;million ($37.6&nbsp;million) and
Rs. 1,207.0&nbsp;million ($26.2&nbsp;million) in fiscal 2006, fiscal 2005 and fiscal 2004 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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>

<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"><B>&#167;</B></FONT></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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><FONT face="wingdings"><B>&#167;</B></FONT></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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 share issued by us was in September&nbsp;1999. However, at our Board
meeting held on April&nbsp;21, 2006, our board of directors recommended the issuance of bonus shares in
the ratio of 1:1 (one equity share for every one share held) for all existing shares including
American Depository Shares. This proposed bonus issue is subject to approval by our shareholders
at the upcoming annual general meeting of shareholders, expected to be held in August&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
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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">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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 a detailed version of 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>

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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>Register of Shareholders; Record Dates; Transfer of Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain a register of shareholders. For the purpose of determining the shares entitled to
annual dividends, the register is closed for a specified period before the annual general meeting.
The date on which this period begins is the record date.
</DIV>

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

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

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


<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to June&nbsp;1, 2000, investment in Indian securities was regulated by the Indian Foreign
</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">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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Reserve Bank of India under the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993, as modified from time to time, notified by the Government of India. This
change was effected through the guidelines for ADR and GDR issues by Indian companies issued by
the Ministry of Finance on January&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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Government
of India 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Government of India to negotiate with
large foreign companies interested in making long-term investments in India. Furthermore,
henceforth no prior approval of the Reserve Bank of India is required although a post-investment
declaration in giving details of the foreign investment in the company pursuant to the ADR issue
must be filed with the Reserve Bank of India within thirty days of an ADR offering.
</DIV>

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

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;1994, the Government of India announced that purchases by foreign investors of ADSs
and foreign currency convertible bonds of Indian companies will be treated as foreign direct
investment in the equity issued by Indian companies for such offerings.
</DIV>

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

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;1992, the Government of India 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)
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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 12pt"><B>Ownership Restrictions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Open market purchases of securities of Indian companies in India by Foreign Direct Investors
above the ownership levels set forth above require Government of India 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

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

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

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

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</DIV>

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<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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 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.</TD>
</TR>

</TABLE>
</DIV>

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

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Government of India, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The capital gains tax is computed by applying the appropriate tax rates to the difference
between the sale price and the purchase price of the ADSs or equity shares.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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
</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">tax returns in India and undergo the usual assessment procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 Government of India 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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. </I></B>The Finance Bill (No.&nbsp;2) 2006 (&#147;Finance Bill&#148;), had 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>No change in the tax rates for companies or individuals is introduced: the effective corporate tax rate for domestic
companies stays at 33.66% and for foreign companies at 41.82%</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 Rate of Minimum Alternate Tax (&#147;MAT&#148;) that is levied on companies from 7.5% to 10%; however, the carryforward
period for MAT credit shall be increased from 5&nbsp;years to 7&nbsp;years</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>Long-term capital gains on the sale of listed securities, which is otherwise tax exempt, will now have to be considered for
MAT purposes</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 Securities Transaction Tax (STT)&nbsp;by 25% for all categories w.e.f. from June&nbsp;1, 2006</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">83
</DIV>

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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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Finance Bill received the assent of the President on April&nbsp;18, 2006 and has been enacted.
Consequently, the above proposed provisions have come into effect.
</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="margin-left: 3%; text-indent: -3%; margin-right: 0%; 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. person.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, 2009, 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.
</DIV>

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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For foreign tax credit purposes, dividends distributed by us with respect to ADSs or equity
shares will generally constitute &#147;passive income&#148; or, in the case of certain U.S. Holders,
&#147;financial services income&#148;. For taxable years beginning after December&nbsp;31, 2006; 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company rules discussed below, upon a sale or other
</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A non-U.S. corporation is considered a passive foreign investment company (a &#147;PFIC&#148;) 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

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

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

<P align="center" style="font-size: 10pt">86
</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 Internal Revenue Service and furnishing any required information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
450 Fifth Street, N.W.<BR>
Room&nbsp;1024<BR>
Washington, D.C. 20549
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copies of these materials can also be obtained from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.
</DIV>

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

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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="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: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" 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="7" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</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>Total Recorded</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Total Recorded</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" 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="3" 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="3" 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="3" 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 nowrap align="center" colspan="23"><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">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>
</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">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</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>
</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 nowrap align="right">&nbsp;</TD>
    <TD align="center">5.33%</TD>
    <TD nowrap>&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="center">3.61%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&#151;</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 termdebt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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 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">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right">&nbsp;</TD>
    <TD align="center">5.58%</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&#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="center">&#151;</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">$</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.3</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">4.1</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 nowrap align="right">&nbsp;</TD>
    <TD align="center">7.78%</TD>
    <TD nowrap>&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="center">9.49%</TD>
    <TD nowrap>&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="center">10.93%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

<P align="center" style="font-size: 10pt">87</DIV>

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



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2006 and 2005, 98.6% and 96.6 %, 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 2.3 %, or $24.9&nbsp;million, in
fiscal 2006, 1.8 %, or $14.5&nbsp;million, in fiscal 2005 while a hypothetical 10% decrease in the
value of the Indian rupee against all other currency would increase revenue by 2.3% or $24.9
million in fiscal 2006 and 1.8 % or $14.5&nbsp;million in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had outstanding forward and options contract amounting to $216.0&nbsp;million and $301.5
million as at March&nbsp;31, 2006 and 2005, respectively. Gains/ (losses)&nbsp;on outstanding forward and
options contracts amounted to $(1.4) million and $1.1&nbsp;million during fiscal 2006 and 2005
respectively. Using sensitivity analysis, a hypothetical 1% increase in the value of the Indian
rupee against all other currencies would decrease these gains by $0.8&nbsp;million in fiscal 2006 and
by $1.6&nbsp;million in fiscal 2005 while a hypothetical 1% decrease in the value of the Indian rupee
against all other currency would increase these gains by $0.8&nbsp;million in fiscal 2006 and $1.6
million in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 $25.7&nbsp;million in fiscal 2006 and
$16.1&nbsp;million in fiscal 2005. This amount would be offset, in part, from the impacts of local
income taxes and local currency interest expense. As of March&nbsp;31, 2006, we had approximately
$277.3&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>

<P align="center" style="font-size: 10pt">88
</DIV>

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

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Securities and
Exchange Commission on May&nbsp;14, 2001 (Registration No.&nbsp;333-13464). As of March&nbsp;31, 2006,
approximately $106.4&nbsp;million of these proceeds has been used for prepayment of loans ($26.9
million); strategic investments in our subsidiaries ($32.7&nbsp;million); development of facilities and
infrastructure ($21.2&nbsp;million) and working capital and general corporate purposes ($25.6&nbsp;million).
We intend to use the balance of the net proceeds to fund expansion of our existing facilities and
communication network in different locations in India and outside India; to develop new facilities
within and outside India; to investment in joint ventures and other strategic investments; and for
working capital and general corporate purposes. None of the net proceeds from our ADS offering
were paid, directly or indirectly, to any of our directors, officers or general partners or any of
their associates, or to any persons owning ten percent or more of any class of our equity
securities, or any affiliates.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. Securities and Exchange
Commission&#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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 with a reasonable level of assurance that
our disclosure controls and procedures were effective as of March&nbsp;31, 2006.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Audit Committee members (as of March&nbsp;31, 2006) are V.P. Rama Rao, Mangalam
Srinivasan and M Rammohan Rao, each of whom is an independent director pursuant to the applicable
rules of the Securities Exchange Commission and the NYSE. Mr.&nbsp;Krishna G Palepu stepped down from
the Audit Committee in fiscal 2006 and was replaced by Mr.&nbsp;M Rammohan Rao 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 Securities and Exchange
Commission. 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>

<P align="center" style="font-size: 10pt">89
</DIV>

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

<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<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="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: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><I><font style="font-size:10pt">(Amounts in
$)</font></I></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>



<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3"><B>Fiscal Year Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Audit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Audit Related</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Tax</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B></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 nowrap align="left" colspan="3"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</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">$</TD>
    <TD align="right">819,092</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">273,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">148,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">117,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">95,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">634,187</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit of the standalone financial statements, consolidated financial statements of the
Company and its 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit Related Services represent assurance and related services that are related to the
performance of the audit of the Company&#146;s 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: 12pt"><B>Other Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Work permit related services and other advisory services
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2006, the Audit Committee pre-approved a list of services that could be
rendered by the principal accountant in fiscal 2006 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 2005 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 PURCHASES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>

<P align="center" style="font-size: 10pt">90
</DIV>
</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 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>
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Statement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following financial statements are filed as part of this document, together with the
report of the independent auditors:
</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Report of Price Waterhouse, Independent Registered Public Accounting Firm</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consolidated Balance Sheets as of March&nbsp;31, 2005 and 2006</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consolidated Statements of Income for the years ended March&nbsp;31, 2004, 2005
and 2006</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consolidated Statements of Shareholders&#146; Equity and Comprehensive Income
for the years ended March&nbsp;31, 2004, 2005 and 2006.</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consolidated Statements of Cash Flows for the years ended March&nbsp;31, 2004,
2005 and 2006</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notes to the Consolidated Financial Statements</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"><B>&#167;</B></FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial Statement Schedule &#151; Valuation and qualifying accounts</TD>
</TR>

</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="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</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. (1)</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. (2)</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">
    <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, Citibank, N.A. and the holders from time to time of American
Depositary Receipts issued thereunder (including as an exhibit, the form of
American Depositary Receipt). (3)</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 Deed of Trust). (2)</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 (2)</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. (2)</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">Investor Rights Agreement, dated October&nbsp;7, 2002, by and among Sify
Limited (formerly Satyam Infoway Limited), Satyam Computer Services Limited,
SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (4)</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 Subsidiaries. (5)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Price Waterhouse, Independent Registered Public Accounting
Firm. (5)</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 Sarbane
Oxley Act. (5)</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 Sarbane
Oxley Act. (5)</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. (5)</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 Financial Officer under Section&nbsp;906 of the
Sarbanes-Oxley Act. (5)</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>Previously filed as an exhibit to our Registration Statement on Form F-3
(File No.&nbsp;333-122996) filed on February&nbsp;25, 2005 and incorporated herein by
reference.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">91
</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">





<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">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed as an exhibit to our Registration Statement on Form F-1
(File No.&nbsp;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&nbsp;20&#151;F (File No.&nbsp;001&#151;15190)
filed on August&nbsp;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 furnished by Sify Limited to the Commission as an exhibit to
Form 6-K (file No.&nbsp;00027-663) on October&nbsp;10, 2002 and incorporated herein 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>Filed herewith.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">92
</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="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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SATYAM COMPUTER SERVICES LIMITED</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ B. Rama Raju</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">B. Rama Raju</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Managing Director and Chief
Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Srinivas V</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Srinivas V</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">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Senior Vice
President &#038; Chief Financial
Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</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">Date: April&nbsp;28, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&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>


<P align="center" style="font-size: 10pt">93
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</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="92%">&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="3">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Balance Sheets as of March&nbsp;31, 2006 and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Income for the three years ended March&nbsp;31, 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Shareholder&#146;s Equity and Comprehensive Income for
the three years ended March&nbsp;31, 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Consolidated Statements of Cash Flows for the three years ended March&nbsp;31, 2006</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#306">Notes to the Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#307">Financial Statement Schedule</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-34</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt">F-1
</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">
<A name="301"></A>
</DIV>

<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"><B>To the Board of Directors and Shareholders of Satyam Computer Services Limited:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of income, of shareholders equity and comprehensive income and of cash flows present
fairly, in all material respects, the financial position of Satyam Computer Services Limited and
its subsidiaries at March&nbsp;31, 2006 and 2005, and the results of their operations and their cash
flows for each of the years in the three year period ended March&nbsp;31, 2006 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 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"><B>Price Waterhouse</B>

</DIV>

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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>April&nbsp;21, 2006</B>

</DIV>

<P align="center" style="font-size: 10pt">F-2
</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>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Consolidated Balance Sheets</B></DIV>



<DIV align="left" style="font-size: 10pt"><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="center" colspan="7" 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 nowrap align="center" colspan="3"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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 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 cash equivalents</DIV></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>
</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">403.7</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 receivable, net of allowance for doubtful debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.9</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">41.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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">Deferred income taxes</DIV></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">9.1</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">48.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&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>1,018.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>332.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">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>
</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">411.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments in associated companies</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">23.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premises and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.6</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">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</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 assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,181.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>884.1</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">
    <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" style="background: #cceeff">
    <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">
    <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">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</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">11.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</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">108.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.8</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">11.8</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"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>139.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>86.1</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">17.9</TD>
    <TD>&nbsp;</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">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</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" style="background: #cceeff">
    <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>165.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>96.2</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">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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interest</B></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">&#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>
</TR>
<TR valign="bottom">
    <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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.05% Cumulative convertible redeemable preference shares, par value Rs.10
(US$0.22)* per share</DIV></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>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>(100&nbsp;million preference shares authorized, 91,009,999 and 91,009,999 preference
shares issued as of March&nbsp;31, 2006 and 2005 respectively)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></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>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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock &#151; par value Rs.2 (US$0.04)* per equity share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(<I>375&nbsp;million equity shares authorized, 324,449,539 and 319,265,291 equity shares
issued as of March&nbsp;31, 2006 and 2005 respectively</I>)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">433.6</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">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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">289.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">15.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>995.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>769.4</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares held by the SC-Trust under associate stock option plan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>(1,193,140 and 1,424,340 equity shares as of March&nbsp;31, 2006 and 2005 respectively)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"></TD>
    <TD nowrap></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"></TD>
    <TD nowrap></TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <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>994.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>767.9</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1,181.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>884.1</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: 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"><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, 2006, 1US$ = Rs 44.48</I></TD>
</TR>

</TABLE>



<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">F-3
</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>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Consolidated Statements of Income</B></DIV>



<DIV align="left" style="font-size: 10pt"><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="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" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>2004</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"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&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="right">$</TD>
    <TD align="right">1,096.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">793.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">566.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD>Cost of revenues<BR>
(<I>Includes stock-based compensation of US$Nil, US$0.8 and US$0.9 for the
three years ended March&nbsp;31, 2006, 2005 and 2004 respectively)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(689.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(506.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(343.6</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:15px; text-indent:-15px"><B>Gross profit</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>222.8</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD>Selling, general and administrative expenses<BR>
<I>(Includes stock-based compensation of US$0.8, US$1.1 and US$0.8 for the
three years ended March&nbsp;31, 2006, 2005 and 2004 respectively)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(187.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(124.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(101.7</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="right">&nbsp;</TD>
    <TD align="right"><B>(187.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(124.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(101.7</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>219.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>162.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>121.1</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">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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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">Gain on sale of investments (Refer note 7)</DIV></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>
</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>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.9</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 nowrap align="right">&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>
</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>287.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>180.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>137.0</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="right">&nbsp;</TD>
    <TD align="right">(37.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22.5</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">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>Income before equity in earnings/(losses) of associated companies</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>114.5</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 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">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</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:15px; text-indent:-15px"><B>Net income</B></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>$</B></TD>
    <TD align="right"><B>153.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>111.9</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"><!-- 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">
    <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">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.35</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">Basic</DIV></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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></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>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" 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 accompanying notes form an integral part of these consolidated financial statements.
</DIV>



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

<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Consolidated Statements of Shareholders&#146; Equity and Comprehensive Income</B></DIV>



<DIV align="left" style="font-size: 10pt"><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 nowrap align="center" colspan="6"><B>Common Stock</B></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 nowrap align="center" colspan="2"><B>Retained</B></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"><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>&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>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>earnings</B></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>by</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shareholders'</B></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>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>&nbsp;</TD>
    <TD>&nbsp;</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>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Equity</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>income/(loss)</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>
</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, 2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>314,542,800</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>17.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>406.7</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 nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(0.9</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>87.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(20.1</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2.3</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>487.6</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">111.9</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">111.9</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 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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&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"></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">49.5</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">49.5</TD>
    <TD>&nbsp;</TD>
</TR>



<TR style="font-size: 1px">
    <TD colspan="33" align="left">&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left">&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 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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>161.4</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">1,708,910</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">8.3</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.4</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">&#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">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">&#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">&#151;</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">0.8</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">(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>&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">1.7</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">1.7</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">0.4</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">0.6</TD>
    <TD>&nbsp;</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">Cash dividend paid at the rate of US$0.08 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>316,251,710</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</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 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">F-5
</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>
<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 nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>Common Stock</B></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 nowrap align="center" colspan="3"><B>Retained</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>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>&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>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" style="border-bottom: 1px solid #ffffff"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>other</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'</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 nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>unissued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>Equity</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>income/(loss)</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>
</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, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>316,251,710</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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="right"><B>$</B></TD>
    <TD align="right"><B>172.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>29.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(1.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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>&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>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">3,013,581</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="right">&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$0.12 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>319,265,291</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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 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">F-6
</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>
<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 nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>Common Stock</B></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 nowrap align="center" colspan="3"><B>Retained</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>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>&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>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" style="border-bottom: 1px solid #ffffff"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>other</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'</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 nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>unissued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>SC-Trust</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>Equity</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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>income/(loss)</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>
</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, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>319,265,291</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/(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">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">5,184,248</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$0.11 per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="37" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance as of March&nbsp;31, 2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>324,449,539</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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">&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="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>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: 6pt">The accompanying notes are an integral part of these consolidated financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-7
</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"><B>Satyam Computer Services Limited</B></DIV>


<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="left" style="font-size: 10pt"><B>Consolidated Statements of Cashflows</B></DIV>



<DIV align="left" style="font-size: 10pt"><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="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="center" colspan="3"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</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>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:15px; text-indent:-15px"><B>Net income</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">111.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; 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">31.5</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">24.4</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">0.8</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">1.6</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">(5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</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">0.2</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">Minority Interest</DIV></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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Equity in 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">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in assets and liabilities:</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">Accounts receivable, net and unbilled revenue on contracts</DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22.5</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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24.7</TD>
    <TD nowrap>)</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">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</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 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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</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">40.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</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">6.1</TD>
    <TD>&nbsp;</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">&#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>Net cash provided by operating activities</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>89.2</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; 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 valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Proceeds from maturity of 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">332.1</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:45px; 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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(411.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <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">(54.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">0.3</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">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <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">(12.1</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>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(1.6</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>
</TR>
<TR valign="bottom">
    <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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">62.3</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">6.1</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>Net cash used in investing activities</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(60.0</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; 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">
    <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">3.6</TD>
    <TD>&nbsp;</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">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(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">(2.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <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">16.3</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">1.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(2.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of common stock</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Shares subscribed but unissued</DIV></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>
    <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">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">9.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">(41.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26.2</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>Net cash provided by/(used in) financing activities</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(11.6</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</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>Net change in cash and cash equivalents</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>24.5</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at the beginning of the period</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.2</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents at the end of the period</B></DIV></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>$</B></TD>
    <TD align="right"><B>129.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>86.7</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>
<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>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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Cash paid during the period 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" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></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>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">31.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>Non-cash items:</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital leases and hire purchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.3</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 Citisoft Plc</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">&#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:30px; text-indent:-15px">Deferred consideration for purchase of Knowledge Dynamics Pte Ltd</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">&#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>
<!-- 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">F-8
</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>
</DIV>

<DIV align="left">
<A name="306"></A>
</DIV>

<DIV align="left" style="font-size: 10pt">Notes to the Consolidated Financial Statements</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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 and
Hungary. 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 wholly 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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Summary of Significant Accounting Policies</B>
</DIV>


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


<P align="center" style="font-size: 10pt">F-9
</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="left" style="font-size: 10pt; margin-top: 6pt"><B>c)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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. 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 for the years ended March&nbsp;31, 2006, 2005 and 2004 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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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 over their estimated useful life or the lease
term, as appropriate. Costs of application software for internal use are
</DIV>


<P align="center" style="font-size: 10pt">F-10
</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: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Software Development Costs</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam capitalizes internally generated software development costs under the provisions of
Statement of Financial Accounting (SFAS)&nbsp;86, <I>&#147;Accounting for Costs of Computer Software to be Sold,
Leased or Otherwise Marketed.&#148; </I>Capitalization of computer software development cost begins upon the
establishment of technological feasibility, which Satyam has defined as the completion of a
prototype. Costs incurred prior to establishment of technological feasibility and other research
and development expenses are charged to income as incurred. Costs incurred by Satyam between
completion of the prototype and the point at which the product is ready for general release have
been insignificant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research and development expenses charged to income amounted to US$0.5&nbsp;million and US$0.6&nbsp;million
and US$0.6&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>h)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Goodwill and Other Intangible Assets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill represents the difference between either a) the purchase price and the fair value of
assets and liabilities acquired and/or b) the purchase price and additional interest in
subsidiaries acquired from minority shareholders. Upto March&nbsp;31, 2002, goodwill and other
intangible assets including license fees were amortized over the useful lives principally over a
period of 5&nbsp;years based on management&#146;s estimate. Goodwill is tested for impairment annually and
reviewed for triggering events when circumstances indicate that the carrying amount may not be
recoverable, and written down when impaired, rather than being amortized as required by previous
standards. Further in accordance with SFAS 142 purchased intangible assets other than goodwill are
amortized over their useful lives unless these lives are determined to be indefinite.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>i)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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; on April&nbsp;1, 2002. 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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam has evaluated its investment policies consistent with the provisions of SFAS 115,
<I>&#147;Accounting for Certain Investments in Debt and Equity
Securities&#148;</I>, and determined that all of its
marketable investment securities are to be classified as available-for-sale. Accordingly, such
securities are carried at fair value with unrealized gains and losses, net of taxes, reported as a
separate component of other comprehensive income/(loss) until realized. Realized gains and losses
and decline in value judged to be other-than-temporary are included in other income. The cost of
securities sold is based on the first-in-first-out (FIFO)&nbsp;method. Interest and dividends on
securities classified as available-for-sale are recognized when earned and included in other
income. Other investments that are not marketable are carried at cost, subject to tests of other
than temporary impairment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>k)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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$2.2&nbsp;million and US$1.1&nbsp;million and US$1.0&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and
2004 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-11
</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>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>


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


<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: 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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>p)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Stock-Based Compensation</B>
</DIV>

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


<P align="center" style="font-size: 10pt">F-12
</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: 12pt"><B>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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 years ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</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="11"><I>(US$ in millions except per share data)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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</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">&#151;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>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>111.9</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" 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">&#151;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>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>88.3</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" 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: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>
    <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">&#151;As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.28</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>
    <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">&#151;As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.28</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"><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>

<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="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="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>2006</B></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right" colspan="3"><B>2004</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">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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.61</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">57.22</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">61</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">69</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>
    <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" colspan="2">1.26</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">2.03</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">2.69</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>q)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Recently issued accounting pronouncements</B>
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;16, 2004, the FASB issued FAS 123R, &#147;<I>Share-Based Payment, an amendment of FASB
Statements No.&nbsp;123 and 95</I>,&#148; that addressed the accounting for share-based payment transactions in
which an enterprise receives employee services in exchange for either equity instruments of the
enterprise or liabilities that are based on the fair value of the enterprise&#146;s equity instruments
or that may be settled by the issuance of such equity instruments. This statement eliminates the
ability to account for share-based compensation transactions using the intrinsic value method as
prescribed by Accounting Principles Board, or APB, Opinion No.&nbsp;25, &#147;<I>Accounting for Stock Issued to
Employees</I>,&#148; and require that such transactions be accounted for using a fair-value-based method and
recognized as expenses in our consolidated statement of income. The standard requires that the
modified prospective method be used, which requires that the fair value of new awards granted from
the beginning of the year of adoption (plus unvested awards at the date of adoption) be expensed
over the vesting period. In addition,
</DIV>


<P align="center" style="font-size: 10pt">F-13
</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>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the statement encourages the use of the &#147;binomial&#148; approach to value stock options, which
differs from the Black-Scholes option pricing model that we currently use in the footnotes to our
consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The revised FAS 123R as issued by FASB will have a significant impact on our consolidated statement
of income as Satyam Computer Services, our subsidiaries and our associated companies will be
required to expense the fair value of our stock option grants rather than expensing the intrinsic
value of stock options as is our current practice. FAS 123R will be applicable to Satyam for annual
periods beginning after June&nbsp;15, 2005.Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Accounting Changes and Error Corrections</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2005, FASB Issued FAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections &#151; a replacement of
APB No.&nbsp;20 and FAS No.&nbsp;3&#148;. FAS 154 provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes, unless impracticable, retrospective
application as the required method for reporting a change in accounting principle in the absence of
explicit transition requirements specific to the newly adopted accounting principle. FAS 154 also
provides guidance for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective application is
impracticable. The correction of an error in previously issued financial statements is not an
accounting change. However, the reporting of an error correction involves adjustments to previously
issued financial statements similar to those generally applicable to reporting an accounting change
retrospectively. Therefore, the reporting of a correction of an error by restating previously
issued financial statements is also addressed by FAS 154. FAS 154 shall be effective for
accounting changes and corrections of errors made in fiscal years beginning after December&nbsp;15,
2005. The adoption of this standard is not expected to have a material impact on Satyam&#146;s
consolidated financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>s)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Acquisitions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Citisoft Plc.</B><BR>
On May&nbsp;12, 2005, Satyam 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 payable on April&nbsp;30, 2006. Satyam
Computer Services is also required to pay a maximum earn out consideration amounting to US$3.9
million on April&nbsp;30, 2006 based on achievement of targeted revenues and profits. The deferred
consideration for the acquisition of the 75% equity interest has been accounted for as part of the
purchase consideration and shown as a current liability in the balance sheet. 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">Satyam Computer Services has a call option and the minority shareholders have 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$2.4
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$3.7&nbsp;million based on achievement of targeted
revenues and profits. Satyam Computer Services records the put option at fair value at each balance
sheet date, with the initial fair value of the put option included as part of the consideration for
its 75.0% interest in Citisoft. The difference between the fair values at each valuation date is
charged to selling, general and administration expenses in statement of income. On the basis of an
independent valuation, the value of put option was US$ Nil and US$1.1&nbsp;million as of May&nbsp;12, 2005
and March&nbsp;31, 2006 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-14
</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>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</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 US$1.6&nbsp;million on April&nbsp;30, 2006 and a maximum of
US$1.6&nbsp;million each on April&nbsp;30, 2007 and 2008 based on achievement of targeted revenues and
profits. As of March&nbsp;31, 2006 Satyam Computer Services has accrued US$1.4&nbsp;million as a current
liability and charged US$1.4&nbsp;million to the statement of income as part of cost of revenues.
</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: 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>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&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>$</B></TD>
    <TD align="right"><B>17.4</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.2</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>
</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>
</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>
</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>
</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>
</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>
</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>17.4</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>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>b)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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$0.8&nbsp;million and US$0.7&nbsp;million payable on April&nbsp;30, 2006 and
2007 respectively. Satyam Computer Services is also required to pay a maximum earn out
consideration amounting to US$0.3&nbsp;million, US$0.8&nbsp;million and US$1.1&nbsp;million on April&nbsp;30, 2006,
2007 and 2008 respectively based on the achievement of targeted revenues and profits. 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 shown as a current liability and US$0.7
million as non current liability in the balance sheet. 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>


<P align="center" style="font-size: 10pt">F-15
</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>Satyam Computer Services Limited</B><BR>
Notes to the Consolidated Financial Statements
</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="3"><B>US$ in millions</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">Purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allocated to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.5</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">&#151;</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">1.0</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">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-Compete agreements</DIV></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">Internally developed technology</DIV></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">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</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="right">&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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><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>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 (US$0.22) per share in October&nbsp;2003 and June&nbsp;2004 respectively to the investors
at an issue price of Rs.10 (US$0.22) 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 are mandatorily convertible into equity shares of
Nipuna no later than June&nbsp;2006, if Nipuna achieves certain targets for revenues and profits earned
up to March&nbsp;31, 2006. If these targeted revenues and profits are not achieved by Nipuna along with
other triggering events, the investors have an option to either redeem these preference shares or
convert them. Although certain triggering events for early redemption as per the agreement have
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 are 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$0.22) 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 period ended March&nbsp;31, 2006 is payable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments of Satyam consist of available-for-sale securities (&#147;AFS&#148;) and 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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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>Available-for-sale securities</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">Cost and fair value</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"><B>Other investments, at cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.6</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="right">&nbsp;</TD>
    <TD align="right">(3.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.6</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>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
</DIV>


<P align="center" style="font-size: 10pt">F-16
</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="left" style="font-size: 10pt; margin-top: 6pt">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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investments in bank deposits</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investments in bank deposits represents term deposits placed with banks earning fixed rate of
interest and amounted to US$403.7&nbsp;million and US$411.6&nbsp;million as of March&nbsp;31, 2006 and 2005
respectively with maturities from more than three months to two years. Interest on investments in
bank deposits is recognized on accrual basis.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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">Sify</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>3.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>23.2</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" style="font-size: 10pt; margin-top: 12pt"><B>Sify</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2004, due to the sale of new shares by Sify to VentureTech and sale
of 1&nbsp;million Indian equity shares by Satyam Computer Services as per the sponsored ADS program of
Sify, Satyam Computer Services&#146; ownership interest in Sify was reduced from 37.15% as at March&nbsp;31,
2003 to 32.04% as at March&nbsp;31, 2004. Further, due to the issue of shares by Sify to its employees
under Sify&#146;s ESOP plan the ownership interest of Satyam Computer Services in Sify reduced from
32.04% as at March&nbsp;31, 2004 to 31.61% as at September&nbsp;30, 2005.
</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">The summarized financial information as to assets, liabilities and results of operations of Sify is
presented 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="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="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Balance sheet</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B></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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">51.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">49.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.2</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:15px; text-indent:-15px">Current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.3</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">Net current asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- 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="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="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="3" style="border-bottom: 1px solid #ffffff"><B>Period ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><B>Year ended March 31,</B></TD>
</TR>

<TR style="font-size: 1pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Statement of operations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>November 9, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</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">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">60.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">82.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">61.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating loss</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">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</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">8.0</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">Satyam Computer Services&#146; equity in loss of Sify, net of taxes amounted to US$1.3&nbsp;million,
US$1.7&nbsp;million and US$2.2&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-17
</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="left" style="font-size: 10pt; margin-top: 6pt"><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$0.5&nbsp;million, US$0.7&nbsp;million and US$3 thousand for the years
ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</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
loss of CA Satyam, net of taxes amounted to US$15 thousand, US$0.1&nbsp;million and US$0.4&nbsp;million for
the years ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><B><I>(</I></B><I>US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.1</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">1.8</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">Premises</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.3</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">109.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99.8</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">21.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.8</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">61.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51.0</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">40.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.9</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">7.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</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">19.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>291.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>242.5</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="right">&nbsp;</TD>
    <TD align="right">(185.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(158.4</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>Premises and equipment, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>106.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>84.1</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="88%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&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">Premises
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">28&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Computers including servers
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">2&nbsp;&#151;5&nbsp;years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">System Software
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Office equipment
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5&nbsp;years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Furniture and fixtures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vehicles
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Depreciation expense amounted to US$30.6&nbsp;million, US$25.0&nbsp;million and US$24.4&nbsp;million for the years
ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-18
</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="left" style="font-size: 10pt; margin-top: 6pt"><B>9.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">10.5</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">Acquisition of Knowledge Dynamics Pte Ltd</DIV></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">&#151;</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 align="right"></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD align="right"></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">23.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23.6</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">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</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>39.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>27.3</B></TD>
    <TD>&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="right">&nbsp;</TD>
    <TD align="right">(11.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.8</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Goodwill, net</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>27.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>15.5</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: 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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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="right"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>14.2</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisitions during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Goodwill at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>27.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>15.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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: 1px solid #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 and non-refundable
deposit 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 majority interest
in 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. Currently there is no impairment of goodwill; however, there
can be no assurance that future goodwill impairment tests will not result in a charge to earnings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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="51%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&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" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="29" 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="15" style="border-bottom: 1px solid #ffffff"><B>As of March 31, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #ffffff"><B>As of March 31, 2005</B></TD>
</TR>

<TR style="font-size: 1pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="27" style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Acquired and amortized</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>Gross</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</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gross</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</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #ffffff"><B>intangible assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>intangible</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>carrying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>amortization</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>intangible</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 #ffffff"><B>(in years)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><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">a) Customer Relationship</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</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>
    <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">b) 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">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>
    <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">c) 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">0.6</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>
    <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"><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>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>
    <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"><B>Knowledge Dynamics Pte
Ltd</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">a) 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">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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) Non-Compete agreements</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">0.1</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">c.) 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">&#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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <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">d.) 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">&#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="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>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>
    <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="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 the Company has not recognized any impairment of other intangible assets. The
Company 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. The Company does not have any intangible
assets with indefinite useful life.
</DIV>


<P align="center" style="font-size: 10pt">F-19
</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="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 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="7" style="border-bottom: 1px solid #ffffff">(US$ in millions)</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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">Identifiable intangibles at the beginning 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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisitions during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Identifiable intangibles at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.6</B></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>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table gives details of Satyam&#146;s total other intangible assets
</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="3"><B>US$ in millions</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left"><B>&nbsp;</B></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">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</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">2009</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">2010</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">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beyond 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</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: 12pt"><B>11.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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>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="right">$</TD>
    <TD align="right">15.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">18.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">Deferred</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">(0.6</TD>
    <TD nowrap>)</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>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">27.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</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="right">&nbsp;</TD>
    <TD align="right">(4.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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="right"><B>$</B></TD>
    <TD align="right"><B>37.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>25.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>22.5</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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 before taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>287.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>180.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>137.0</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="right">&nbsp;</TD>
    <TD align="right">33.66</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.59</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35.88</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="right"><B>$</B></TD>
    <TD align="right"><B>96.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>65.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>49.2</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="right">&nbsp;</TD>
    <TD align="right">(75.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38.2</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">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</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">Difference arising from different tax rates on gain on sale of
investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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">Stock- based compensation (non-deductible)</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">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</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">5.4</TD>
    <TD>&nbsp;</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">0.8</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">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 valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</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:15px; text-indent:-15px"><B>Income taxes recognized in the statement of income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>37.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>25.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>22.5</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$8.5&nbsp;million and US$10.7
million as of March&nbsp;31, 2006 and 2005 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
</DIV>


<P align="center" style="font-size: 10pt">F-20
</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="left" style="font-size: 10pt; margin-top: 6pt">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 2010. 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>

<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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.1</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">5.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</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">0.5</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">Provision for gratuity and unutilized leaves</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">3.8</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>Gross deferred tax assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>36.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>30.6</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="right">&nbsp;</TD>
    <TD align="right">(24.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21.1</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>Total deferred tax assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>9.5</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="right">&nbsp;</TD>
    <TD align="right">(6.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.5</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="right">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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>
</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="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.4</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 deferred tax liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(11.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(11.5</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="right"><B>$</B></TD>
    <TD align="right"><B>1.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(2.0</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>
<!-- 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$37.8&nbsp;million and US$36.4&nbsp;million as of March&nbsp;31, 2006 and 2005 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$24.0&nbsp;million
and US$21.1&nbsp;million as of March&nbsp;31, 2006 and 2005 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.
</DIV>


<P align="center" style="font-size: 10pt">F-21
</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="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="84%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="right" colspan="9" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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>
</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="right">$</TD>
    <TD align="right">12.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.1</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">0.5</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">Current liabilities &#151; accrued expenses and other liabilities*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</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="right">&nbsp;</TD>
    <TD align="right">(8.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.9</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 deferred tax asset/ (liabilities)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(2.0</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>
<!-- 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"><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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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$4.1&nbsp;million and US$1.7&nbsp;million as of March&nbsp;31, 2006 and 2005
respectively. Short-term debt represents export packing credit 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 5.33% and 3.61% for
the years ended March&nbsp;31, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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>
</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 align="right">$</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">&#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">5.6</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">&#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">10.5</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">Hire Purchase Loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</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="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>20.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.3</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="right">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.1</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>Long-term debt, net of current portion</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.2</B></TD>
    <TD>&nbsp;</TD>
</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 are secured by equity shares of Satyam Computer Services&#146; held by the SC-Trust. In
2003, SC-Trust has repaid its rupee loans maturing in January&nbsp;2004 and March&nbsp;2004, amounting to
US$1.2&nbsp;million and US$1.4&nbsp;million, respectively, with an interest rate of 13% p.a. and has replaced
them with new rupee loans in same principal amounts with a fixed interest rate of 10.75% p.a.
maturing in July&nbsp;2005.The SC-Trust has further renewed these upto September&nbsp;2007 with a revised
interest rate of 10.25%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Aggregate maturities of long-term debt subsequent to March&nbsp;31, 2006, are US$2.4&nbsp;million in fiscal
2007, US$1.6&nbsp;million in fiscal 2008 and US$16.3&nbsp;million in fiscal 2009.
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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>
</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="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.4</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">3.9</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">Non-fund facilities</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">14.1</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Unused lines of credit</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>12.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>37.5</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">F-22
</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="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;6, 2005, Nipuna obtained a credit facility from a bank for long term borrowings to
the extent of US$20&nbsp;million with an interest rate of 0.95% above 6&nbsp;month LIBOR. Satyam Computer
Services has given a corporate guarantee to the bank for the borrowing. As per the terms of the
facility, Nipuna was required to draw the funds prior to September&nbsp;30, 2005 and Nipuna has got a
further extension upto June&nbsp;30, 2006. The borrowing is repayable in 3&nbsp;years from each draw down of
the borrowing. As of March&nbsp;31, 2006, Nipuna has availed US$16.1&nbsp;million under the above
arrangement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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="center" colspan="3"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</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>Accumulated benefit obligation</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.9</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Change in projected benefit obligation</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Projected benefit obligation at beginning of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.5</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">1.9</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">0.9</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">0.4</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">0.2</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">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</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">Benefits paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</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 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">0.3</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 period</B></DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>4.0</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>
<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">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">0.2</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="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</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 period</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="right">&nbsp;</TD>
    <TD align="right"><B>(7.8</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>(4.0</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">1.3</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">1.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount recognized during the period</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" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accrued benefit cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(6.5</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(4.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(2.8</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>The components of net gratuity costs are reflected below:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount recognized during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net gratuity costs</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.1</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>


<P align="center" style="font-size: 10pt">F-23
</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="left" style="font-size: 10pt; margin-top: 6pt">The assumptions used in accounting for the gratuity plan for the years ended March&nbsp;31, 2006,
2005 and 2004 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="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&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="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" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3" style="border-bottom: 1px solid #ffffff"><B>2004</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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="right">&nbsp;</TD>
    <TD align="right">7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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="73%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&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="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>2006</B></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="right" colspan="3"><B>2004</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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="right">&nbsp;</TD>
    <TD align="right">7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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>Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam expects to contribute US$1.5&nbsp;million to its Gratuity plan during the year ending March&nbsp;31,
2007. 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="3" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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 nowrap align="left"><B>For the financial year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>Expected contribution</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">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</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">2.0</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">2.5</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">3.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012 &#151; 2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.0</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: 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$10.7&nbsp;million, US$6.8&nbsp;million and
US$3.4&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004 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$1.2&nbsp;million, US$0.9&nbsp;million and US$0.4&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and
2004 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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 53,300 and
240,500 as of March&nbsp;31, 2006 and 2005 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
1,139,840 and 1,183,840 as of March&nbsp;31, 2006 and 2005 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-24
</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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions except per share data)</I></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="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" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>2004</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</B></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>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>111.9</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:15px; text-indent:-15px">Average outstanding shares (in millions)</DIV></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>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dilutive effect of Associate Stock Options (in millions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.8</TD>
    <TD>&nbsp;</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">3.9</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>331.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>323.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>317.1</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: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="right">$</TD>
    <TD align="right">0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.36</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="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.35</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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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 13,000,000 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. As and when the SC-Trust issues warrants to eligible
associates, the difference between the market price and the exercise price is accounted as deferred
stock based compensation and amortized over the vesting period. The warrants vest immediately or
vest over a period ranging from two to three years, depending on the associate&#146;s length of service
and performance. Upon vesting, associates have 30&nbsp;days in which to exercise these warrants. As of
March&nbsp;31, 2006, warrants (net of lapsed and cancelled) to purchase 11,849,860 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 41,727,140 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, 2006, options (net of lapsed and cancelled) to
purchase 31,381,633 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 2,574,665 ADSs (5,149,330 shares)
to be issued to eligible associates with the intention to issue the warrants at a price per option
which is not less than 90% of the value of one ADS as reported on 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, 2006, warrants (net of lapsed
and cancelled) for 1,660,971 ADSs representing 3,321,942 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>Warrant grants</I></B>
</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 13,200
shares and warrants for 30,800 (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 492,181 (net of 2,797,595 warrants
cancelled) shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer
Services issued warrants for 69,993 ADS representing 139,986 (net of warrants for 90,222 ADS
representing 180,444 shares cancelled) shares to associates under the ASOP (ADS)&nbsp;plan.
</DIV>


<P align="center" style="font-size: 10pt">F-25
</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="left" style="font-size: 10pt; margin-top: 6pt">During the year ended March&nbsp;31, 2005, the SC-Trust issued immediately vesting warrants for
50,840 and warrants for 384,500 (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 11,957,233 (net of 2,248,524 warrants cancelled) shares to
the associates. During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
2,64,560 ADS representing 529,120 (net of warrants for 102,164 ADS representing 204,328 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, 2004, the SC-Trust issued immediately vesting warrants for 92,500
and warrants for 89,500 (net of 11,700 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 4,465,271 (net of 645,528 shares cancelled) shares to the
associates During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
63,143 ADS representing 126,286 (net of warrants for 64,200 ADS representing 128,400 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="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="23" 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="7" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2004</B></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="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 nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>ASOP Plan</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>
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</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>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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" 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>240,500</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>58,200</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.99</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,167,380</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.31</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.68</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">(231,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(253,040</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(523,140</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.90</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(768,040</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>53,300</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.83</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>240,500</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.35</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>58,200</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.99</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">4,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.72</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="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="23" 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="7" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2004</B></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="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 nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>ASOP B</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>
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</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>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</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" 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>26,830,315</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.14</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,510,481</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.05</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,464,148</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.33</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">3,289,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,205,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,110,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,519,802</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,637,399</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,418,938</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.09</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">(2,797,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,248,524</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(645,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>22,802,694</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.47</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,830,315</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.14</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,510,481</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.05</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">5,124,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,695,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,517,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value of options
granted during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,289,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,205,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,110,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.33</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>

<P align="center" style="font-size: 10pt">F-26
</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">
<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="23" 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="7" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2004</B></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="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 nowrap align="left" style="border-bottom: 1px solid #ffffff"><B>ASOP (ADS)</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>
    <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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</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>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</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 at the beginning of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,515,802</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.42</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,362,864</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.92</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,526,550</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.08</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">320,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.65</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">(664,446</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(376,182</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(289,972</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(180,444</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(204,328</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(128,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.41</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>1,991,342</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>8.49</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,515,802</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>7.42</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,362,864</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>5.92</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at the end of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">932,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">343,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.91</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">320,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.65</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">Information about number of equity shares representing stock options outstanding as on March
31, 2006:
</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="14%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="8%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="8%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="8%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="8%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&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 nowrap align="center" colspan="5"><B>Range of Exercise Price</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>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>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="5" style="border-bottom: 1px solid #ffffff"><B>(per equity share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Exercise</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 shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>equity shares</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>Price (per equity</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>arising out of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price (per equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>arising out of</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>share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="25" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 111.68-
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">2.51-</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 210.24
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 211.34
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 236.95
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">5.33</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">4.73</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4,710,074</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">4.75</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,475,018</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 236.96-
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">5.33-</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 364.10-
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 349.36
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 554.53
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">12.47</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">8.19</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">19,860,179</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">7.85</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,471,231</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 554.54-
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">12.47-</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 621.64-
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">Rs 625.39
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rs 716.06
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">16.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">13.98</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">277,083</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">14.06</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">111,037</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="25" valign="top" 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, 2006 1US$= Rs 44.48</I>
</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">During the year ended March&nbsp;31, 2006 Nipuna issued options for 1,215,506 equity shares at weighted
average exercise price of Rs.80 (US$1.78) being the fair market value per share. No options were
exercised during the period.
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services recognized deferred stock-based compensation of US$0.9&nbsp;million, US$2.2
million and US$0.8&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004 respectively. Satyam
Computer Services amortized and charged to income US$0.8&nbsp;million, US$1.9&nbsp;million and US$1.7&nbsp;million
for the years ended March&nbsp;31, 2006, 2005 and 2004 respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to APB 25, deferred stock-based compensation has been computed as of grant date based on
the difference between the exercise price of the warrants and the market price of underlying shares
of Satyam Computer Services. Deferred stock compensation is amortized on a graded vesting basis
over the vesting period of the warrants.
</DIV>


<P align="center" style="font-size: 10pt">F-27
</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="left" style="font-size: 10pt; margin-top: 6pt"><B>16.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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. Upto March&nbsp;31, 2005, Satyam provided segmental disclosures based on three
business groups: IT services, Business Process Outsourcing, and Software Products. Subsequent to
March&nbsp;31, 2005, executive management evaluates Satyam&#146;s operating segments based on the following
two-business groups, since the revenues from Software Product segment are no longer meaningful and
management does not evaluate this segment any longer:
</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>&#149;</B></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 for the year ended
March&nbsp;31, 2006 includes the results of Citisoft and Knowledge
Dynamics which were acquired during the year.</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"><B>&#149;</B></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>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam&#146;s operating segment information for the years ended March&nbsp;31, 2006, 2005 and 2004 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="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>&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" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="17" 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="3"><B>IT</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>BPO</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>Elimination</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Consolidated</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</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 nowrap align="center" colspan="3"><B>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, 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 and amortization</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 / (loss)</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>

<P align="center" style="font-size: 10pt">F-28
</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">
<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="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="3"><B>IT</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>BPO</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #ffffff"><B>Elimination</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Consolidated</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Services</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 nowrap align="center" colspan="3"><B>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, 2004</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">$</TD>
    <TD align="right">565.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">566.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue &#151; Inter-segment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</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 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>565.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(1.6</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>566.4</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</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</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">121.1</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">(2.6</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="right">&nbsp;</TD>
    <TD align="right">(2.6</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">116.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</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">111.9</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">719.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">713.8</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">24.0</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.4</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">15.6</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">18.1</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"><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>



<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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="23" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #ffffff"><B>2004</B></TD>
</TR>
<TR style="font-size: 1pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" 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</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Long-lived</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>from external</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>from external</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>assets</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>from external</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #ffffff"><B>assets</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>customers</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>customers</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>customers</B></TD>
    <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="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">North America</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">711.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">542.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">414.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77.8</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">India</DIV></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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77.5</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</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">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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</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="right"><B>$</B></TD>
    <TD align="right"><B>1,096.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>140.8</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>793.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>99.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>566.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>84.0</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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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 align="right">$</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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="right">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Short term advance provided by Satyam to</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">CA Satyam</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>0.4</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.3</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 align="right">$</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>11.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>8.6</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>6.8</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>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-29
</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="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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></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>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="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Satyam Venture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">CA Satyam</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>
</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:45px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(1.7</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(3.1</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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Shareholders&#146; Equity-Dividends</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$786.9&nbsp;million, US$559.8&nbsp;million
and US$422.7&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004 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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Contingencies and Commitments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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. Further Satyam
Computer Services is required to subscribe to convertible debentures amounting to US$20&nbsp;million
based on certain provisions in the agreement. These convertible debentures shall bear an interest
rate equal to the prime lending rate of the State Bank of India prevailing at that time and are
convertible upon the election of Nipuna into Ordinary Shares at any time after issuance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Satyam Computer Services, Nipuna and the investors have also entered into a warrant agreement
whereby Nipuna agrees 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 at any time during
the period commencing from the date of initial closing and ending in June&nbsp;2007 from business
referred to Nipuna or its subsidiaries by an investor or its affiliates. These warrants are
convertible into ordinary equity shares of Nipuna subject to a maximum of 7.5% of the then
outstanding equity share capital of Nipuna on a fully diluted basis during the exercise period at
the price per share then in effect and subject to other terms and conditions set forth in the
agreement. As of March&nbsp;31, 2006, 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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Bank guarantees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Bank guarantees outstanding are US$13.4&nbsp;million and US$8.2&nbsp;million as of March&nbsp;31, 2006 and 2005
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)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Capital commitments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Contractual commitments for capital expenditure pending execution were US$26.7&nbsp;million and US$8.8
million as of March&nbsp;31, 2006 and 2005 respectively. Contractual commitments for capital
expenditures are relating to acquisition of premises and equipment.
</DIV>


<P align="center" style="font-size: 10pt">F-30
</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="left" style="font-size: 10pt; margin-top: 6pt"><B>e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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$17.5
million, US$12.5&nbsp;million and US$9.1&nbsp;million for the years ended March&nbsp;31, 2006, 2005 and 2004
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, 2006 are US$4.1&nbsp;million in fiscal
2007, US$2.4&nbsp;million in fiscal 2008, US$0.6&nbsp;million in fiscal 2009, US$1.0&nbsp;million in fiscal 2010
and thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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: 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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>2004</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>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="right">&nbsp;</TD>
    <TD align="right">8.80</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10.81</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.28</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="right">&nbsp;</TD>
    <TD align="right">5.14</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.92</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="right">&nbsp;</TD>
    <TD align="right">24.21</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.21</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.45</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.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Financial Instruments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Forward and options contracts</B><BR>
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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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>
</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="right">$</TD>
    <TD align="right">79.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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 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 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="right"><B>$</B></TD>
    <TD align="right"><B>216.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>301.5</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>
<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="right">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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 nowrap align="right">&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 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 nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(1.4</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="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, 2006 mature
between one to eleven months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gains/(losses) on foreign exchange forward and options contracts included under the head 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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">Forward contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(0.8</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD 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>2.4</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>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-31
</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="left" style="font-size: 10pt; margin-top: 6pt"><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$20.3&nbsp;million and US$4.3
million as of March&nbsp;31, 2006 and 2005 respectively as compared to the carrying amounts of US$20.3
million and US$4.3&nbsp;million as of March&nbsp;31, 2006 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>22.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Schedules of Balance sheet</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>a)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cash and Cash Equivalents</B>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">258.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">128.1</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">33.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</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="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="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>b)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Accounts receivable and allowance for doubtful debts</B>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">238.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">178.3</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">1.0</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">Less: Allowance for doubtful debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.5</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Accounts receivable</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>220.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>160.9</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">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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>c)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Prepaid Expenses and Other Receivables</B>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">24.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">Directors liability insurance</DIV></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">0.4</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">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</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">6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.7</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">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</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="right">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.7</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Prepaid expenses and other receivables</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>48.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>16.1</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$0.4&nbsp;million and US$30 thousand
as of March&nbsp;31, 2006 and 2005 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-32
</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="left" style="font-size: 10pt; margin-top: 6pt"><B>d)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Assets</B>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.6</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">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</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">0.5</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">Others</DIV></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">1.8</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="right">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&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="right"><B>$</B></TD>
    <TD align="right"><B>18.2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>16.8</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 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$0.7&nbsp;million and US$0.3&nbsp;million as of March&nbsp;31,
2006 and 2005 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>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>e)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Accrued Expenses and Other Current Liabilities</B>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="7" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="9" 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="7" 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 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="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="right">$</TD>
    <TD align="right">56.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">28.3</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">1.1</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">Provision for taxation, net of payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.7</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">16.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.5</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">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</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">23.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.7</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>Accrued expenses and other current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>108.9</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>64.8</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 align="left" style="font-size: 10pt; margin-top: 12pt"><B>23.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Subsequent event:</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.
</DIV>


<P align="center" style="font-size: 10pt">F-33
</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>
</DIV>


<DIV align="left">
<A name="307"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>Financial Statement Schedule</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Financial
Statement Schedule &#151;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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>24.0</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>21.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.6</B></TD>
    <TD>&nbsp;</TD>
</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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>19.1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>17.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>13.9</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 align="left" style="font-size: 10pt; margin-top: 6pt"><B>a)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Prepaid Expenses and Other Receivables</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="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>2.3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.7</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.6</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: 12pt"><B>b)</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other 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>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="11" style="border-bottom: 1px solid #ffffff"><I>(US$ in millions)</I></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="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>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</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">At the beginning of the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write offs, net of recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change due to foreign exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>At the end of the year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>1.5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</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>
</DIV>



<P align="center" style="font-size: 10pt">F-34
</DIV>
</BODY>
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Satyam Computer Services Limited
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
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
For the fiscal year ended March 31, 2006
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) 40-5523 3505
(Address and Telephone Number of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
American Depositary Shares, each represented by two Equity Shares, par value Rs.2 per share.
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.
Yes
þ
No
o
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: 324,449,539
equity shares, including 64,680,600 underlying equity shares for 32,340,300 ADSs, were
issued and outstanding as of March 31, 2006.
If this report is an annual or transition report, 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
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 obligation under those
Sections. 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
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
o
No
þ
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required
to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes
o
No
o
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
23
ITEM 4A. UNRESOLVED STAFF COMMENTS
37
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
38
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
58
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
65
ITEM 8. FINANCIAL INFORMATION
66
ITEM 9. THE OFFER AND LISTING
66
ITEM 10. ADDITIONAL INFORMATION
69
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
87
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
88
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
89
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
89
ITEM 15. CONTROLS AND PROCEDURES
89
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
89
ITEM 16B. CODE OF ETHICS
90
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
90
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
90
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES
90
ITEM 17. FINANCIAL STATEMENTS
91
ITEM 18. FINANCIAL STATEMENTS
91
ITEM 19. EXHIBITS
91
Ex-4.2 Associate Stock Option Plan B as amended and restated.
Ex-4.3 Associate Stock Option Plan ADS as amended and restated.
EX-8.1 List of Subsidiaries
Ex-10.1 Consent of Price Waterhouse,Independent Registered Public Accounting Firm.
Ex-12.1 Certification of Chief Executive Officer under Section 302 of the Sarbane Oxley Act.
Ex-12.2 Certification of Chief Financial Officer under Section 302 of the Sarbane Oxley Act.
Ex-13.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act.
Ex-13.2 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act.
2
Table of Contents
CURRENCY OF PRESENTATION AND CERTAIN DEFINED TERMS
Unless otherwise stated in this Annual Report or unless the context otherwise requires,
references in this Annual Report on Form 20-F, or "Annual Report", to "we," "our," "us," "Satyam"
and "our company" are to Satyam Computer Services Limited and its consolidated subsidiaries and
other consolidated entities.
In this Annual Report, references to "US", "Dollars" 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 31, 2006 for cable transfers in Indian rupees as certified for customs purposes by
the Federal Reserve Bank of New York. The noon buying rate on March 31, 2006 was Rs. 44.48 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
IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTION ENTITLED "ITEM 3. KEY INFORMATION—RISK
FACTORS", "ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS" AND ELSEWHERE IN THIS ANNUAL
REPORT. YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE \FORWARD-LOOKING STATEMENTS, WHICH
REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE OF THIS ANNUAL REPORT. IN ADDITION, YOU SHOULD
CAREFULLY REVIEW THE OTHER INFORMATION IN THIS ANNUAL REPORT AND IN OUR QUARTERLY REPORTS AND OTHER
DOCUMENTS FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, OR SEC, FROM TIME TO
TIME. OUR FILINGS WITH THE SEC ARE AVAILABLE ON ITS WEBSITE, WWW.SEC.GOV.
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, 2006 and the balance sheet data as of March 31, 2006, 2005, 2004, 2003 and
2002 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.
Consequently, financial data as of March 31, 2005, 2004 and 2003 and for the year ended March 31,
2006, 2005 and 2004 reflect our interest in Sify accounted for under the equity method and are not
comparable to the financial data as of March 31, 2002 and for the years ended March 31, 2003, and
2002 which reflect our interest in Sify accounted for on a consolidated basis. 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. As a result of the above, financial data as of
March 31, 2006 and for the year ended March 31, 2006 are not comparable to financial data as of
March 31, 2005, 2004, 2003 and 2002 and for the years ended March 31, 2005, 2004, 2003 and 2002.
Year Ended March 31,
2006
2005
2004
2003
2002
(dollars in millions, except per share and per ADS data, or as stated otherwise)
Statement of operations data
Revenues:
IT services
$
1,082.7
$
786.7
$
565.1
$
459.2
$
414.5
BPO
13.6
6.9
1.3
—
—
Total revenues
1,096.3
793.6
566.4
459.2
414.5
Cost of revenues
(1)
(689.0
)
(506.8
)
(343.6
)
(275.2
)
(240.3
)
Gross profit
407.3
286.8
222.8
184.0
174.2
Operating expenses:
Selling, general and administrative expenses
(2)
(187.6
)
(124.3
)
(101.7
)
(116.9
)
(139.6
)
Amortization of goodwill
—
—
—
—
(17.0
)
Impairment of goodwill
—
—
—
—
(81.1
)
Impairment of other non-marketable investments
—
—
—
(3.3
)
—
Reversal of put option charge
—
—
—
19.8
—
Total operating expenses
(187.6
)
(124.3
)
(101.7
)
(100.4
)
(237.7
)
Operating income/(loss)
219.7
162.5
121.1
83.6
(63.5
)
Interest income
26.3
22.3
20.3
7.2
3.8
Interest expense
(1.3
)
(0.4
)
(0.5
)
(0.8
)
(2.9
)
Gain on sale of shares in associated companies/ other investments
43.6
—
2.7
0.8
45.6
Gain/(loss) on foreign exchange transactions
0.3
(4.6
)
(8.9
)
(4.8
)
10.8
Other income/(expenses), net
(0.8
)
0.4
2.3
(1.7
)
1.3
Income/(loss) before income taxes, minority interest and equity in
earnings/ (loss) of associated companies
287.8
180.2
137.0
84.3
(4.9
)
Income taxes
(37.7
)
(25.3
)
(22.5
)
(9.8
)
(0.7
)
Minority interest
0.1
—
—
11.1
73.4
Income before equity in earnings/(losses) of associated companies
250.2
154.9
114.5
85.6
67.8
Equity in earnings/ (losses) of associated companies, net of taxes
(0.8
)
(1.1
)
(2.6
)
(3.3
)
(25.4
)
Net income (loss)
$
249.4
$
153.8
$
111.9
$
82.3
$
42.4
4
Table of Contents
Year Ended March 31,
2006
2005
2004
2003
2002
(dollars in millions, except per share and per ADS data, or as stated otherwise)
Earnings (loss) per share:
Basic
$
0.78
$
0.49
$
0.36
$
0.26
$
0.14
Diluted
0.75
0.48
0.35
0.26
0.14
Earnings (loss) per ADS:
Basic
1.56
0.98
0.71
0.53
0.28
Diluted
1.50
0.96
0.71
0.52
0.28
Weighted average equity shares used in computing earnings per
shares (in millions):
Basic
320.6
316.2
313.2
311.8
305.8
Diluted
331.4
323.6
317.1
318.7
307.1
Weighted average equity shares used in computing earnings per ADS:
Basic
160.3
158.1
156.6
155.9
152.9
Diluted
165.7
161.8
158.5
159.3
153.6
Cash dividend per equity share
0.11
0.12
0.08
0.03
0.02
Cash dividend per ADS
0.22
0.24
0.17
0.06
0.02
(1)
Inclusive of stock-based compensation expense of $Nil, $0.8 million, $0.9
million, $1.6 million and $7.2 million in fiscal 2006, 2005, 2004, 2003 and 2002 respectively.
(2)
Inclusive of stock-based compensation expense of $0.8 million, $1.1 million, $0.8
million, $2.9 million and $3.6 million in fiscal 2006, 2005, 2004, 2003 and 2002 respectively.
As at March 31,
2006
2005
2004
2003
2002
(dollars in millions)
Balance sheet data
Cash and cash equivalents
$
292.8
$
129.8
$
86.7
$
62.2
$
243.4
Investments in bank deposits
403.7
411.6
332.1
259.4
—
Total assets
1,181.2
884.1
713.8
561.7
515.6
Total long-term debt, excluding current portion
17.9
1.2
1.8
1.7
2.7
Preferred stock of subsidiary
20.0
20.0
10.0
—
—
Total shareholders' equity
994.4
767.9
633.9
487.7
394.4
Capital stock
(1)
481.5
449.5
431.7
421.6
419.1
(1)
Includes common stock and additional paid-in capital but excludes shares
held by Satyam Associate Trust.
SFAS 142 pro forma disclosure
Effective April 1, 2002, Satyam adopted Statement of Financial Accounting Standards No. 142
("SFAS 142"),
Goodwill and Other Intangible Assets.
Due to the adoption of SFAS 142, Satyam ceased
amortizing goodwill. The effect of this accounting change is reflected prospectively. The
following pro forma disclosure presents the impact of SFAS 142 on net income, net income per
share, and the related tax effect had the standard been in effect for the year ended March 31,
2002:
Year Ended March 31,
2002
(dollars in millions
except per share
amount)
Reported net income
$
42.4
Add:
Goodwill amortization
17.0
Amortization of excess of cost of investment
over equity in net assets of associated companies
3.6
Adjusted net income
$
63.0
Basic and diluted earnings per share:
As reported
$
0.14
As adjusted
0.21
5
Table of Contents
Risk Factors
Any investment in our ADSs involves a high degree of risk. You should carefully consider the
following information about these risks, together with the other information contained in this
Annual Report, before you decide to buy our ADSs. If any of the following risks actually occur,
our company could be seriously harmed. In any such case, the market price of our ADSs could
decline, and you may lose all or part of the money you paid to buy our ADSs.
Risks Related to Our Overall Operations
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 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, 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 2006 our total revenues
increased by 38.1% as compared to fiscal 2005, and in fiscal 2005 our total revenues increased by
40.1% as compared to fiscal 2004. As of March 31, 2006, we had 28,624 employees, whom we refer to
as associates, worldwide as compared to 20,690 associates as of March 31, 2005. 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 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.
6
Table of Contents
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 IT in most parts of the world has recently increased 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.
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 2006, 2005 and 2004, approximately 64.9%, 68.3% and 73.3%, respectively, of our
total revenues were derived from the United States. For the same periods, we earned 28.6%, 29.2%
and 32.0% of our IT revenues from the manufacturing industry and 18.5%, 17.8% and 18.3%, of our IT
revenues from the banking and finance industry respectively. If the current economic recovery 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
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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, recent legislation has come into effect in the United
Kingdom in April 2006 requiring in certain circumstances offshore outsourcing providers have 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 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, BearingPoint, 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, programming companies and
temporary staffing firms. Nipuna, through which we provide BPO services, faces competition from
firms like 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, 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 falls below 5% after an initial public offering. 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 and generate greater revenues than us, 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 2006, 2005 and 2004, our largest customer together with its affiliates, accounted for
8.8%, 10.8% and 14.3%, respectively, of our total revenues. In fiscal 2006, 2005 and 2004, our
second largest customer accounted for 5.1%, 7.4% and 9.9%, respectively, of our total revenues. In
fiscal 2006, 2005 and 2004, our five largest customers accounted for 24.2%, 29.2% and 36.4%
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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 2006, 2005 and 2004, we
derived 35.1%, 34.2% and 31.7%, 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.
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 revenues than previously anticipated.
We continue to consider the viability of introducing performance-based or variable-pricing
contracts. Should we increase our use of 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.
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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.
A number of our customer contracts provide that, during the term of the contract and for a
certain period thereafter ranging from six to 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 2006, 2005 and 2004, we experienced associate attrition in the IT services
segment at a rate of 19.2%, 16.5% and 17.5%, 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.
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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, 2006, we had contractual commitments of approximately $26.7 million for
capital expenditures, and we estimate spending a further $75.0 million until March 2007. 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 employees 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, 2006,
the majority of our associates located outside India were in the United States and held either
H-1B visas, allowing the employee to remain in the United States during the term of the work
permit and work as long as he or she remains an employee of the sponsoring firm, or L-1 visas,
allowing the employee to stay in the United States 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
recent 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 maintaining work visas for our associates working in the United States.
The CIS announced on August 10, 2005 that it had received sufficient applications to fill up all
65,000 visas that were available for the year. In November 2005, the CIS announced that it was
considering increasing the H1B by adding another 30,000 visas; however this has not yet happened.
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
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 employees 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 employees 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
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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 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 control 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 8.59% of our outstanding equity shares as of
March 31, 2006. As a result, acting together, this group has the ability to exercise significant
control over most matters requiring our shareholders' approval, including the election and removal
of directors and significant corporate transactions. These insider shareholders may exercise
control even if they are opposed by our other shareholders. Without the consent of these insider
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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 the Company and
all of the shareholders.
Our financial results are impacted by the financial results of entities that we do not control.
As of March 31, 2006, 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 significantly 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 the utility of goodwill. 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 under U.S. GAAP. Such impact on net income may result in a
reduction of the market value of our shares.
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 under U.S. GAAP.
Although Satyam has suspended, except in certain cases, new grants of stock options as of
April 1, 2005, our reported income under U.S. GAAP has been and will continue to be affected by
the grant of warrants or options under our various employee benefit plans. Under the terms of our
existing plans, 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. These grants require us to record non-cash compensation expenses under
currently applicable U.S. GAAP, amortized over the vesting period of the warrants or options.
Depending on the market value or fair value of our equity shares on the dates the outstanding
grants were made and future grants are made, amortization of deferred stock-based compensation may
contribute to reducing our operating income and net income under U.S. GAAP. Our subsidiaries also
have stock option schemes which have and will continue to generate stock-based compensation
expenses and have and will reduce our operating income and net income.
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Our earnings will be adversely affected once we change our accounting policies with respect to the
expensing of stock options.
Currently we account for share-based compensation transactions using the intrinsic value
method as prescribed by Accounting Principles Board, or APB, Opinion No. 25,
Accounting for Stock
Issued to Employees,
and have adopted the pro forma disclosure provisions of the Statement of
Financial Accounting Standard, or SFAS No. 123
, Accounting for Stock-Based Compensation.
On
December 16, 2004, the FASB issued FAS 123R,
Share-Based Payment, an amendment of FASB Statements
No. 123 and 95
, which requires that such transactions be accounted for using a fair-value-based
method and recognized as expenses in our consolidated statement of operations. As of the required
effective date, the standard requires that the modified prospective method be used, which requires
that the fair value of new awards granted from the beginning of the year of adoption (plus
unvested awards at the date of adoption) be expensed over the vesting period. In addition, the
statement encourages the use of the "binomial" approach to value stock options, which differs from
the Black-Scholes option pricing model that we currently use in the footnotes to our consolidated
financial statements. Many companies have or are in the process of changing their accounting
policies to expense the fair value of stock options. This change in the accounting policy with
respect to the treatment of employee stock option grants will adversely affect our earnings and
will have a significant impact on our consolidated statement of operations as we will be required
to expense the fair value of our stock option grants rather than expensing the intrinsic value of
stock options as is our current practice. FAS 123R has become applicable to Satyam for annual
periods beginning after June 15, 2005. Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
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, new U.S. Securities and Exchange
Commission, or SEC, regulations, the NYSE, rules, 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 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 we
do not anticipate any material weaknesses or significant deficiencies, our independent auditors
may be 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 Stock Exchange,
Mumbai, or the BSE, and The National Stock Exchange of India Limited, or the 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 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
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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 Securities Act, and the Securities Exchange Act of 1934, as amended, or 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 ordinary 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, Government of India policies,
including taxation policies, as well as political, social and economic developments affecting
India.
The Government of India 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% to 90% for the fiscal 2003, and is
expected to expire between fiscal 2006 and fiscal 2010. Exemption for two of our STP units in
Hyderabad expired during fiscal 2006. We also earn certain other foreign income and domestic
income, which is taxable irrespective of the above tax exemption.
All facilities registered in the exemption program before March 31, 2001, which include all
of our existing facilities in India and registrations for two new facilities which have not yet
been constructed, will continue to benefit from this program under present law. Over time, as we
construct additional facilities, however, the overall benefits of this tax program to our company
will decrease with a consequential increase in our effective tax rate. When our tax holidays
expire or terminate, our tax expense will materially increase, reducing our profitability. We
cannot assure you
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as to what action the present or future governments of India will take regarding tax
incentives for the IT industry.
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
reconversion 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
reconversion 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. 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 Government of India has pursued policies of economic
liberalization, including significantly relaxing restrictions on the private sector. Nevertheless,
the role of the Indian central and state governments in the Indian economy as producers, consumers
and regulators has remained significant. 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
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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.
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 2006, 2005 and 2004, our U.S.
dollar-denominated revenues represented 77.6%, 81.8% and 84.5%, 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, 2006 and 2005, we had outstanding
forward and options contracts in the amount of $216.0 million and $301.5 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 Government of India 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%
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
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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 by or assigned
to our customers, and we do not retain an interest in such software and deliverables.
We have applied for the registration of "Satyam" and other related marks as trademarks in
India, the United States and 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 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.
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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 2001 until the
latest practicable date are set forth in the table below.
High
Low
Fiscal Year
Rs
$ equivalent
Rs.
$ equivalent
2001
902.0
19.3
179.0
3.8
2002
331.2
6.8
111.0
2.3
2003
291.9
6.1
175.1
3.7
2004
391.0
9.0
127.3
2.9
2005
442.0
10.1
250.0
5.7
2006
862.0
19.4
364.4
8.4
2007 (Through April 21, 2006)
890.0
20.0
755.1
17.0
On April 21, 2006
,
the closing price of our shares on the BSE was Rs. 808.15 ($ 18.2). For
comparison purposes, these prices have been adjusted to give effect to our August 25, 2000
five-for-one stock split. 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.
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:
(i)
effect service of process upon us outside India or these persons outside the
jurisdiction of their residence; or
(ii)
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, would not
be enforceable in India. However, the party in whose favor such final judgment is rendered may
bring a new suit in a competent court in India based on a final judgment which has been obtained
in the United States. If and to the extent Indian courts were of the opinion that fairness and
good faith so required, it would, under current practice, give binding effect to the final
judgment which had been rendered in the United States unless such a judgment 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.
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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 redeem receipts in exchange for underlying
equity shares. The period of holding of such equity shares, for determining whether the gain is
long-term or short-term, commences on the date of the giving of such notice by 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.
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. Further, 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. As U.S. holders of ADSs
represent 19.94% of our outstanding equity shares as at March 31, 2006, you may be unable to
exercise preemptive rights for equity shares underlying ADSs unless a registration statement under
the Securities Act of 1933, as amended, or the Securities Act, is effective with respect to the
rights or an exemption from the registration requirements of the Securities Act is available. Our
decision to file a registration statement will depend on the costs and potential liabilities
associated with any given registration statement as well as the perceived benefits of enabling the
holders of our ADSs to exercise their preemptive rights and any other factors that we deem
appropriate to consider at the time the decision must be made. We may elect not to file a
registration statement 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
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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 shareholder present in person and holding at
least 10% of the total voting power or on which an aggregate sum of not less than Rs.50,000 has
been paid-up, at the meeting demands that a poll be taken. 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 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.
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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, 2006, we had an aggregate of equity shares
outstanding of 323,256,399 (excluding 1,193,140 equity shares held by the Satyam Associate Trust),
which includes underlying equity shares of 64,680,600 represented by 32,340,300 ADSs. In addition,
as of March 31, 2006 we had outstanding options to purchase approximately 6,057,286 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, including Regulation S.
Forward-looking statements contained in this Annual Report may not be realized.
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, other factors that could cause results to differ materially from those estimated by
the forward-looking statements contained in this document include, but are not limited to, general
economic and political conditions in India, Southeast Asia, and other countries which have an
impact on our business activities, changes in Indian and foreign laws, regulations and taxes,
changes in competition and other factors beyond our control, including the factors described in
this "Risk Factors" section.
We do not intend to update any of the forward-looking statements after the date of this
Annual Report to conform such statements to actual results.
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ITEM 4. INFORMATION ON THE COMPANY
Business 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 and infrastructure management services. We also
offer BPO services through our majority-owned subsidiary company, Nipuna. Our headquarters are
located in Hyderabad, India.
We began providing IT services to businesses in 1988 and are currently the fourth largest
Indian IT software and services company, based on the amount of export revenues generated during
fiscal 2005. Our revenues grew to $1,096.3 million in fiscal 2006 from $459.2 million in fiscal
2003, representing a compound annual growth rate of 33.7%. For the same period, our net income
grew from $82.3 million to $249.4 million. The number of our employees, whom we refer to as
associates, grew from 9,838 as of March 31, 2003 to 28,624 as of March 31, 2006.
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, 2006, we had 506 active customers,
including 156 Fortune Global 500 or Fortune U.S. 500 companies and 45 companies that generated
more than $5 million in annual revenues in fiscal 2006. 90.6% of our revenues for fiscal 2006 and
92.1% of our revenues for fiscal 2005 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 recently added services such as research,
analytics and animation to its portfolio of service offerings. As of March 31, 2006, Nipuna had
1,765 associates and 25 customers, of which 9 were Fortune Global 500 and Fortune U.S. 500
companies.
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 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.
At our Board meeting held on April 21, 2006, our board of directors recommended the issuance
of bonus shares in the ratio of 1:1 (one equity share for every one share held) for all existing
shares including American Depository Shares. This proposed bonus issue is subject to approval by
our shareholders at the upcoming annual general meeting of shareholders, expected to be held in
August 2006.
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Industry Overview
Global IT Services Overview
Global IT services spending has been estimated to total $441.0 billion in 2005, representing
an increase of approximately 5.5 % over 2004, and is projected to grow at a compound annual growth
rate of 5.9% to reach $556 billion by 2009, according to International Data Corporation.
We believe the growth of global IT services spending is driven by the following factors and
trends:
•
Increased importance of IT to businesses.
In today's increasingly competitive
business environment, companies have become dependent on 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.
•
Impact 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.
•
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 offshoring their outsourced services, they
are increasingly making offshoring a part of their business strategy.
India is considered to be the most favored destination for offshore IT service delivery. The
NASSCOM-McKinsey Report of 2002 estimates that export revenue generated from the software and
service industry in India was approximately $15.5 billion in 2004 and is expected to reach $50.0
billion by 2008 representing a compound annual growth rate of 34.0%. 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
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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.
•
Large 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 2004, educational institutes
in India produce approximately 290,000 engineering students and 139,000 computer software
engineers each year. 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 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-
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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 20 centers
located in Australia, Canada, China, Hungary, India, Japan, Malaysia, Singapore, United
Arab Emirates, 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, nearshore 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 2006 and fiscal 2005, 39.2% and 34.3%
respectively, of our revenues, was generated from consulting and enterprise business
solutions.
•
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, 2006, 156 of our 506 customers were Fortune
Global 500 or Fortune U.S. 500 corporations. 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 2006 and fiscal 2005, 90.6% and 92.1%
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
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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, 2006, we employed 26,711 technical associates in the IT
services area, of which 51% had bachelor's degrees in engineering and 4% had master's
degrees in engineering, technology or computer applications. 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 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
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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.
•
Attracting and retaining quality technical associates and augmenting their training.
To attract, retain and motivate our technical associates, we plan to continue to provide
an environment that rewards entrepreneurial initiative and performance, including
competitive salaries and benefits as well as 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.
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
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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 "RightSourcing
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.
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
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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 15 offsite centers in
locations in Australia, Canada, China, Hungary, Japan, Malaysia, Singapore, 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 enables 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 domain specific certifications like AS9100/EN9100 for ES group –
Aerospace domain, PCMM Level 5 Assessment for Pune Location, BS15000/ISO20000 certification for
N&S across India and BS15000 Global Certification for IMS business. We have also adopted Six Sigma
as a way of improving our processes and providing the highest levels of quality to our customers.
Our 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 also 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. Maintaining a high level of customer satisfaction
requires sophisticated project management techniques to deliver services seamlessly
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across multiple locations and time zones. We have developed and applied a sophisticated global
project management methodology to help ensure timely, consistent and accurate delivery of our IT
services to our customers. XCEED Optima (Operational Projects Real Time Management), the
enterprise wide project management solution for our Company is a joint initiative of IIS and
Quality. Optima is based on cProjects, a new Enterprise Project Management solution from SAP, the
world leaders in ERP and is customized to meet our specific needs.
Customers
We market our services primarily to companies in the North America, Europe, the Middle East
and the Asia-Pacific region. We have a global customer base which, as of March 31, 2006, consisted
of 506 customers including 156 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 2006, 2005 and 2004 accounted for 90.6%, 92.1% and
90.7% of IT services revenues, respectively. In fiscal 2006, 2005 and 2004, our largest customer,
together with its affiliates, accounted for 8.8%, 10.8% and 14.3%, respectively, of our total
revenues. In fiscal 2006, 2005 and 2004, our second largest customer accounted for 5.1%, 7.4% and
9.9% respectively, of our total revenues. Our top five customers accounted for 24.2%, 29.2% and
36.5% of our total revenues in fiscal 2006, 2005 and 2004 respectively.
The following is a distribution of our customers by our revenues on a trailing 12-month basis
or for the fiscal indicated:
Fiscal
2006
2005
2004
No. of $1+ million customers
101
109
81
No. of $5+ million customers
22
30
24
No. of $10+ million customers
23
19
9
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.
The following is a distribution of our IT revenues across our industry segments for the three
most recent fiscal years:
Fiscal
2006
2005
2004
Manufacturing
28.6
%
29.2
%
32.0
%
Banking and Finance
18.5
17.8
18.3
Insurance
8.8
11.4
13.7
TIMES
18.4
17.3
13.5
Healthcare
6.1
6.0
6.0
Retail
3.1
2.8
1.9
Transportation
2.6
2.7
2.1
Others
13.9
12.8
12.5
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.
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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, 2006, we employed 243 marketing and sales associates.
BPO Services and Nipuna
Nipuna Services Limited, 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 falls below 5% after an
initial public offering. 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, 2006, Nipuna had 25 customers including 9 Fortune Global 500 and Fortune U.S.
500 companies. For fiscal 2006, 2005 and 2004, Nipuna had revenues of $20.0 million, $10.0 million
and $2.4 million respectively. Nipuna handles more than 71 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. Some of Nipuna's arrangements with its customers have Service Level Agreements, or SLAs,
as defined, which if Nipuna were to fail to meet, would result in loss of revenue.
The services offered by Nipuna include:
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
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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 to deliver IT solutions across a wide array
of technologies and platforms. We have partnered with some of the leading names in key application
areas such as ERP (SAP & Oracle), CRM, Integration Middleware, Business Intelligence (Business
Objects and Informatica) and Collaborative Commerce. Some of our other prominent alliance partners
include 4S, 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. 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 23 to our fiscal 2006 financial statements. Also 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.
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, 2006, we had 28,624 associates including
Nipuna's 1,765 associates representing a compound annual growth rate in the number of our
associates of 33.5% 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 our associates' welfare and were selected as one of
the Top 10 Best Employers in India by BT-TNS-Mercer & CNBC-Hewitt in 2004.
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, which promotes our culture of learning and serves as a catalyst for us to sustain
our technological and managerial edge. We require our technical 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
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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. Trainers for our leadership training
include professors from the Harvard Business School. Our leadership training 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.
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 2006, 2005 and 2004, we
experienced associate attrition in IT services at a rate of 19.2%, 16.5% and 17.5%, respectively,
which included involuntary attrition ranging from 4% 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:
•
consulting firms such as Accenture, BearingPoint, 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 Progeon 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
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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 leased lines from reputed service providers such as AT&T,
Sprint, MCI, Telstra, VSNL, Bharti and Software Technology Park of India which permit 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.
We monitor the network performance and continually upgrade SatyamNet to enhance and optimize
network efficiency across all operating locations. We currently have 20Mbps International Private
Leased Circuits (IPLC) and 30Mbps Internet bandwidth in India. In addition, we have 12Mbps high
speed links connecting various cities in India, with our intra-city links being connected by
multiple 2 Mbps lines totaling to 130Mbps 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 1,400 software associates
in two buildings covering an aggregate area of approximately 173,000 square feet, which are linked
to our other facilities through SatyamNet. The Satyam Technology Center also has recreational
facilities and housing for up to 500 associates which covers an area of approximately 140,000
square feet.
We also have additional offshore software technology centers located in Bangalore,
Bhubaneshwar, Chennai, Hyderabad and Pune in India with facilities aggregating approximately
570,000 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.
The delivery centers of Nipuna are located in Hyderabad and Bangalore and cover an area of
75,000 square feet and 52,000 square feet, respectively.
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Intellectual Property
Ownership of software and associated deliverables created for customers is generally retained
by or assigned to the customer, and we do not usually retain an interest in such software or
deliverables. We also develop software products and software tools which are licensed to customers
and remain our property. We rely upon a combination of non-disclosure and other contractual
arrangements and copyright, trade secret, patent and trademark laws to protect our proprietary
rights in technology. We currently require our technical associates to enter into non-disclosure
and assignment of rights agreements to limit use of, access to and distribution of our proprietary
information. The source code for our proprietary software is generally protected as trade secrets
and as unpublished copyright works. We have applied for the registration of "Satyam" as trademarks
in India and United States. We generally apply for trademarks and service marks to identify our
various service and product offerings. Although we believe that our services and products do not
infringe the intellectual property rights of others, we cannot assure you that such a claim will
not be asserted against us in the future.
Seasonality
Our IT services 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 Government of India, including a ten-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 Reserve Bank of India and/or the Ministry of
Finance of the Government of India 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 Reserve Bank of India.
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 datawarehousing 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 2006 and 2005, we spent 0.05%, and 0.08% of our total
revenues on R&D activities.
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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.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of the financial condition and results of operations of our
company should be read in conjunction with the financial statements and the related notes included
elsewhere in this document. This discussion contains forward-looking statements that involve risks
and uncertainties. For additional information regarding these risks and uncertainties, please see
"Item 3. 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 wholly-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, 2005. Our total revenues for fiscal 2006 were $1,096.3 million and
over the past three fiscal years our revenues have grown at a compound annual growth rate of
33.7%.
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. 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 US$5.60 per equity share
aggregating to US$62.3 million.
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 rapidly in recent years. In fiscal 2006, our total
revenues increased by 38.1% as compared to fiscal 2005. Our revenues grew to $1,096.3 million in
fiscal 2006 from $793.6 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 North America 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 2006, 2005 and 2004, our five largest customers accounted for 24.2%,
29.2% and 36.4%, respectively, of our total revenues. As of March 31, 2006, we had 28,624
employees (including employees of Nipuna), whom we refer to as associates, worldwide as compared
to 20,690 associates as of March 31, 2005. 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 Canada, Germany, Italy, the Netherlands, Spain, Sweden,
United Kingdom and United States and sales and marketing offices in the rest of the world.
Upto March 31, 2005, Satyam provided segmental disclosures based on three business groups: IT
services, Business Process Outsourcing, and Software Products. Subsequent to March 31, 2005,
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executive management evaluates Satyam's operating segments based on the following
two-business groups, since the revenues from Software Product segment are no longer meaningful and
management does not evaluate this segment any longer:
•
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 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 for the year ended March 31, 2006 includes the results of
Citisoft and Knowledge Dynamics which were acquired during the year.
•
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 falls below 5% after an initial public offering.
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 2006, 2005 and 2004:
Year ended March 31,
2006
2005
2004
Segment
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
IT
services
$
1,082.7
98.8
%
$
786.7
99.1
%
$
565.1
99.8
%
BPO
13.6
1.2
%
6.9
0.9
1.3
0.2
Total
$
1,096.3
100.0
%
$
793.6
100.0
%
$
566.4
100.0
%
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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,
2006
2005
2004
Technology type
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Application development and maintenance
services
$
541.4
50.0
%
$
429.5
54.6
%
$
339.2
60.1
%
Consulting and enterprise business
solutions
429.5
39.7
269.7
34.3
179.9
31.8
Extended engineering solutions
70.2
6.5
55.2
7.0
20.9
3.7
Infrastructure management services
41.6
3.8
32.3
4.1
25.1
4.4
Total
$
1,082.7
100.0
%
$
786.7
100.0
%
$
565.1
100.0
%
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 years indicated:
Year ended March 31,
2006
2005
2004
Contract type
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Time-and-material
basis
$
702.8
64.9
%
$
517.3
65.8
%
$
386.2
68.3
%
Fixed-price basis
379.9
35.1
269.4
34.2
178.9
31.7
Total
$
1,082.7
100.0
%
$
786.7
100.0
%
$
565.1
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) offsite centers located in Australia, Canada, China, Hungary, Japan,
Malaysia, Singapore, United Arab Emirates, 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
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on the location where services are performed for the years indicated:
Year ended March 31,
2006
2005
2004
Location
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
Offshore
$
496.0
45.8
%
$
327.1
41.6
%
$
248.3
43.9
%
Onsite
/Offsite
586.7
54.2
459.6
58.4
316.8
56.1
Total
$
1,082.7
100.0
%
$
786.7
100.0
%
$
565.1
100.0
%
Revenues by top customers
Our top two customers accounted for 14.1 % of our IT services' revenues in fiscal 2006, as
compared to 18.3% and 24.2% of IT services revenues in fiscal 2005 and 2004 respectively. Our top
five customers accounted for 24.5% of IT services' revenues in fiscal 2006 as compared to 29.5%
and 36.5% of IT services' revenues in fiscal 2005 and 2004 respectively.
Revenues based on customer location
We have experienced increasing volumes of business from customers located in North America
and Europe, attributable to both new customers and additional business from existing customers. We
expect that most of our revenues will be generated in North America 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 years indicated:
Year ended March 31,
2006
2005
2004
Geographic
location
Amount
%
Amount
%
Amount
%
(in millions, except percentages)
North America
$
699.0
64.6
%
$
538.2
68.4
%
$
414.0
73.3
%
Europe
204.8
18.9
130.7
16.6
77.5
13.7
Japan
15.5
1.4
13.9
1.8
11.1
2.0
India
45.1
4.2
25.5
3.2
16.0
2.8
Rest of the world
118.3
10.9
78.4
10.0
46.5
8.2
Total
$
1,082.7
100.0
%
$
786.7
100.0
%
$
565.1
100.0
%
Expenses
Cost of revenues
Our cost of revenues consists primarily of salary and other compensation and benefits,
stock-based compensation expense, depreciation, data communication expenses, computer maintenance,
cost of software, sub-contracting charges, expenses relating to the opening of new onsite,
offsite, nearshore and offshore centers, and foreign travel expenses.
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 85.0%, 82.1% and
81.4% in fiscal 2006, 2005 and 2004 respectively. The utilization levels for our technical
associates have been increasing in recent periods, mainly on account of new business and an
increase in business from existing customers, and we expect this trend to continue in the near
future.
Selling, general and administrative expenses
Selling, general and administrative expenses generally include compensation costs of sales,
management and administrative personnel, travel costs, advertising, business promotion,
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depreciation on assets, rent, repairs, electricity and other general expenses not
attributable to cost of revenues.
Subsidiaries
As of March 31, 2006, we have four wholly-owned subsidiaries, Nipuna Services Ltd., or
Nipuna, Satyam Technologies Inc., or STI, Satyam Computer Services (Shanghai) Company Limited, or
Satyam Shanghai and Knowledge Dynamics Pte Ltd, or Knowledge Dynamics as well as one
majority-owned subsidiary, Citisoft Plc, or Citisoft. These five subsidiaries have been
consolidated in our consolidated financial statements as of March 31, 2006. The results of
Citisoft's operations have been consolidated by us from the acquisition date of May 12, 2005 and
the results of Knowledge Dynamics Pte Ltd have been consolidated by Satyam Computer Services from
the acquisition date of October 1, 2005.
Citisoft
On May 12, 2005, Satyam 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 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$3.1 million payable on April 30,
2006. Satyam Computer Services is also required to pay a maximum earn out consideration amounting
to US$ 3.9 million on April 30, 2006 based on achievement of targeted revenues and profits. The
deferred consideration for the acquisition of the 75% equity interest has been accounted for as
part of the purchase consideration and shown as a current liability in the balance sheet. The
earn-out consideration will be accounted for as purchase consideration when the contingency is
resolved.
Satyam Computer Services has a call option and the minority shareholders have a put option to
acquire or sell (as applicable) 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$2.4 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$3.7 million based on
achievement of targeted revenues and profits. Satyam Computer Services records the put option at
fair value at each balance sheet date, with the initial fair value of the put option included as
part of the consideration for its 75.0% interest in Citisoft. The difference between the fair
values at each valuation date is charged to selling, general and administration expenses in
statement of income. On the basis of an independent valuation, the value of put option was US$ Nil
and US$1.1 million as of May 12, 2005 and March 31, 2006 respectively..
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 US$1.6 million on April 30, 2006 and a maximum of
US$1.6 million each on April 30, 2007 and 2008 based on achievement of targeted revenues and
profits. As of March 31, 2006 Satyam Computer Services has accrued US$1.4 million as a current
liability and charged US$1.4 million to the statement of income as part of cost of revenues.
The purchase consideration has been allocated to the assets acquired and liabilities assumed
as of the date of acquisition based on management's estimates and a valuation done by an
independent valuer in accordance with Statement of Financial Accounting Standards No. 141,
Business Combinations. The goodwill has been allocated to the IT services segment. The purchase
price allocation is as follows:
42
Table of Contents
US$ in
millions
Purchase price
$
17.4
Allocated to:
Net current assets
$
2.2
Tangible assets
0.3
Customer Contracts related intangibles
0.8
Customer relationship related intangibles
5.4
Trade name
0.7
Goodwill
10.3
Deferred tax liability
(2.3
)
Total
$
17.4
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 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. 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$0.8 million and US$0.7 million payable on April 30, 2006 and
2007 respectively. Satyam Computer Services is also required to pay a maximum earn-out
consideration amounting to US$0.3 million, US$0.8 million and US$1.1 million on April 30, 2006,
2007 and 2008 respectively based on the achievement of targeted revenues and profits. 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 shown as a current liability and
US$0.7 million as non current liability in the balance sheet. The earn-out consideration will be
accounted for as purchase consideration when the contingency is resolved.
The purchase consideration has been allocated to the assets acquired and liabilities assumed
as of the date of acquisition based on management's estimates and a valuation done by an
independent valuer in accordance with Statement of Financial Accounting Standards No. 141,
Business Combinations. The goodwill has been allocated to the IT services segment. The purchase
price allocation is as follows:
US$ 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
Associate — Sify
In addition to our subsidiaries, during fiscal 2006, we also owned 31.6% of the equity shares
of 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. 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.
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 US$43.6 million has been
recognized as gain in the statement of income during year ended March 31, 2006.
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Table of Contents
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 is expected to expire between fiscal 2006 and fiscal 2010. Exemption for two of our
STP units in Hyderabad expired during the year ended March 31, 2006. 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 $24.0
million as March 31, 2006, 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.
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,
2006
2005
2004
Statement of Operations data:
Amount
%
Amount
%
Amount
%
(dollars in millions)
Revenues:
IT services
$
1,083.5
98.8
%
$
787.4
99.2
%
$
565.6
99.9
%
BPO
19.9
1.8
10.0
1.3
2.4
0.4
Inter–segment
(7.1
)
(0.6
)
(3.8
)
(0.5
)
(1.6
)
(0.3
)
Total revenues
1,096.3
100.0
793.6
100.0
566.4
100.0
Cost of
revenues:
(1)
IT services
(678.1
)
(61.9
)
(502.2
)
(63.3
)
(343.1
)
(60.6
)
BPO
(17.6
)
(1.6
)
(7.9
)
(1.0
)
(1.9
)
(0.3
)
Inter–segment
6.7
0.6
3.3
0.4
1.4
0.2
Total cost of revenues
(689.0
)
(62.8
)
(506.8
)
(63.9)
(343.6
)
(60.7
)
Gross profit:
IT services
405.4
37.0
285.2
35.9
222.5
39.3
BPO
2.3
0.2
2.1
0.3
0.5
0.1
Inter–segment
(0.4
)
(0.0
)
(0.5
)
(0.1
)
(0.2
)
(0.0
)
Total gross profit
407.3
37.2
286.8
36.1
222.8
39.3
Operating expenses:
Selling, general and administrative expenses:
(2)
IT services
(176.8
)
(16.1
)
(113.4
)
(14.3
)
(97.3
)
(17.2
)
BPO
(11.2
)
(1.0
)
(11.4
)
(1.4
)
(4.5
)
(0.8
)
Inter–segment
0.4
0.0
0.5
0.1
0.2
0.0
Total selling, general and administrative expenses
(187.6
)
(17.1
)
(124.3
)
(15.7
)
(101.6
)
(17.9
)
Operating income/(loss):
IT services
228.6
20.9
171.8
21.7
125.2
22.1
BPO
(8.9
)
(0.8
)
(9.3
)
(1.2
)
(4.1
)
(0.7
)
Inter–segment
—
—
—
—
—
—
Total operating income/(loss)
219.7
20.0
162.5
20.5
121.1
21.4
Interest income
26.3
2.4
22.3
2.8
20.3
3.6
Interest expense
(1.3
)
(0.1
)
(0.5
)
(0.1
)
(0.5
)
(0.1
)
Gain on sale of investments
43.6
4.0
—
0.0
2.7
0.5
Gain/ (loss) on foreign exchange transactions
0.3
0.0
(4.6
)
(0.6
)
(8.9
)
(1.6
)
Other income/(expense), net
(0.8
)
(0.1
)
0.4
0.0
2.3
0.4
Income before income taxes and equity in earnings/(losses)
of associated companies
287.8
26.3
180.2
22.7
137.0
24.2
Income taxes
(37.7
)
(3.4
)
(25.3
)
(3.2
)
(22.5
)
(4.0
)
Minority interest
0.1
0.0
—
—
—
—
Equity in earnings/(losses) of associated companies, net of
taxes
(0.8
)
(0.1
)
(1.1
)
(0.1
)
(2.6
)
(0.5
)
Net income/(loss)
$
249.4
22.7
$
153.8
19.4
$
111.9
19.8
Depreciation
30.6
2.8
25.0
3.2
24.4
4.3
Stock-based compensation
0.8
0.1
1.9
0.2
1.7
0.3
(1)
Inclusive of stock-based compensation expenses of $Nil, $0.8 million and $0.9
million during the years ended March 31, 2006, 2005 and 2004, respectively, in the IT
services segments.
(2)
Inclusive of stock-based compensation expenses of $0.8 million, $1.1 million and
$0.8 million during the years ended March 31, 2006, 2005 and 2004, respectively, in the IT
services segments.
45
Table of Contents
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.
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 has grown by $159.8 million, revenues from application
development and maintenance has increased by $111.9 million, followed by extended engineering
solutions and infrastructure management services, which grew 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
increased in North America followed by $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 North America 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
46
Table of Contents
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 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 Indian equity shares of 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 amounting to $0.8
million in fiscal 2006 as compared to a loss of $0.3 million in fiscal 2005.
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 losses of associated
companies was $0.8 million in fiscal 2006 as compared to $1.1 million in fiscal 2005. Equity in
losses of Sify and CA Satyam amounted to $1.3 million and $15 thousand respectively in fiscal 2006
as compared to $1.7 million and $63 thousand respectively in fiscal 2005. These losses were
partially offset by equity in profit of Satyam Venture amounting to $0.5 million in fiscal 2006 as
compared to equity in loss of $0.7 million in fiscal 2005.
Net
income.
As a result of the foregoing, our net income was
$249.4 million 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.
47
Table of Contents
Comparison of results for fiscal 2005 and fiscal 2004
Revenues.
Our revenues increased by 40.1% to $793.6 million in fiscal 2005 from $566.4 million in
fiscal 2004. This revenue growth of $227.2 million in fiscal 2005 was primarily the result of an
increase in business both from existing customers and new customers. Revenues from existing
customers increased by 42.4% to $731.2 million in fiscal 2005 from $513.6 million in fiscal
2004. Revenues from new customers increased by 18.2% to $62.4 million in fiscal 2005 from $52.8
million in fiscal 2004. We added 108 customers both in fiscal 2005 and 2004 including 17 and 25
from the Fortune Global 500 and Fortune U.S. 500 list in fiscal 2005 and 2004, respectively.
During fiscal 2005, revenues (IT services excluding inter-segment revenues) from application
development and maintenance has grown by $90.4 million or 26.7%, revenues from consulting and
enterprise business solutions has increased by $89.8 million or 49.9%, followed by revenues in
extended engineering solutions and infrastructure management services, which grew by $34.3 million
and $7.2 million or 164.1% and 28.7% respectively.
Revenues from IT services (excluding inter-segment revenues) provided on a time-and-materials
basis decreased to 65.8% in fiscal 2005 from 68.3% in fiscal 2004. Revenues from IT services
provided on a fixed-price basis increased to 34.2% in fiscal 2005 from 31.7% in fiscal 2004. The
increase in fiscal 2005 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 in fiscal 2005 increased as a result of new engagements in consulting and
enterprise business solutions, 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. Revenues from new customers increased
by 18.2% to $62.4 million in fiscal 2005 from $52.8 million in fiscal 2004.
Of the total increase of $227.2 million in total revenue in fiscal 2005, $127.5 million was
on account of increase in revenues from North America followed by $53.9 million increase in
revenue from Europe and $31.8 million in rest of the world; revenues in India increased by $11.2
million and in Japan by $2.8 million. Our increased business in North America and Europe was due
to new customers and additional business from existing customers.
Cost of Revenues.
Cost of revenues increased by 47.5% to $506.8 million in fiscal 2005 from
$343.6 million in fiscal 2004. Cost of revenues represented 63.9% of revenues in fiscal 2005 and
60.7% in fiscal 2004. This increase by $163.2 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 utilization levels for IT services were 82.1% and 81.4% in fiscal
2005 and 2004, respectively. Associate compensation and benefits expenses increased by 56.7% to
$401.2 million, or 50.6% of revenues in fiscal 2005 from $256.0 million, or 45.2% of revenues in
fiscal 2004. The increase in the associate compensation and benefits is due to: (i) increase in
the total number of technical associates by 5,790 to 19,240 in fiscal 2005 from 13,450 in fiscal
2004; (ii) increase in number of onsite technical associates by 845 to 4,301 in fiscal 2005 from
3,456 in fiscal 2004 for which we pay a higher compensation; and (iii) an increase of existing
salaries (approximately 17%) during the period. Traveling expenses increased 23.3% to $39.1
million, or 4.9% of revenues, in fiscal 2005 from $31.7 million, or 5.6% of revenues, in fiscal
2004. Communication expenses increased 37.3% to $7.0 million or 0.9% of revenues in fiscal 2005
from $5.1 million in fiscal 2004. Other expenses comprised mainly of rent, power and fuel and
maintenance expenses. Other expenses increased by 27.9% to $38.1 million, or 4.8% of revenues, in
fiscal 2005 from $29.8 million in fiscal 2004. Depreciation expense increased 2.5% to $20.6
million, or 2.6% of revenues, in fiscal 2005 from $20.1 million in fiscal 2004. Stock-based
compensation expense decreased by 8.8% to $775 thousand in fiscal 2005 from $850 thousand in
fiscal 2004.
Selling, general and administrative expenses.
Selling, general and administrative expenses
increased 22.3% to $124.3 million in fiscal 2005 from $101.6 million in fiscal 2004. Selling,
general and administrative expenses represented 15.7% of revenues in fiscal 2005 and 17.9% of
revenues in fiscal 2004. This increase of $22.7 million in fiscal 2005 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 40.8% to $52.8 million, or 6.7% of revenues, in fiscal 2005 as compared to
$37.5 million or 6.6% of revenues in fiscal 2004 primarily on account of increase in number of
non-technical associates to 1,450 from 1,006, incentives amounting to $3.7 million and salary
increments
48
Table of Contents
(approximately 17%) given to associates during the year. Communication expenses increased 35.0%
to $8.1 million or 1.0% of revenues in fiscal 2005 as compared to $6.0 million or 1.1% of revenue
in fiscal 2004. Traveling expenses increased 5.7% to $9.2 million or 1.2% of revenues in fiscal
2005 from $8.7 million or 1.5% of revenue in fiscal 2004. Traveling expenses increased primarily
due to increase in travels by our non-technical associates. Stock-based compensation expense
increased 54.7% to $1.2 million in fiscal 2005 from $771 thousand in fiscal 2004. Other expenses
comprised primarily of depreciation, professional charges, marketing expense, rent, power and fuel
and maintenance expenses. Other expenses increased 9.0% to $53.1 million or 6.7% of revenue in
fiscal 2005 from $48.7 million, or 8.6% of revenues in fiscal 2004.
Operating income.
Our operating income was $162.5 million in fiscal 2005, representing an
increase of 34.2% over the operating income of $121.1 million for fiscal 2004. As a percentage of
revenues, operating income decreased to 20.5% in fiscal 2005, from 21.4% in fiscal 2004. This
decrease in operating income as a percentage of revenue was due to (i) increase in the associate
compensation and benefits expenses by $160.5 million to $454.0 million or 57.2% of revenue in
fiscal 2005 from $293.5 million, or 51.8% of revenues, in fiscal 2004 and (ii) offset by decrease
in the traveling, communication, depreciation and other expenses.
Interest income
. Interest income increased to $22.3 million in fiscal 2005 representing an
increase of 9.9% from $20.3 million in fiscal 2004. This increase was due to increase in deposits
with banks by $79.5 million to $411.6 million in fiscal 2005 from $332.1 million in fiscal 2004.
Gain on sale of shares in associated company/others.
In fiscal 2005, gain on sale of investments
was $Nil as compared to $2.7 million in fiscal 2004. The gain of $2.7 million in fiscal 2004 was
on account of the gain on sale of 1,000,000 Indian equity shares of Sify amounting to $2.6
million.
Gain/(loss) on foreign exchange transactions.
In fiscal 2005 and fiscal 2004, 81.8% and 84.5%
respectively, of our revenues were generated in U.S. dollars. The average exchange rate of Indian
rupee to U.S. dollar in fiscal 2005 was Rs. 44.85 against Rs. 45.96 in fiscal 2004. As at March
31, 2005, the Indian rupee depreciated to Rs. 43.62 against 43.40 at March 31, 2004. As at March
31, 2004, the Indian rupee appreciated to Rs. 43.40 against Rs. 47.53 as at March 31, 2003. As a
result of the average exchange rate during fiscal 2005 being lower than during fiscal 2004, loss
on foreign exchange transactions was $4.6 million in fiscal 2005 as compared to a loss of $8.9
million in fiscal 2004.
Other income/(expenses), net.
Other income was $326 thousand in fiscal 2005, representing a
decrease of 85.6 % from $2.3 million in fiscal 2004. The decrease in the other income is
primarily on account of loss on forward and options contracts amounting to $339 thousand in fiscal
2005 as compared to a gain of $2.4 million in fiscal 2004. This decrease was partly offset by
increase in other income, net of other expenses to $665 thousand in fiscal 2005 as compared to a
loss of $91 thousand in fiscal 2004.
Income taxes.
Income taxes were $25.3 million in fiscal 2005, representing an increase of 12.4%
from $22.5 million in fiscal 2004.
Equity in earnings/(losses) of associated companies, net of taxes.
Equity in losses of associated
companies was $1.1 million in fiscal 2005 as compared to $2.6 million in fiscal 2004. Equity in
losses of Sify and CA Satyam amounted to $1.7 million and $63 thousand respectively in fiscal 2005
as compared to $2.2 million and $398 thousand respectively in fiscal 2004. These losses were
partially offset by equity in profit of Satyam Venture amounting to $706 thousand in fiscal 2005
as compared to equity in loss of $3 thousand in fiscal 2004.
Net income.
As a result of the foregoing, our net income was $153.8 million in fiscal 2005,
representing an increase of 37.4% over net income of $111.9 million in fiscal 2004. As a
percentage of total revenues, net income decreased to 19.4% in fiscal 2005 from 19.8% in fiscal
2004.
Liquidity and Capital Resources
Net cash provided by operating activities
Net cash provided by operating activities was $162.7 million, $171.3 million and $89.2
million in fiscal 2006, 2005 and 2004, respectively.
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
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and increase in net accounts receivable and unbilled revenues. Net accounts receivable and
unbilled revenues increased by $81.9 million primarily as a result of an increase in our revenues
and increase in collection period. Accounts payable and accrued expenses increased by $38.1
million primarily on account of accrued compensation and benefits of $7.7 million, increase in
sub-contracting charges payable by $1.6 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 $19.6 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.
In fiscal 2004, non-cash adjustments to reconcile the $111.9 million net income to net cash
used in operating activities consisted primarily of depreciation expense of $24.4 million. Net
accounts receivable and unbilled revenues increased by $22.5 million primarily as a result of an
increase in our revenues. Increase in other working capital assets of $25.4 million was primarily
on account of interest accrued on deposits placed with banks. Unearned and deferred revenues
increased because of advance billing on customers for services to be rendered in future.
Net cash used in investing activities
Net cash used in investing activities was $5.2 million in fiscal 2006 against net cash used
in investing activities of $115.5 million and $60.0 million in fiscal 2005 and 2004 respectively.
This decrease in net cash used in investing activities was primarily due to sale of shares
in 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 by $ 33.9 million to $79.3 million in fiscal 2005 as compared to
$45.4 million in fiscal 2004, increase in purchases of premises, plant and equipment by $22.2
million to $39.0 million in fiscal 2005 from $16.8 million in fiscal 2004 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 used in investing activities in fiscal 2004 decreased by $212.0 million to $60.0
million from $272.0 million in fiscal 2003. This decrease was primarily related to a decrease in
investments in bank deposits and acquisitions and investments in associate companies. Investments
made in bank deposits in fiscal 2004 were $45.4 million as compared to $259.3 million in fiscal
2003. Net cash used for acquisitions and investment in associate companies decreased from $5.1
million in fiscal 2003 to zero in fiscal 2004. These decreases were partially offset by an
increase in purchase of premises and equipment by $5.8 million in fiscal 2004.
Net cash provided by/ (used in) financing activities
Net cash provided by financing activities was $6.1 million in fiscal 2006 against net cash
used in financing activities was $12.9 million and $ 11.6 million in fiscal 2005 and 2004
respectively.
In fiscal 2006, $6.1 million is used in financing activities. We received cash from issuance
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 dividends paid amounted to $41.3 million in fiscal 2006.
In fiscal 2005, $26.8 million was raised from financing activities, primarily 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 compared to $26.2 million in fiscal 2004.
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During fiscal 2004, $20.5 million was raised from financing activities, primarily from the
issuance of preferred stock (net of issuance costs) of $9.4 million by our subsidiary and $9.3
million by associate stock options. We used cash to repay loans amounting to $2.5 million and to
pay of dividend amounting to $26.2 million in fiscal 2004.
As of March 31, 2006, we had cash and cash equivalents of $292.8 million, rupee denominated
loans from the Satyam Associate Trust of $1.3 million secured by our shares held by the Satyam
Associate Trust, U.S. dollar denominated loans of Nipuna amounting to $16.1 million and other
outstanding loans of $7.0 million with maturities ranging from one to three years. As of March
31, 2006, we had an unused working capital line of credit of $7.7 million from banks and unused
non-funded lines of credit of $4.4 million from banks.
The following table describes our outstanding credit facilities as of March
31, 2006
Amount
Interest
Computation
Loan Type
Lenders
outstanding
(per annum)
method
(dollars in millions)
Rupee loan of Satyam Associates Trust
Cholamandalam
$             1.3
10.25%
Fixed
Working capital term loan
BNP Paribas
5.6
6 month LIBOR +0.95%
Floating
External commercial borrowing
BNP Paribas
10.5
6 month LIBOR +0.95%
Floating
Export packing credit
BNP Paribas
4.1
6 month LIBOR +0.25%
Floating
Other loans
Various other parties
2.9
3.0%-14.5%
Fixed
Total
$           24.4
We anticipate capital expenditures of approximately $75.0 million in fiscal 2007,
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 its two strategic investors,
Olympus Capital and Intel Capital, upon redemption of the $20 million preference shares in Nipuna
held by them. These preference shares are to be mandatorily redeemed or converted into equity
shares no later than June 2006, if Nipuna achieves certain targets for revenues and profits by
March 31, 2006. If these targeted revenues and profits are not achieved along with other
triggering events, the investors have an option to either redeem the preference shares or convert
them. Although certain triggering events for early redemption as per the agreement have occurred
during the period January 2004 to December 2004, the investors waived their right of early
redemption. Further Nipuna has not achieved the targeted revenues and profits upto March 2006. If
not earlier converted, these preference shares are redeemable on maturity in June 2007 at a
redemption premium, which could range between 7.5% to 13.5% per annum.
In addition, depending upon certain triggering events, we may be required to subscribe to
US$20 million in convertible debentures of Nipuna which would be convertible upon the election of
Nipuna into ordinary shares at any time. On January 6, 2005, Nipuna obtained approval from a bank
for long-term borrowings up to US$20 million with an interest of 0.95% above a six-month LIBOR.
Satyam Computer Services has given a corporate guarantee to the bank for this borrowing. As per
the terms of the facility, Nipuna was required to draw the funds prior to September 30, 2005 and
Nipuna has got a further extension upto June 30, 2006. The borrowing is repayable in 3 years from
each draw down of the borrowing. As of March 31, 2006, Nipuna has availed $16.1 million under the
above arrangement. We expect that we will not be required to subscribe to the convertible
debenture described above
The following table sets forth our contractual obligations and commitments to make future
payments as of March 31, 2006. The following table excludes our accounts payable, accrued
operating expenses and other current liabilities which are payable in normal course of operations.
We believe that the conversion of the Nipuna preference shares is more probable than redemption
and therefore have not included such redemption and the redemption premium payable, if redeemed as
per the terms of the agreement, in the following table.
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Payments due as at March 31, 2006,
Within 1
1-3
3-5
After 5
year
years
years
years
Total
(dollars in millions)
Long-term debt
$
2.4
$
1.8
$
16.1
—
$
20.3
Operating leases
4.1
3.0
0.6
$
0.4
8.1
Unconditional purchase obligations:
Other commercial commitments
26.7
—
—
—
26.7
Bank guarantees
3.7
2.9
0.4
6.4
13.4
Letters of credit
—
—
—
—
—
Gratuity Plan
1.5
3.7
5.6
13.0
23.8
Citisoft deferred and earn-out
consideration and EBT funding
(1)
8.5
15.0
—
—
23.5
Knowledge Dynamics deferred and
earn-out consideration
(2)
1.1
2.7
—
—
3.8
Total contractual cash obligations
$
48.0
$
29.1
$
22.7
$
19.8
$
119.6
(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.
Based on past performance and current expectations, we believe that our cash and cash
equivalents, short-term investments, 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.
Deferred Stock-based Compensation
We have three associate stock option plans: our Associated Stock Option Plan, or ASOP,
established in May 1998; our Associated Stock Option Plan B, or ASOP B, established in May 1999;
and our Associated Stock Option Plan ADS, or ASOP ADS, established in May 1999. We also have the
Employee Stock Option Plan, or ESOP, established by Nipuna in April 2004.
ASOP
We account for the ASOP as a fixed plan in accordance with Accounting Principles Board, or
APB, Opinion No. 25. Under U.S. GAAP, the difference between the exercise price and the market
price on the date the warrants are granted to associates is required to be recognized as a
non-cash compensation charge and amortized over the vesting period of the equity shares underlying
the warrants. Under U.S. GAAP, in fiscal 2006 and 2005, we recognized deferred stock-based
compensation of $0.4 million and $2.2 million, and amortized and charged to earnings $0.4 million,
$1.9 million during the same periods, respectively.
ASOP B
The ASOP B is substantially similar to the ASOP and is administered by the compensation
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 (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. Under U.S. GAAP, in fiscal 2006 and 2005, we
recognized deferred stock-based compensation of $0.5 million and $(28) thousand and amortized and
charged to earnings $0.4 million and $(27) thousand during the same periods, respectively.
ASOP ADS
Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. We
account for the ASOP ADS as a fixed option plan.
Nipuna ESOP
Under the Nipuna ESOP options are granted at fair value to associates as determined by an
independent valuer as of the date of grant. We account for the Nipuna ESOP as a fixed option plan.
We expect that the exercise prices of options granted in the future under the plan will not be
less than the fair market value and therefore we do not expect to incur compensation expense with
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respect to those future grants under current accounting rules.
Effect of recently issued accounting pronouncements
On December 16, 2004, the FASB issued FAS 123R, Share-Based Payment, an amendment of
FASB Statements No. 123 and 95, that addressed the accounting for share-based payment transactions
in which an enterprise receives employee services in exchange for either equity instruments of the
enterprise or liabilities that are based on the fair value of the enterprise's equity instruments
or that may be settled by the issuance of such equity instruments. This statement eliminates the
ability to account for share-based compensation transactions using the intrinsic value method as
prescribed by Accounting Principles Board, or APB, Opinion No. 25, "Accounting for Stock Issued to
Employees," and requires that such transactions be accounted for using a fair-value-based method
and recognized as expenses in our consolidated statement of operations. As of the required
effective date, the standard requires that the modified prospective method be used, which requires
that the fair value of new awards granted from the beginning of the year of adoption (plus
unvested awards as of the effective date) be expensed over the vesting period. In addition, the
statement encourages the use of the "binomial" approach to value stock options, which differs from
the Black-Scholes option pricing model that we currently use in the footnotes to our consolidated
financial statements.
The revised FAS 123R as issued by FASB will have a significant impact on our consolidated statement
of income as Satyam Computer Services, our subsidiaries and our associated companies will be
required to expense the fair value of our stock option grants rather than expensing the intrinsic
value of stock options as is our current practice. FAS 123R is applicable to Satyam for annual
periods beginning after June 15, 2005. Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
In May 2005, FASB Issued FAS No. 154, "Accounting Changes and Error Corrections — a
replacement of APB No. 20 and FAS No. 3". FAS 154 provides guidance on the accounting for and
reporting of accounting changes and error corrections. It establishes, unless impracticable,
retrospective application as the required method for reporting a change in accounting principle in
the absence of explicit transition requirements specific to the newly adopted accounting
principle. FAS 154 also provides guidance for determining whether retrospective application of a
change in accounting principle is impracticable and for reporting a change when retrospective
application is impracticable. The correction of an error in previously issued financial
statements is not an accounting change. However, the reporting of an error correction involves
adjustments to previously issued financial statements similar to those generally applicable to
reporting an accounting change retrospectively. Therefore, the reporting of a correction of an
error by restating previously issued financial statements is also addressed by FAS 154. FAS 154
shall be effective for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. The adoption of this standard is not expected to have a material impact
on Satyam's consolidated financial statements.
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.
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.
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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.
Revenues earned from services performed on a "time-and-material" basis are recognized as the
services are performed. IT services performed on time bound fixed-price engagements require
accurate estimation of the costs which include salaries and related expenses of technical
associates, related communication expenses, travel costs, scope and duration of each engagement.
Revenue and the related costs for these projects are recognized on percentage of completion, with
revisions to estimates reflected in the period in which changes become known. Provisions for
estimated losses on such engagements are made during the period in which a loss becomes probable
and can be reasonably estimated. We recognize revenue based on the completed-contract method where
the work to complete cannot be reasonably estimated.
We provide our 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.
Impairment of Goodwill
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:
•
significant underperformance relative to expected historical or projected future operating
results;
•
significant changes in the manner of our use of the acquired assets or the strategy for our
overall business;
•
significant negative industry or economic trends;
•
significant decline in our stock price for a sustained period; and
•
our market capitalization relative to net book value.
When we determine that the carrying value of goodwill may not be recoverable based upon the
existence of one or more of the above indicators of impairment, we measure any impairment based on
a projected discounted cash flow method using a discount rate determined by our management to be
commensurate with the risk inherent in our current business model.
Effective April 1, 2002, we adopted SFAS 142 which requires, among other things, the
discontinuance of amortization related to goodwill and indefinite lived intangible assets. These
assets will then be subject to an impairment test at least annually. We are required to perform
goodwill impairment tests on an annual basis and between annual tests in certain circumstances. We
performed an initial impairment review of goodwill on the adoption of SFAS 142 and also carried
out an annual impairment review in 2006. Based on these tests there is no impairment of goodwill
during the year ended March 31, 2006.
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
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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.
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-04
44.52
43.89
44.52
43.40
May-04
45.42
45.18
45.57
44.55
June-04
45.99
45.50
46.21
44.94
July-04
46.40
46.06
46.45
45.66
August-04
46.35
46.32
46.40
46.21
September-04
45.91
46.05
46.35
45.81
October-04
45.30
45.74
45.87
45.30
November-04
44.47
45.03
45.40
44.47
December-04
43.27
43.85
44.52
43.27
January-05
43.60
43.62
43.82
43.35
February-05
43.57
43.58
43.73
43.28
March-05
43.62
43.59
43.70
43.44
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
Risk Management Policy
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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,
2006
2005
2004
Amount
Amount
Amount
(dollars in millions)
Aggregate contracted principal amounts of contracts outstanding:
Forward contracts
$
79.0
$
160.0
$
44.5
Options contracts
137.0
141.5
—
Total
$
216.0
$
301.5
$
44.5
Gains/(loss) on outstanding contracts:
Forward contracts
$
0.4
$
1.0
$
0.4
Options contracts
(1.8
)
0.1
—
Total
$
(1.4
)
$
1.1
$
0.4
The outstanding foreign exchange forward and options contracts as of March 31, 2006
mature between one to eleven months.
Gains/(losses) on foreign exchange forward and options contracts included under the head
other income/(expense) in the statement of income are as stated below:
Year ended March 31,
2006
2005
2004
Amount
Amount
Amount
(dollars in millions)
Forward contracts
$
0.8
$
(0.5
)
$
2.4
Options contracts
(1.6
)
0.2
—
Total
(0.8
)
$
0.3
$
2.4
Off-Balance Sheet Arrangements
We currently do not engage in any off-balance sheet arrangements.
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Foreign Currency Transactions/ Translation
During the fiscal 2006, 2005 and 2004, 77.6%, 81.8% and 84.5%, 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 in fiscal 2006 was Rs. 44.18 against Rs.
44.85 in fiscal 2005. As at March 31, 2006, the rupee depreciated to Rs. 44.48 against Rs. 43.62
as at March 31, 2005. As at March 31, 2005, the rupee depreciated to Rs. 43.62 against Rs.43.40 as
at March 31, 2004. As a result, gain on foreign exchange transactions was $0.3 million in fiscal
2006 as compared to a loss of $4.6 million in fiscal 2005.
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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, 2006:
Directors
Name
Age
Position
B. Ramalinga Raju
50
Chairman
B. Rama Raju
46
Managing Director and Chief Executive Officer(3)
V.P. Rama Rao
72
Director(1),(2),(3)
Dr. Mangalam Srinivasan
67
Director(1),(2)
Krishna G. Palepu
51
Director
Vinod K. Dham
55
Director(2)
M.Rammohan Rao
64
Director(1), (2)
Key Management Personnel
(4)
Name
Age
Position
Anand T. R
50
Director and Senior Vice President, Vertical
Business Unit — TIMES
Jayaraman G
50
Sr. Vice President, Corporate Governance and
Company Secretary
Joseph Abraham
53
Director and Senior Vice President, Vertical
Business Unit — Retail
Keshab Panda
47
Director and Senior Vice President, Regional
Business Unit, Europe
Manish Sukhlal Mehta
49
Director and Senior Vice President, Horizontal
Competency Unit — SAP, Engineering and Spatial
Services
Mohan Eddy F.S
55
Director, Internal Information Systems and
Platinum Processes Group
Murty A.S
47
Director and Senior Vice President, Leadership
Development Group
Prabhat G.B
40
Director, Horizontal Business Unit — Business Solution
Ram Mynampati
48
President, Commercial and Healthcare Businesses
Ravi Shanker Bommakanti
47
Director and Senior Vice President — Vertical
Business Unit — Insurance
Shailesh Shah
45
Director and Senior Vice President — Corporate
Strategy Group
Srinivas V
45
Director, Senior Vice President and Chief
Financial Officer
Subramanian D
46
Director and Senior Vice President — Vertical
Business Unit — Manufacturing, Energy, Oil and
Gas and Utilities
Vijay Prasad Boddupalli
54
Director and Senior Vice President — Horizontal
Competency Unit — Enterprise Applications and
Business Intelligence Solutions
Virender Aggarwal
45
Director and Senior Vice President — Regional
Business Unit-India, Middle, Africa & Asia Pacific
V Murali
41
Director and Senior Vice President – Commercial
and Contract Management
(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
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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.
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.
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
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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.
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 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.
Jayaraman G.
has been our Sr.Vice President, Corporate Governance and Company Secretary since
April 2005. From March 2000 to September 2000 he was Assistant Vice President and Company
Secretary and 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 associate 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.
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
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Tata Consulting Services Limited for over 12 years. Mr. Murty holds a Master of Engineering
degree from the Indian Institute of Science, Bangalore.
Prabhat G. B.
has been our Director, Horizontal Business Unit — Business Solution since
November 2000. He is responsible for leading our business into the higher-end consulting service
offerings. He was co-founder and Director, Strategic Business Unit of Satyam Renaissance
Consulting from 1995, prior to which he worked for nearly 10 years for the TVS Group. Mr. Prabhat
holds a Master of Science (Computer Sciences) degree from the Indian Institute of Technology,
Chennai.
Ram Mynampati
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.
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 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,
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.
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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.
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.
Compensation
Executive Compensation
Under the Companies Act, our shareholders must approve the salary, bonus and benefits of all
associate directors at an annual general meeting of shareholders. At our general meeting held on
July 23, 2004, our shareholders approved the employment terms and conditions for each of our
associate directors including the monthly salary, benefits, medical reimbursement and pension fund
contributions. These terms are made for a five-year period. The employment terms of Mr. B.
Ramalinga Raju, the chairman of our board of directors, and Mr. Rama Raju, our managing director
and chief executive officer, were renewed for a period of five years with effect from April 1,
2004.
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.
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 2006 for services rendered
in all capacities to us. Mr. Raju was appointed as managing director and chief executive officer
of our company in 1991. With the exception of four executive officers who are serving overseas,
none of our other executive officers earned a combined salary and bonus in excess of $100,000
during any of the last three fiscal years. With respect to the four key managerial personnel, we
have not provided individual compensation information because their compensation is attributed
predominantly to their overseas assignments, and if they were based in India, their individual
compensation would not have exceeded $100,000. In addition, none of our non-executive officers
received compensation from us of greater than $100,000 during fiscal 2006, other than Mr. Krishna
G Palepu who received payments towards professional fees by us of $155,000 during fiscal 2006.The
total remuneration received by our executive officers and directors for their services to us for
the fiscal year ended March 31, 2006 was $4.3 million. The total remuneration and the amounts in
the following table are in dollars based on the noon buying rate of Rs. 44.48 per dollar
on March 31, 2006.
Annual Compensation
Name and Principal Position
Salary
Bonus
Others
(1)
B. Rama Raju, Managing
Director and Chief Executive
Officer
$
83,849
—
$
9,856
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(1)
Includes membership fees and housing allowance.
Option Grants
During the fiscal year ended March 31, 2006, we granted options to our key managerial personnel to
purchase 326,541 shares under our ASOP B plan and 103,340 ADSs under our ASOP ADS plan. The
expiration dates for these options granted under ASOP B and ASOP ADS ranged from April 23, 2010 to
April 01, 2013. The exercise prices for the options granted under ASOP B, ranged from Rs512.10 to
Rs. 587.45 and the exercise price for the options granted under ASOP ADS was $22.52 to $31.60.
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 three 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;
and our Associated Stock Option Plan ADS, or ASOP ADS, established in May 1999. We also have the
Employee Stock Option Plan, or ESOP, established by Nipuna in April 2004.
ASOP
The aspects of the ASOP differ significantly from typical U.S. stock option plans. 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. As of March 31, 2006, warrants (net of
forfeited and cancelled) to purchase 11,849,860 equity shares have been granted to associates
pursuant to ASOP, and warrants to purchase 11,796,560 equity shares have been exercised.
ASOP B
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, 2006, options (net of forfeited and
cancelled) to purchase 31,381,633 equity shares have been granted to associates under this plan
and warrants to purchase 8,578,939 equity shares have been exercised.
ASOP ADS
Under ASOP ADS, we periodically issue grants to eligible associates to purchase ADSs. The
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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, 2006,
warrants (net of forfeited and cancelled) for 1,660,971 ADSs representing 3,321,942 equity shares
have been granted to associates under the ASOP ADS, and warrants to purchase 665,300 ADSs
representing 1,330,600 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.
Nipuna ESOP
Under the Nipuna ESOP options are granted at fair value to associates as determined by an
independent valuer as of the date of grant. The options granted under the Nipuna ESOP vest in
three equal tranches at the end of the second, third and fourth year from the date of grant. As of
March 31, 2006, options (net of forfeited and cancelled) for 1,215,506 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 seven 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 and B. Rama Raju are permanent directors and are not subject to retirement
by rotation. Dr. Managalam Srinivasan, Krishna G. Palepu, Vinod K. Dham, V.P. Rama Rao and M
Rammohan Rao 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 V.P. Rama Rao, Dr. Mangalam Srinivasan and M Rammohan Rao 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 V.P. Rama Rao, Dr. Mangalam Srinivasan, Vinod K
Dham and M. Rammohan Rao each of whom is an
independent director.
The investors' grievance committee of the board of directors formed in January 2001 focuses
on strengthening investor relations and addressing investors' concerns. The members of the
committee are V.P. Rama Rao, who is an independent director, and B. Rama Raju, Managing Director
and CEO.
Director Compensation
Our Articles of Association provides that each of our directors shall receive a sitting fee
not exceeding the maximum amount allowed under the Companies Act. Currently, our directors receive
Rs.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 was 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
$155,000 in fiscal 2006.
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Employment, Severance and Other Agreements
Our Articles of Association provides that directors are appointed by the shareholders by
resolutions passed at general meetings; however, the board of directors has the power to appoint
additional directors for a period up to the date of the next annual general meeting. Key
managerial personnel are appointed by the management. There are no severance 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, 2006 by each of our directors and our chief executive officer and
all of our directors and executive officers as a group. The table gives effect to equity shares
issuable within 60 days of March 31, 2006 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
14,593,000
(1)
4.49
B. Ramalinga Raju
13,272,000
(2)
4.09
V.P. Rama Rao
—
—
Dr. Mangalam Srinivasan
—
—
Krishna G. Palepu
—
—
Vinod K Dham
—
—
M Rammohan Rao
—
—
All directors and executive officers as a
group
28,593,231
8.88
(1)
Includes 3,874,000 equity shares held by B. Rama Raju's wife, B. Radha
Raju. B. Rama Raju disclaims beneficial ownership of any equity shares held by
B. Radha Raju.
(2)
Includes 4,047,000 equity shares held by B. Ramalinga Raju's wife, B.
Nandini Raju. B. Ramalinga Raju disclaims beneficial ownership of any equity
shares held by B. Nandini Raju.
Other than B. Rama Raju and B Ramalinga Raju, none of our directors or executive
officers beneficially owned more than 1% of our equity shares as of March 31, 2006.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Share Ownership
No person or group of affiliated persons who is known to us to beneficially own 5%
or more of our equity shares as of March 31, 2006.
As of March 31, 2006, 575,231 of our equity shares, representing 0.18% of our outstanding
shares, were held by a total of 243 holders of record with addresses in the United States. As of
March 31, 2006, we have issued 32,340,300 ADSs (representing 64,680,600 equity shares)
and which represent 19.9% of our outstanding equity shares and which are held by approximately 13
beneficial holders.
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 2006, 2005 and
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fiscal 2004, we provided infrastructure and other services to Satyam Venture, which amounted
to $0.5 million, $0.3 million and $1.2 million respectively. For fiscal 2006, 2005 and fiscal
2004, we received services from Satyam Venture, which amounted to $8.6 million, $7.1 million and
$5.4 million respectively. As of March 31, 2006 and 2005, we owe $1.8 million and $3.1 million to
Satyam Venture.
During fiscal 2006 and 2005, Sify rendered services to us aggregating to $2.9 million and $1.4
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.
No significant change has occurred since the date of our annual financial statements for fiscal
2006.
Legal Proceedings
As of the date of this document, we are not a party to any legal proceedings that
could reasonably be expected to seriously harm our company.
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. See note 23 to
our fiscal 2006 financial statements included in this Annual Report.
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 Rs1,820.5
million ($ 41.3 million), Rs. 1,722.7 million ($37.6 million) and Rs. 1,207.0 million ($26.2
million) in fiscal 2006, fiscal 2005 and fiscal 2004 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.
Owners of ADSs will be entitled to receive dividends payable in respect of the equity shares
represented by such ADSs. Cash dividends in respect of the equity shares represented by the ADSs
will be paid to the depositary in rupees and, will generally be converted by the depositary into
U.S. dollars and distributed, net of depositary fees and expenses, to the holders of such ADSs.
ITEM 9. THE OFFER AND LISTING
Trading Markets
Our
equity shares are traded in India on Bombay Stock Exchange Limited and the National
Stock Exchange. Our ADSs evidenced by American Depositary
Receipts, or ADRs, are traded in the United States on the New York Stock Exchange. Each ADS
represents two equity shares. The ADRs evidencing ADSs were issued by our depositary, Citibank,
N.A., pursuant to a Deposit Agreement.
The number of our outstanding equity shares (including the underlying shares for ADSs) as of
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March, 31, 2006 was 324,449,539. As of March 31, 2006, there were 32,340,300 ADSs outstanding
(representing 64,680,600 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
2002
331.15
111.00
6.78
2.27
2003
291.85
175.10
6.14
3.68
2004
391.00
127.30
9.01
2.93
2005
442.00
250.00
10.10
5.70
2006
862.00
364.40
19.38
8.38
2007(though April 21, 2006)
890.00
755.10
20.01
16.98
Fiscal 2005:
First Quarter
338.00
250.00
7.35
5.44
Second Quarter
394.00
293.55
8.58
6.39
Third Quarter
442.00
352.60
10.21
8.15
Fourth Quarter
424.30
335.00
9.73
7.68
Fiscal 2006:
First Quarter
517.45
364.40
11.89
8.38
Second Quarter
566.00
474.40
12.88
10.80
Third Quarter
741.00
543.00
16.48
12.08
Fourth Quarter
862.00
713.00
19.38
16.03
Fiscal 2007:
First Quarter (Through April 21, 2006)
Monthly prices:
October 2005
616.35
543.00
13.67
12.04
November 2005
679.05
604.00
14.80
13.17
December 2005
741.00
649.05
16.48
14.44
January 2006
775.00
713.00
17.63
16.22
February 2006
790.00
719.75
17.87
16.28
March 2006
862.00
764.10
19.38
17.18
April 2006(Though April 21, 2006)
890.00
755.10
20.01
16.98
(1)
Data derived from the BSE website. The prices and volumes quoted on the NSE may be
different.
(2)
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.
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Price per ADS
High
Low
Fiscal
2002 (since May 15, 2001)
$
14.74
$
5.05
2003
13.50
7.93
2004
35.35
7.25
2005
28.50
16.00
2006
24.23
21.00
2007 (through April 21, 2006)
44.50
35.47
Fiscal 2005
First Quarter
23.96
16.00
Second Quarter
24.85
17.06
Third Quarter
28.50
23.06
Fourth Quarter
26.25
20.75
Fiscal 2006
First Quarter
26.77
21.00
Second Quarter
30.61
25.75
Third Quarter
37.44
28.25
Fourth Quarter
43.90
36.60
Monthly prices
September 2005
30.59
27.55
October 2005
34.75
28.25
November 2005
36.55
34.19
December 2005
37.44
33.00
January 2006
40.40
36.60
February 2006
42.07
37.00
March 2006
43.90
37.62
April 2006(through April 21,2006)
44.50
35.47
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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 its
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.
Standard for U.S. Listed
Satyam Computer Services
Companies
Limited's Practice
Director Independence
•
A majority of the board
must consist of independent directors.
•
Four of our seven directors,
namely Mr. VP Rama
Rao, Dr. Mangalam Srinivasan,
Mr. Vinod K Dham and Mr. M
Rammohan Rao, 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.
However, at our April 21, 2006 meeting
of our Board of Directors, our directors have
proposed that Mr. Ram Mynampati, one of our
key management personnel, to be nominated to
the board of directors, subject to
shareholder approval at the forthcoming
annual general meeting. Mr. Ram Mynampati
would not qualify as an independent director
as he is an employee of our Company. If this
appointment is approved, our Board will
comprise eight directors, four of them will
be independent and four will be
non-independent. This 50:50 split is
permitted under corporate governance in
India.
•
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
•
We have an audit committee which
meets all of the requirements
of Rule  10A-3.
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Standard for U.S. Listed
Satyam Computer Services
Companies
Limited's Practice
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.
•
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
three members and all the
members are independent under
the NYSE's rules.
•
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.
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Standard for U.S. Listed
Satyam Computer Services
Companies
Limited's Practice
•
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 its 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
its internal audit function.
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
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Standard for U.S. Listed
Satyam Computer Services
Companies
Limited's Practice
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 is 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 ourdomestic
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 registration statement on Form F-1 filed with the
Securities and Exchange Commission on May 7, 2001 (Registration No. 333-13464).
Objects and Purposes
Under our Memorandum of Association, the main objectives of our company include, but are not
limited to:
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§
manufacturing and selling computer systems, peripherals, accessories, consumables and
other computer products;
§
designing and developing computer systems and applications software for our own use
and for sale and designing and developing systems and applications software for or on
behalf of manufacturers, owners and users of computer systems and digital or electronic
equipment; and
§
providing electronic data processing centers, word processing, software consultancy,
system studies, management consultancy, feasibility studies and computer training.
Board of Directors
At each annual general meeting at least, one-third of our directors must retire from office
by rotation. A retiring director is eligible for re-election and the directors to retire every
year are those who have been longest in office since their last re-election or appointment. No
shares are required to be held by a director for qualification as a director. In addition, save in
respect of the following managerial personnel, there are no age-limit requirements for serving on
our board of directors. Under the Companies Act, no person under the age of 25 or over the age of
70 is eligible for appointment as a managing director or a whole-time director or a manager of our
Company, provided that persons under the age of 25 or over age 70 may be appointed with either the
approval of our shareholders by a special resolution or with the approval of the Central
Government. Under the Companies Act, our directors must refrain from participating in discussions
and voting on any matters in which they are interested party. In addition, directors are also
required to disclose such interests, if any, at meetings of the board of directors.
Managerial Remuneration
Under the Companies Act, the remuneration payable to our directors is to be determined either
by the articles of the company or by an ordinary resolution passed by the company in the general
meeting, unless the articles require a special resolution for the same.
As a public company, the total managerial remuneration in any year cannot exceed 11 per cent
of our profits in that year. In addition, the remuneration payable to a managing or any whole-time
director in any year cannot exceed 5 per cent of our net profits in that year. If there is more
than one managing or whole-time director, then the aggregate remuneration to all of them cannot
exceed 10 per cent of our net profits.
In addition, where a company has made no or inadequate profits, there are additional limits
on the maximum remuneration payable to the directors. Approval of the Central Government would be
required for payment of remuneration in excess of the limits prescribed.
Under our Articles of Association, our board of directors may, at its discretion and by means
of a resolution, borrow funds on behalf of the company, create mortgages or liens on the company's
property or uncalled capital and issue debentures. However, the Companies Act imposes some
restrictions on the powers of the board to act without the consent of the shareholders including,
for example, the ability to borrow money beyond the aggregate of our paid up capital and free
reserves.
Equity Shares
Our authorized share capital is 375,000,000 equity shares, par value Rs. 2 per share. The
equity shares are our only class of share capital. However, our Articles of Association and the
Companies Act permit us to issue preference shares in addition to the equity shares. The rights
attached to a class of shares may, subject to the provisions of the Companies Act, be varied only
with either the written consent of the holders of 75% of the issued shares of that class or by
special resolution passed at a separate meeting of the holders of that class.
Our equity shares are under the control of our board of directors, who may, with prior
approval from the shareholders at a general meeting, allot or otherwise dispose of new equity
shares in its discretion, including allotments of shares at a premium or discount in accordance
with the provisions of the Companies Act. Our Articles of Association permit our board of
directors to make calls on our equity shares, but only in respect of unpaid amounts 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$41.3 million ($1,820.5) Rs. 1,722.7 million ($37.6 million) and
Rs. 1,207.0 million ($26.2 million) in fiscal 2006, fiscal 2005 and fiscal 2004 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:
§
the rate of dividend to be declared may not exceed 10.0% of its paid up capital or the
average of the rate at which dividends were declared by the company in the prior five
years, whichever is less;
§
the total amount to be drawn from the accumulated profits earned in the previous years
and transferred to the reserves may not exceed an amount equivalent to 10.0% of its paid
up capital and free reserves, and the amount so drawn is to be used first to set off the
losses incurred in the fiscal year before any dividends in respect of preference or
equity shares are declared; and
§
the balance of reserves after withdrawals shall not fall below 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 share issued by us was in September 1999. However, at our Board
meeting held on April 21, 2006, our board of directors recommended the issuance of bonus shares in
the ratio of 1:1 (one equity share for every one share held) for all existing shares including
American Depository Shares. This proposed bonus issue is subject to approval by our shareholders
at the upcoming annual general meeting of shareholders, expected to be held in August 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.
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If we issue equity shares and a special resolution is not approved by our shareholders, the
new shares must first be offered to the existing shareholders as of a fixed record date. The offer
must include: (1) the right, exercisable by the shareholders of record, to renounce the shares
offered in favor of any other person; and (2) the number of shares offered and the period of the
offer, which may not be less than 15 days from the date of offer. If the offer is not accepted it
is deemed to have been declined. Our board is authorized under the Companies Act to distribute any
new shares not purchased by the preemptive rights holders in the manner that it deems most
beneficial to our company.
Annual General Meetings of Shareholders
We must convene an annual general meeting of shareholders within six months after the end of
each fiscal year to adopt the accounts for such fiscal year and to transact other businesses and
may convene an extraordinary general meeting of shareholders when necessary or at the request of a
shareholder or shareholders holding at least 10.0% of our paid up capital carrying voting rights.
The annual general meeting of the shareholders is generally convened by our 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 a detailed version of 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.
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Register of Shareholders; Record Dates; Transfer of Shares
We maintain a register of shareholders. For the purpose of determining the shares entitled to
annual dividends, the register is closed for a specified period before the annual general meeting.
The date on which this period begins is the record date.
To determine which shareholders are entitled to specified shareholder rights, we may close
the register of shareholders. The Companies Act and our listing agreements with the Indian stock
exchanges require us to give at least seven days' and fifteen days' 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), 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
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declaration within 30 days may be liable for a fine of up to Rs. 1,000 for each day the
declaration is not made. Any lien, promissory note or other collateral agreement created, executed
or entered into with respect to any equity share by its registered owner, or any hypothecation by
the registered owner of any equity share, shall not be enforceable by the beneficial owner or any
person claiming through the beneficial owner if such declaration is not made. Failure to comply
with Section 187C will not affect our obligation to register a transfer of shares or to pay any
dividends to the registered holder of any shares pursuant to which the declaration has not been
made. While it is unclear under Indian law whether Section 187C applies to holders of ADSs,
investors who exchange ADSs for the underlying equity shares will be subject to the restrictions
of Section 187C. Additionally, holders of ADSs may be required to comply with the notification and
disclosure obligations pursuant to the provisions of the deposit agreement covering the ADSs.
Company Acquisition of Equity Shares
Under the Companies Act, approval of at least 75.0% of our shareholders voting on the matter
and approval of the High Court of Andhra Pradesh is required to reduce our share capital. We may,
under some circumstances, acquire our own equity shares without seeking the approval of the High
Court. However, we would have to extinguish any shares we have so acquired within the prescribed
time period. Generally, a company is not permitted to acquire its own shares for treasury
operations. An acquisition of our own shares (without having to obtain the approval of the High
Court) must comply with prescribed rules, regulations and conditions as laid down in the Companies
Act and the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, or
Buy-back Regulations.
Liquidation Rights
Subject to the rights of creditors, employees and the holders of any shares entitled by their
terms to preferential repayment over the equity shares, if any, in the event of our winding-up the
holders of the equity shares are entitled to be repaid the amounts of paid up capital or credited
as paid up on those equity shares. All surplus assets after payments due to the holders of any
preference shares at the commencement of the winding-up shall be paid to holders of equity shares
in proportion to their shareholding.
Takeover Code
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
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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.
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 Reserve Bank of India under the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993, as modified from time to time, notified by the Government of India. This
change was effected through the guidelines for ADR and GDR issues by Indian companies issued by
the Ministry of Finance on January 19, 2000 and a notification issued by the Reserve Bank of
India. Hence we do not require the approval of the Ministry of Finance and the Reserve Bank of
India under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depositary Receipt Mechanism) Scheme, 1993. However, we will be required to furnish full
particulars of the issue, including the underlying equity shares representing the ADRs, to the
Ministry of Finance and the Reserve Bank of India within 30 days of the completion of an offering.
The Issue of Foreign Currency Convertible Bonds and Ordinary Shares Scheme is distinct from
other policies or facilities, as described below, relating to investments in Indian companies by
foreign investors. The issuance of ADSs pursuant to the Issue of Foreign Currency Convertible
Bonds and Ordinary Shares Scheme also affords to owners of ADSs the benefits of Section 115AC of
the Indian Income-tax Act, 1961 for purposes of the application of Indian tax law. The Government
of India 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 Government of India to negotiate with
large foreign companies interested in making long-term investments in India. Furthermore,
henceforth no prior approval of the Reserve Bank of India is required although a post-investment
declaration in giving details of the foreign investment in the company pursuant to the ADR issue
must be filed with the Reserve Bank of India within thirty days of 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
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investment must be filed with the Reserve Bank of India once the foreign investment is made
in the Indian company.
In May 1994, the Government of India announced that purchases by foreign investors of ADSs
and foreign currency convertible bonds of Indian companies will be treated as foreign direct
investment in the equity issued by Indian companies for such offerings.
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 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 Government of India 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
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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 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 Government of India approval on a case-by-case
basis.
Voting Rights of Deposited Equity Shares Represented by ADSs
Holders of ADSs generally have the right under the deposit agreement to instruct the
depositary bank to exercise the voting rights for the equity shares represented by the related
ADSs.
At our request, the depositary bank will mail to the holders of ADSs any notice of
stockholders' meeting received from us together with information explaining how to instruct the
depositary bank to exercise the voting rights of the securities represented by ADSs.
If the depositary bank timely receives voting instructions from a holder of ADSs, it will
endeavor to vote the securities represented by the holder's ADSs in accordance with such voting
instructions. In the event that voting takes place by a show of hands, the depositary bank will
cause the custodian to vote all deposited securities in accordance with the instructions received
by holders of a majority of the ADSs for which the depositary bank receives voting instructions.
Please note that the ability of the depositary bank to carry out voting instructions may be
limited by practical and legal limitations and the terms of the securities on deposit. We cannot
assure you that ADS holders will receive voting materials in time to enable them to return voting
instructions to the depositary bank in a timely manner. Securities for which no voting
instructions have been received will not be voted.
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.
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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 more; 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.
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.
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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 Government of India, 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 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
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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 Government of India 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.
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 (No. 2) 2006 ("Finance Bill"), had proposed, among
others, the following:
•
No change in the tax rates for companies or individuals is introduced: the effective corporate tax rate for domestic
companies stays at 33.66% and for foreign companies at 41.82%
•
Increase in Rate of Minimum Alternate Tax ("MAT") that is levied on companies from 7.5% to 10%; however, the carryforward
period for MAT credit shall be increased from 5 years to 7 years
•
Long-term capital gains on the sale of listed securities, which is otherwise tax exempt, will now have to be considered for
MAT purposes
•
Increase in Securities Transaction Tax (STT) by 25% for all categories w.e.f. from June 1, 2006
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The Finance Bill received the assent of the President on April 18, 2006 and has been enacted.
Consequently, the above proposed provisions have come into effect.
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, 2009, 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 will generally constitute "passive income" or, in the case of certain U.S. Holders,
"financial services income". For taxable years beginning after December 31, 2006; 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
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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 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
A 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 (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
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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
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Copies of these materials can also be obtained from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that make electronic filings with the SEC
using its EDGAR system.
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,
2006
2005
2004
Total Recorded
Total Recorded
Total Recorded
Amount
Fair Value
Amount
Fair Value
Amount
Fair Value
( dollars in millions)
Debt:
Variable rate short-term debt
$
4.1
$
4.1
$
1.7
$
1.7
—
—
Average interest rate
5.33%
3.61%
—
Variable rate long termdebt
$
16.1
$
16.1
—
—
—
—
Average interest rate
5.58%
—
—
Fixed rate long-term debt
$
4.2
$
4.2
$
4.3
$
4.3
$
4.1
$
4.1
Average interest rate
7.78%
9.49%
10.93%
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
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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 2006 and 2005, 98.6% and 96.6 %, 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 2.3 %, or $24.9 million, in
fiscal 2006, 1.8 %, or $14.5 million, in fiscal 2005 while a hypothetical 10% decrease in the
value of the Indian rupee against all other currency would increase revenue by 2.3% or $24.9
million in fiscal 2006 and 1.8 % or $14.5 million in fiscal 2005.
We had outstanding forward and options contract amounting to $216.0 million and $301.5
million as at March 31, 2006 and 2005, respectively. Gains/ (losses) on outstanding forward and
options contracts amounted to $(1.4) million and $1.1 million during fiscal 2006 and 2005
respectively. Using sensitivity analysis, a hypothetical 1% increase in the value of the Indian
rupee against all other currencies would decrease these gains by $0.8 million in fiscal 2006 and
by $1.6 million in fiscal 2005 while a hypothetical 1% decrease in the value of the Indian rupee
against all other currency would increase these gains by $0.8 million in fiscal 2006 and $1.6
million in fiscal 2005.
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 $25.7 million in fiscal 2006 and
$16.1 million in fiscal 2005. This amount would be offset, in part, from the impacts of local
income taxes and local currency interest expense. As of March 31, 2006, we had approximately
$277.3 million of non-Indian rupee denominated cash and cash equivalents.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
In May 2001, we completed an offering of 16,675,000 ADSs (representing 33,350,000 equity
shares) at a price of $9.71 per ADS. We received approximately $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 Securities and
Exchange Commission on May 14, 2001 (Registration No. 333-13464). As of March 31, 2006,
approximately $106.4 million of these proceeds has been used for prepayment of loans ($26.9
million); strategic investments in our subsidiaries ($32.7 million); development of facilities and
infrastructure ($21.2 million) and working capital and general corporate purposes ($25.6 million).
We intend to use the balance of the net proceeds to fund expansion of our existing facilities and
communication network in different locations in India and outside India; to develop new facilities
within and outside India; to investment in joint ventures and other strategic investments; and for
working capital and general corporate purposes. None of the net proceeds from our ADS offering
were paid, directly or indirectly, to any of our directors, officers or general partners or any of
their associates, or to any persons owning ten percent or more of any class of our equity
securities, or any affiliates.
ITEM 15. 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. Securities and Exchange
Commission'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 with a reasonable level of assurance that
our disclosure controls and procedures were effective as of March 31, 2006.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit Committee members (as of March 31, 2006) are V.P. Rama Rao, Mangalam
Srinivasan and M Rammohan Rao, each of whom is an independent director pursuant to the applicable
rules of the Securities Exchange Commission and the NYSE. Mr. Krishna G Palepu stepped down from
the Audit Committee in fiscal 2006 and was replaced by Mr. M Rammohan Rao 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 Securities and Exchange
Commission. 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."
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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.
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:
(Amounts in
$)
Fiscal Year Ended
Audit
Audit Related
Tax
Other
March 31,
Services
Services
Services
Services
Total
2006
$
493,120
$
206,010
$
109,717
$
10,245
$
819,092
2005
$
273,437
$
148,036
$
117,007
$
95,707
$
634,187
Audit Services
Audit of the standalone financial statements, consolidated financial statements of the
Company and its 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 the Company's 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 2006, the Audit Committee pre-approved a list of services that could be
rendered by the principal accountant in fiscal 2006 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 2005 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 PURCHASES
None.
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PART III
ITEM 17. FINANCIAL STATEMENTS
See Item 18 for a list of financial statements filed under Item 17.
ITEM 18. FINANCIAL STATEMENTS
Financial Statement
The following financial statements are filed as part of this document, together with the
report of the independent auditors:
§
Report of Price Waterhouse, Independent Registered Public Accounting Firm
§
Consolidated Balance Sheets as of March 31, 2005 and 2006
§
Consolidated Statements of Income for the years ended March 31, 2004, 2005
and 2006
§
Consolidated Statements of Shareholders' Equity and Comprehensive Income
for the years ended March 31, 2004, 2005 and 2006.
§
Consolidated Statements of Cash Flows for the years ended March 31, 2004,
2005 and 2006
§
Notes to the Consolidated Financial Statements
§
Financial Statement Schedule — Valuation and qualifying accounts
ITEM 19. EXHIBITS
Number
Description
1.1
Memorandum and Articles of Association of Satyam Computer Services. (1)
1.2
Certificate of Incorporation of Satyam Computer Services. (2)
2.1
Specimens of Share Certificates. (2)
2.2
Deposit Agreement dated May 14, 2001, by and among Satyam Computer
Services, Citibank, N.A. and the holders from time to time of American
Depositary Receipts issued thereunder (including as an exhibit, the form of
American Depositary Receipt). (3)
4.1
Associate Stock Option Plan (including Deed of Trust). (2)
4.2
Associate Stock Option Plan B as amended and restated (2)
4.3
Associate Stock Option Plan ADS as amended and restated. (2)
4.4
Investor Rights Agreement, dated October 7, 2002, by and among Sify
Limited (formerly Satyam Infoway Limited), Satyam Computer Services Limited,
SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (4)
8.1
List of Subsidiaries. (5)
10.1
Consent of Price Waterhouse, Independent Registered Public Accounting
Firm. (5)
12.1
Certification of Chief Executive Officer under Section 302 of the Sarbane
Oxley Act. (5)
12.2
Certification of Chief Financial Officer under Section 302 of the Sarbane
Oxley Act. (5)
13.1
Certification of Chief Executive Officer under Section 906 of the
Sarbanes-Oxley Act. (5)
13.2
Certification of Financial Officer under Section 906 of the
Sarbanes-Oxley Act. (5)
(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.
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(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 furnished by Sify Limited to the Commission as an exhibit to
Form 6-K (file No. 00027-663) on October 10, 2002 and incorporated herein by
reference.
(5)
Filed herewith.
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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/ Srinivas V
Name:
Srinivas V
Title:
Director and Senior Vice
President & Chief Financial
Officer
Date: April 28, 2006
93
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, 2006 and 2005
F-3
Consolidated Statements of Income for the three years ended March 31, 2006
F-4
Consolidated Statements of Shareholder's Equity and Comprehensive Income for
the three years ended March 31, 2006
F-5
Consolidated Statements of Cash Flows for the three years ended March 31, 2006
F-8
Notes to the Consolidated Financial Statements
F-9
Financial Statement Schedule
F-34
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Satyam Computer Services Limited:
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of income, of shareholders equity and comprehensive income and of cash flows present
fairly, in all material respects, the financial position of Satyam Computer Services Limited and
its subsidiaries at March 31, 2006 and 2005, and the results of their operations and their cash
flows for each of the years in the three year period ended March 31, 2006 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 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.
Price Waterhouse
Secunderabad, India
April 21, 2006
F-2
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,
2006
2005
Assets
Current assets
Cash and cash equivalents
$
292.8
$
129.8
Investments in bank deposits
403.7
—
Accounts receivable, net of allowance for doubtful debts
220.0
160.9
Unbilled revenue on contracts
41.1
17.0
Deferred income taxes
12.2
9.1
Prepaid expenses and other receivables
48.9
16.1
Total current assets
1,018.7
332.9
Investments
—
—
Investments in bank deposits
—
411.6
Investments in associated companies
3.5
23.2
Premises and equipment, net
106.6
84.1
Goodwill, net
27.6
15.5
Intangible assets, net
6.6
—
Other assets
18.2
16.8
Total assets
1,181.2
884.1
Liabilities and shareholders' equity
Current liabilities
Short-term and current portion of long-term debt
6.5
4.8
Accounts payable
11.9
10.9
Accrued expenses and other current liabilities
108.9
64.8
Unearned and deferred revenue
11.8
5.6
Total current liabilities
139.1
86.1
Long-term debt, excluding current portion
17.9
1.2
Deferred income taxes
8.9
8.9
Total liabilities
165.9
96.2
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$0.22)* per share
20.0
20.0
(100 million preference shares authorized, 91,009,999 and 91,009,999 preference
shares issued as of March 31, 2006 and 2005 respectively)
Shareholders' equity
Common stock — par value Rs.2 (US$0.04)* per equity share
17.6
17.4
(
375 million equity shares authorized, 324,449,539 and 319,265,291 equity shares
issued as of March 31, 2006 and 2005 respectively
)
Additional paid-in capital
465.1
433.6
Shares subscribed but unissued
0.4
0.1
Deferred stock-based compensation
(0.4
)
(0.3
)
Retained earnings
497.1
289.0
Accumulated other comprehensive income/(loss)
15.8
29.6
995.6
769.4
Shares held by the SC-Trust under associate stock option plan
(1.2
)
(1.5
)
(1,193,140 and 1,424,340 equity shares as of March 31, 2006 and 2005 respectively)
Total shareholders' equity
994.4
767.9
Total liabilities and shareholders' equity
$
1,181.2
$
884.1
*
The par value in US$ has been converted at the closing rate as of March 31, 2006, 1US$ = Rs 44.48
The accompanying notes are an integral part of these consolidated financial statements.
F-3
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,
2006
2005
2004
Revenues
$
1,096.3
$
793.6
$
566.4
Cost of revenues
(
Includes stock-based compensation of US$Nil, US$0.8 and US$0.9 for the
three years ended March 31, 2006, 2005 and 2004 respectively)
(689.0
)
(506.8
)
(343.6
)
Gross profit
407.3
286.8
222.8
Selling, general and administrative expenses
(Includes stock-based compensation of US$0.8, US$1.1 and US$0.8 for the
three years ended March 31, 2006, 2005 and 2004 respectively)
(187.6
)
(124.3
)
(101.7
)
Total operating expenses
(187.6
)
(124.3
)
(101.7
)
Operating income
219.7
162.5
121.1
Interest income
26.3
22.3
20.3
Interest expense
(1.3
)
(0.4
)
(0.5
)
Gain on sale of investments (Refer note 7)
43.6
—
2.7
Gain/(Loss) on foreign exchange transactions
0.3
(4.6
)
(8.9
)
Other income/(expense), net
(0.8
)
0.4
2.3
Income before income taxes and equity in earnings/(losses) of
associated companies
287.8
180.2
137.0
Income taxes
(37.7
)
(25.3
)
(22.5
)
Minority interest
0.1
—
—
Income before equity in earnings/(losses) of associated companies
250.2
154.9
114.5
Equity in earnings/(losses) of associated companies, net of taxes
(0.8
)
(1.1
)
(2.6
)
Net income
$
249.4
$
153.8
$
111.9
Earnings per share:
Basic
$
0.78
$
0.49
$
0.36
Diluted
$
0.75
$
0.48
$
0.35
Weighted average number of shares used in computing earnings per share
(in millions)
Basic
320.6
316.2
313.2
Diluted
331.4
323.6
317.1
The accompanying notes form an integral part of these consolidated financial statements.
F-4
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)
Common Stock
Additional
Shares
Deferred
Retained
Accumulated
Shares held
Total
paid-in
subscribed but
stock-based
earnings
other
by
Shareholders'
capital
unissued
compensation
comprehensive
SC-Trust
Equity
Shares
Par Value
income/(loss)
Balance as of March 31, 2003
314,542,800
$
17.1
$
406.7
—
$
(0.9
)
$
87.1
$
(20.1
)
$
(2.3
)
$
487.6
Net income
—
—
—
—
—
111.9
—
—
111.9
Other comprehensive income
—
Gain on foreign currency translation
—
—
—
—
—
—
49.5
—
49.5
Total Comprehensive income
—
—
—
—
—
—
—
161.4
Issuance of common stock
1,708,910
0.1
8.3
—
—
—
—
—
8.4
Shares subscribed but unissued
—
—
—
—
—
—
—
—
—
Gain on dilution of interest in associate company
on its issuance of new shares, net of taxes
—
—
—
—
—
—
—
—
—
Deferred stock-based compensation
—
—
0.8
—
(0.8
)
—
—
—
—
Amortization of deferred stock-based compensation
—
—
—
—
1.7
—
—
—
1.7
Shares transferred by SC-Trust to employees
—
—
0.4
—
—
—
—
0.6
1.0
Cash dividend paid at the rate of US$0.08 per share
—
—
—
—
—
(26.2
)
—
—
(26.2
)
Balance as of March 31, 2004
316,251,710
$
17.2
$
416.2
—
—
$
172.8
$
29.4
$
(1.7
)
$
633.9
The accompanying notes are 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)
Common Stock
Additional
Shares
Deferred
Retained
Accumulated
Shares held
Total
paid-in
subscribed but
stock-based
earnings
other
by
Shareholders'
capital
unissued
compensation
comprehensive
SC-Trust
Equity
Shares
Par Value
income/(loss)
Balance as of March 31, 2004
316,251,710
$
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
3,013,581
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
319,265,291
$
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)
Common Stock
Additional
Shares
Deferred
Retained
Accumulated
Shares held
Total
paid-in
subscribed but
stock-based
earnings
other
by
Shareholders'
capital
unissued
compensation
comprehensive
SC-Trust
Equity
Shares
Par Value
income/(loss)
Balance as of March 31, 2005
319,265,291
$
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)
Loss on foreign currency translation
—
—
—
—
—
—
(13.8
)
—
(13.8
)
Total Comprehensive income
235.6
Issuance of common stock
5,184,248
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
324,449,539
$
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 Cashflows
(Millions of US Dollars except per share data and as stated otherwise)
Year ended March 31,
2006
2005
2004
Cash Flows From Operating Activities
Net income
$
249.4
$
153.8
$
111.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets
31.5
25.0
24.4
Stock-based compensation
0.8
1.9
1.6
Deferred income taxes
(5.1
)
(1.9
)
(1.0
)
Gain on sale of investments
(43.6
)
—
(2.7
)
Loss on sale of premises and equipment
0.2
0.3
0.3
Minority Interest
(0.1
)
—
—
Equity in losses of associated companies, net of taxes
0.8
1.1
2.6
Changes in assets and liabilities:
Accounts receivable, net and unbilled revenue on contracts
(81.9
)
(40.7
)
(22.5
)
Prepaid expenses and other receivables, net
(31.7
)
16.6
(24.7
)
Other assets, net
(1.8
)
(8.0
)
5.0
Accounts payable
(2.5
)
2.5
(4.2
)
Accrued expenses and other current liabilities
40.6
17.2
(1.5
)
Unearned and deferred revenue
6.1
3.5
—
Net cash provided by operating activities
162.7
171.3
89.2
Cash Flows From Investing Activities
Proceeds from maturity of bank deposits
—
332.1
—
Investments in bank deposits
—
(411.5
)
(45.4
)
Purchase of premises and equipment
(54.1
)
(39.0
)
(16.7
)
Proceeds from sale of premises and equipment
0.3
0.3
0.2
Payment for purchase of Citisoft Plc, net of cash acquired
(12.1
)
—
—
Payment for purchase of Knowledge Dynamics Pte. Ltd., net of cash acquired
(1.6
)
—
—
Purchase of investments
—
(7.6
)
(4.2
)
Proceeds from sale of investments
62.3
10.2
6.1
Net cash used in investing activities
(5.2
)
(115.5
)
(60.0
)
Cash Flows From Financing Activities
Proceeds from short-term debt
3.6
1.7
—
Repayments of short-term debt
(1.2
)
—
(2.5
)
Proceeds from long-term debt
16.3
0.2
1.7
Repayment of long-term debt
(2.7
)
(2.2
)
(3.4
)
Issuance of common stock
31.0
15.4
9.4
Shares subscribed but unissued
0.4
0.1
—
Issuance of Preferred stock by subsidiary, net of issuance cost
—
9.5
9.4
Cash dividends paid
(41.3
)
(37.6
)
(26.2
)
Net cash provided by/(used in) financing activities
6.1
(12.9
)
(11.6
)
Effect of exchange rate changes on cash and cash equivalents
(0.6
)
0.2
6.9
Net change in cash and cash equivalents
163.0
43.1
24.5
Cash and cash equivalents at the beginning of the period
129.8
86.7
62.2
Cash and cash equivalents at the end of the period
$
292.8
$
129.8
$
86.7
Supplementary information:
Cash paid during the period for:
Income taxes
$
44.9
$
25.4
$
31.9
Interest
1.3
0.5
0.5
Non-cash items:
Capital leases and hire purchase
$
2.5
$
2.0
$
1.3
Deferred consideration for purchase of Citisoft Plc
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-8
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 and
Hungary. 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 wholly 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-9
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. 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 for the years ended March 31, 2006, 2005 and 2004 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 over their estimated useful life or the lease
term, as appropriate. Costs of application software for internal use are
F-10
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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)
Software Development Costs
Satyam capitalizes internally generated software development costs under the provisions of
Statement of Financial Accounting (SFAS) 86,
"Accounting for Costs of Computer Software to be Sold,
Leased or Otherwise Marketed."
Capitalization of computer software development cost begins upon the
establishment of technological feasibility, which Satyam has defined as the completion of a
prototype. Costs incurred prior to establishment of technological feasibility and other research
and development expenses are charged to income as incurred. Costs incurred by Satyam between
completion of the prototype and the point at which the product is ready for general release have
been insignificant.
Research and development expenses charged to income amounted to US$0.5 million and US$0.6 million
and US$0.6 million for the years ended March 31, 2006, 2005 and 2004 respectively.
h)
Goodwill and Other Intangible Assets
Goodwill represents the difference between either a) the purchase price and the fair value of
assets and liabilities acquired and/or b) the purchase price and additional interest in
subsidiaries acquired from minority shareholders. Upto March 31, 2002, goodwill and other
intangible assets including license fees were amortized over the useful lives principally over a
period of 5 years based on management's estimate. Goodwill is tested for impairment annually and
reviewed for triggering events when circumstances indicate that the carrying amount may not be
recoverable, and written down when impaired, rather than being amortized as required by previous
standards. Further in accordance with SFAS 142 purchased intangible assets other than goodwill are
amortized over their useful lives unless these lives are determined to be indefinite.
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
" on April 1, 2002. 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 has evaluated its investment policies consistent with the provisions of SFAS 115,
"Accounting for Certain Investments in Debt and Equity
Securities"
, and determined that all of its
marketable investment securities are to be classified as available-for-sale. Accordingly, such
securities are carried at fair value with unrealized gains and losses, net of taxes, reported as a
separate component of other comprehensive income/(loss) until realized. Realized gains and losses
and decline in value judged to be other-than-temporary are included in other income. The cost of
securities sold is based on the first-in-first-out (FIFO) method. Interest and dividends on
securities classified as available-for-sale are recognized when earned and included in other
income. Other investments that are not marketable are carried at cost, subject to tests of other
than temporary impairment.
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$2.2 million and US$1.1 million and US$1.0 million for the years ended March 31, 2006, 2005 and
2004 respectively.
F-11
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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.
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.
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.
p)
Stock-Based Compensation
Satyam uses 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.
F-12
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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 years ended March 31, 2006, 2005 and 2004 respectively.
(US$ in millions except per share data)
Year ended March 31,
2006
2005
2004
Net Income
—As reported
$
249.4
$
153.8
$
111.9
Add: Charge under APB25
0.8
1.9
1.6
Less: Charge under FAS123
(22.2
)
(22.6
)
(25.2
)
—Pro forma
$
228.0
$
133.1
$
88.3
Earnings Per Share:
Basic
—As reported
$
0.78
$
0.49
$
0.36
—Pro forma
$
0.71
$
0.42
$
0.28
Diluted
—As reported
$
0.75
$
0.48
$
0.35
—Pro forma
$
0.69
$
0.41
$
0.28
Note: The pro forma disclosures shown above are not representative of the effects on net income
and earnings per share in future years.
The fair value of Satyam Computer Services' stock options used to compute pro forma net income
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
2004
Dividend yield
0.75
%
0.75
%
0.61
%
Expected volatility
57.22
%
61
%
69
%
Risk-free interest rate
7
%
7
%
7
%
Expected term (in years)
1.26
2.03
2.69
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
Share-Based Payments
On December 16, 2004, the FASB issued FAS 123R, "
Share-Based Payment, an amendment of FASB
Statements No. 123 and 95
," that addressed the accounting for share-based payment transactions in
which an enterprise receives employee services in exchange for either equity instruments of the
enterprise or liabilities that are based on the fair value of the enterprise's equity instruments
or that may be settled by the issuance of such equity instruments. This statement eliminates the
ability to account for share-based compensation transactions using the intrinsic value method as
prescribed by Accounting Principles Board, or APB, Opinion No. 25, "
Accounting for Stock Issued to
Employees
," and require that such transactions be accounted for using a fair-value-based method and
recognized as expenses in our consolidated statement of income. The standard requires that the
modified prospective method be used, which requires that the fair value of new awards granted from
the beginning of the year of adoption (plus unvested awards at the date of adoption) be expensed
over the vesting period. In addition,
F-13
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
the statement encourages the use of the "binomial" approach to value stock options, which
differs from the Black-Scholes option pricing model that we currently use in the footnotes to our
consolidated financial statements.
The revised FAS 123R as issued by FASB will have a significant impact on our consolidated statement
of income as Satyam Computer Services, our subsidiaries and our associated companies will be
required to expense the fair value of our stock option grants rather than expensing the intrinsic
value of stock options as is our current practice. FAS 123R will be applicable to Satyam for annual
periods beginning after June 15, 2005.Management estimates the likely impact of SFAS 123R to be
similar to the amounts disclosed as pro forma disclosures in accordance with SFAS 123.
Accounting Changes and Error Corrections
In May 2005, FASB Issued FAS No. 154, "Accounting Changes and Error Corrections — a replacement of
APB No. 20 and FAS No. 3". FAS 154 provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes, unless impracticable, retrospective
application as the required method for reporting a change in accounting principle in the absence of
explicit transition requirements specific to the newly adopted accounting principle. FAS 154 also
provides guidance for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective application is
impracticable. The correction of an error in previously issued financial statements is not an
accounting change. However, the reporting of an error correction involves adjustments to previously
issued financial statements similar to those generally applicable to reporting an accounting change
retrospectively. Therefore, the reporting of a correction of an error by restating previously
issued financial statements is also addressed by FAS 154. FAS 154 shall be effective for
accounting changes and corrections of errors made in fiscal years beginning after December 15,
2005. The adoption of this standard is not expected to have a material impact on Satyam's
consolidated financial statements.
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 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 payable on April 30, 2006. Satyam
Computer Services is also required to pay a maximum earn out consideration amounting to US$3.9
million on April 30, 2006 based on achievement of targeted revenues and profits. The deferred
consideration for the acquisition of the 75% equity interest has been accounted for as part of the
purchase consideration and shown as a current liability in the balance sheet. The earn-out
consideration will be accounted for as purchase consideration when the contingency is resolved.
Satyam Computer Services has a call option and the minority shareholders have 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$2.4
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$3.7 million based on achievement of targeted
revenues and profits. Satyam Computer Services records the put option at fair value at each balance
sheet date, with the initial fair value of the put option included as part of the consideration for
its 75.0% interest in Citisoft. The difference between the fair values at each valuation date is
charged to selling, general and administration expenses in statement of income. On the basis of an
independent valuation, the value of put option was US$ Nil and US$1.1 million as of May 12, 2005
and March 31, 2006 respectively.
F-14
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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 US$1.6 million on April 30, 2006 and a maximum of
US$1.6 million each on April 30, 2007 and 2008 based on achievement of targeted revenues and
profits. As of March 31, 2006 Satyam Computer Services has accrued US$1.4 million as a current
liability and charged US$1.4 million to the statement of income as part of cost of revenues.
The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management's estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
US$ in millions
Purchase price
$
17.4
Allocated to:
Net current assets
$
2.2
Tangible assets
0.3
Customer Contracts related intangibles
0.8
Customer relationship related intangibles
5.4
Trade name
0.7
Goodwill
10.3
Deferred tax liability
(2.3
)
Total
$
17.4
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$0.8 million and US$0.7 million payable on April 30, 2006 and
2007 respectively. Satyam Computer Services is also required to pay a maximum earn out
consideration amounting to US$0.3 million, US$0.8 million and US$1.1 million on April 30, 2006,
2007 and 2008 respectively based on the achievement of targeted revenues and profits. 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 shown as a current liability and US$0.7
million as non current liability in the balance sheet. The earn-out consideration will be
accounted for as purchase consideration when the contingency is resolved.
The purchase consideration has been allocated to the assets acquired and liabilities assumed as of
the date of acquisition based on management's estimates and a valuation done by an independent
valuer in accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations. The goodwill has been allocated to the IT services segment. The purchase price
allocation is as follows:
F-15
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
US$ in millions
Purchase price
$
3.3
Allocated to:
Net current assets
$
0.5
Tangible assets
—
Customer Contracts and Related Relationships
1.0
Trade name
0.1
Non-Compete agreements
—
Internally developed technology
—
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.
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$0.22) per share in October 2003 and June 2004 respectively to the investors
at an issue price of Rs.10 (US$0.22) per share, in exchange for an aggregate consideration of US$20
million.
As per the agreement, these preference shares are mandatorily convertible into equity shares of
Nipuna no later than June 2006, if Nipuna achieves certain targets for revenues and profits earned
up to March 31, 2006. If these targeted revenues and profits are not achieved by Nipuna along with
other triggering events, the investors have an option to either redeem these preference shares or
convert them. Although certain triggering events for early redemption as per the agreement have
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 are 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$0.22) from the date of issuance of such Preference Shares. The dividends are
cumulative and payable in cash at the rate indicated above, whether or not they have been declared
and whether or not there are profits, surplus or other funds of Nipuna legally available for the
payment of dividends. These preference shares rank senior to all classes of Nipuna's currently
existing capital stock or established subsequently with respect to dividend distributions and
repayment of capital and premium upon a Bankruptcy Event or Change in Control with respect to
Nipuna, unless the terms and conditions of such class expressly provide that such class will rank
senior to or on parity with the convertible redeemable cumulative preference shares. The dividend
on the preference shares for the period ended March 31, 2006 is payable.
5.
Investments
Investments of Satyam consist of available-for-sale securities ("AFS") and other non-marketable
securities.
(US$ in millions)
As of March 31,
2006
2005
Available-for-sale securities
Cost and fair value
—
—
Other investments, at cost
$
3.7
$
3.6
Less: Provision for impairment
(3.7
)
(3.6
)
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
F-16
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Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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 represents term deposits placed with banks earning fixed rate of
interest and amounted to US$403.7 million and US$411.6 million as of March 31, 2006 and 2005
respectively with maturities from more than three months to two years. Interest on investments in
bank deposits is recognized on accrual basis.
7.
Investments in associated companies
The carrying values of investments in various associated companies of Satyam are as follows:
(US$ in millions)
As of March 31,
2006
2005
Sify
—
$
20.4
Satyam Venture
2.7
2.0
CA Satyam
0.8
0.8
Total
$
3.5
$
23.2
Sify
During the year ended March 31, 2004, due to the sale of new shares by Sify to VentureTech and sale
of 1 million Indian equity shares by Satyam Computer Services as per the sponsored ADS program of
Sify, Satyam Computer Services' ownership interest in Sify was reduced from 37.15% as at March 31,
2003 to 32.04% as at March 31, 2004. Further, due to the issue of shares by Sify to its employees
under Sify's ESOP plan the ownership interest of Satyam Computer Services in Sify reduced from
32.04% as at March 31, 2004 to 31.61% as at September 30, 2005.
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$43.6
million has been recognized as gain in the statement of income during the year ended March 31,
2006.
The summarized financial information as to assets, liabilities and results of operations of Sify is
presented below:
(US$ in millions)
As of March 31,
Balance sheet
2005
2004
Current assets
$
51.9
$
49.3
Non-current assets
40.2
38.2
Current liabilities
33.3
23.6
Net current asset
18.6
25.7
Shareholders' equity
57.3
62.6
(US$ in millions)
Period ended
Year ended March 31,
Statement of operations
November 9, 2005
2005
2004
Revenues
$
60.2
$
82.8
$
61.1
Gross profit
25.7
36.4
28.9
Operating loss
7.2
10.4
12.9
Net loss
5.3
7.1
8.0
Satyam Computer Services' equity in loss of Sify, net of taxes amounted to US$1.3 million,
US$1.7 million and US$2.2 million for the years ended March 31, 2006, 2005 and 2004 respectively.
F-17
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Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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$0.5 million, US$0.7 million and US$3 thousand for the years
ended March 31, 2006, 2005 and 2004 respectively.
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
loss of CA Satyam, net of taxes amounted to US$15 thousand, US$0.1 million and US$0.4 million for
the years ended March 31, 2006, 2005 and 2004 respectively.
8.
Premises, Equipment and Depreciation
Premises and equipment at cost less accumulated depreciation consist of:
(
US$ in millions)
As of March 31,
2006
2005
Freehold land
$
7.0
$
6.1
Leasehold land
1.8
1.9
Premises
23.6
14.3
Computers including servers
109.7
99.8
System software
21.0
15.8
Office equipment
61.6
51.0
Furniture and fixtures
40.1
31.9
Vehicles
7.0
5.6
Assets under construction
19.9
16.1
Total
291.7
242.5
Less: Accumulated depreciation
(185.1
)
(158.4
)
Premises and equipment, net
$
106.6
$
84.1
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$30.6 million, US$25.0 million and US$24.4 million for the years
ended March 31, 2006, 2005 and 2004 respectively.
F-18
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
9.
Goodwill
Goodwill consists of:
(US$ in millions)
As of March 31,
2006
2005
Goodwill
Acquisition of Citisoft Plc
$
10.5
—
Acquisition of Knowledge Dynamics Pte Ltd
2.0
—
Acquisition of minority interest in
Satyam Enterprise Solutions Limited
23.1
$
23.6
Satyam Technologies Inc.
3.6
3.7
Total
39.2
27.3
Less: Accumulated amortization
(11.6
)
(11.8
)
Goodwill, net
$
27.6
$
15.5
The following table presents the reconciliation of changes in carrying values of goodwill:
(US$ in millions)
Year ended March 31,
2006
2005
2004
Goodwill at the beginning of the year
$
15.5
$
15.5
$
14.2
Acquisitions during the year
12.4
—
—
Impairment during the year
—
—
—
Change due to foreign exchange
(0.3
)
—
1.3
Goodwill at the end of the year
$
27.6
$
15.5
$
15.5
Goodwill represents the excess of amount paid towards purchase price and non-refundable
deposit 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 majority interest
in 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. Currently there is no impairment of goodwill; however, there
can be no assurance that future goodwill impairment tests will not result in a charge to earnings.
10.
Intangible assets, net
Intangible assets consist of:
(US$ in millions)
As of March 31, 2006
As of March 31, 2005
Acquired and amortized
Weighted
Gross
Accumulated
Net
Gross
Accumulated
Net
intangible assets
average life
carrying
amortization
intangible
carrying
amortization
intangible
(in years)
amount
assets
amount
assets
Citisoft Plc
a) Customer Relationship
8
$
4.9
$
(0.6
)
$
4.3
—
—
—
b) Customer Contracts
6
0.8
(0.1
)
0.7
—
—
—
c) Trade name
5
0.6
(0.1
)
0.5
—
—
—
Total
$
6.3
$
(0.8
)
$
5.5
—
—
—
Knowledge Dynamics Pte
Ltd
a) Customer Contracts and
Related Relationships
9
$
1.0
$
(0.1
)
$
0.9
b) Non-Compete agreements
5
0.1
—
0.1
c.) Trade name
3
—
—
—
d.) Internally developed
technology
3
0.1
—
0.1
—
—
—
Total
$
1.2
$
(0.1
)
$
1.1
—
—
—
During the year the Company has not recognized any impairment of other intangible assets. The
Company 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. The Company does not have any intangible
assets with indefinite useful life.
F-19
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 other
intangible assets:
(US$ in millions)
Year ended March 31,
2006
2005
2004
Identifiable intangibles at the beginning of the year
—
—
—
Acquisitions during the year
$
8.0
—
—
Amortization during the year
(0.9
)
—
—
Change due to foreign exchange
(0.5
)
—
—
Identifiable intangibles at the end of the year
$
6.6
—
—
The following table gives details of Satyam's total other intangible assets
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,
2007
1.1
2008
1.1
2009
1.0
2010
1.0
2011
0.9
Beyond 2011
1.5
11.
Income Taxes
The income tax expense consists of:
(US$ in millions)
Year ended March 31,
2006
2005
2004
Foreign taxes
Current
$
15.4
$
18.1
$
20.2
Deferred
(0.8
)
(0.6
)
0.3
Domestic taxes
Current
27.4
9.1
3.3
Deferred
(4.3
)
(1.3
)
(1.3
)
Aggregate taxes
$
37.7
$
25.3
$
22.5
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,
2006
2005
2004
Net income before taxes
$
287.8
$
180.2
$
137.0
Enacted tax rates in India
33.66
%
36.59
%
35.88
%
Computed tax expense
$
96.9
$
65.9
$
49.2
Tax effect due to non-taxable export income
(75.3
)
(52.7
)
(38.2
)
Difference arising from different tax rates in other tax jurisdictions
10.2
5.5
7.0
Difference arising from different tax rates on gain on sale of
investment
(7.0
)
—
(0.6
)
Stock- based compensation (non-deductible)
0.3
0.7
0.6
Changes in valuation allowance, including losses of subsidiaries
5.4
3.5
0.8
Effect of tax rate change
0.1
—
—
Others
7.1
2.4
3.7
Income taxes recognized in the statement of income
$
37.7
$
25.3
$
22.5
The current provision for income taxes, net of payments, were US$8.5 million and US$10.7
million as of March 31, 2006 and 2005 respectively. The foreign taxes are due to income taxes
payable in overseas tax jurisdictions by its offsite and onsite centers, principally in the United
States. Satyam Computer Services benefits from tax incentive provided to software entities as an
exemption from payment of Indian corporate income taxes for a
F-20
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
period of ten consecutive years of operations of software development facilities designated as
"Software Technology Parks" ("STP units"). The benefit of this tax incentive has historically
resulted in an effective tax rate for Satyam Computer Services well below statutory rates. In case
of Satyam Computer Services for various registered STP units these exemptions expire starting from
fiscal 2006 through fiscal 2010. Satyam Computer Services subsidiaries are subject to income taxes
of the countries in which they operate.
Satyam has not recognized deferred income taxes arising on income of Satyam Computer Services
due to the tax benefit available to it in the form of a exemption from taxable income, except to
the extent of timing differences which reverse after the tax holiday period or unless they reverse
under foreign taxes. However, Satyam Computer Services earns certain other income and domestic
income, which are taxable irrespective of the tax holiday as stated above.
Significant components of activities that gave rise to deferred tax assets and liabilities included
in the financial statements are as follows:
(US$ in millions)
As of March 31,
2006
2005
Deferred tax assets:
Operating loss carry forwards
$
24.0
$
21.1
Provision for accounts receivable, advances and investments
5.7
5.3
Premises and equipment
0.5
0.4
Provision for gratuity and unutilized leaves
6.5
3.8
Gross deferred tax assets
36.6
30.6
Less: Valuation allowance
(24.0
)
(21.1
)
Total deferred tax assets
12.7
9.5
Deferred tax liabilities:
Premises and equipment
(6.4
)
(3.5
)
Provision for accounts receivable and advances
(2.8
)
(2.6
)
Intangibles
(2.2
)
—
Investments in associated companies and gain on dilution
(0.3
)
(5.4
)
Total deferred tax liabilities
(11.7
)
(11.5
)
Net deferred tax assets/ (liabilities)
$
1.0
$
(2.0
)
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$37.8 million and US$36.4 million as of March 31, 2006 and 2005 respectively.
Operating loss carry forwards for tax purposes of Satyam amounts to approximately US$24.0 million
and US$21.1 million as of March 31, 2006 and 2005 respectively and are available as an offset
against future taxable income of such entities. These carry forwards expire at various dates
primarily over 8 to 20 years. Realization is dependent on such subsidiaries generating sufficient
taxable income prior to expiration of the loss carry forwards. A valuation allowance is established
attributable to deferred tax assets and loss carry forwards in subsidiaries where, based on
available evidence, it is more likely than not that they will not be realized.
F-21
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Net deferred tax asset/ (liabilities) included in the consolidated balance sheets are as
follows:
(US$ in millions)
As of March 31,
2006
2005
Current assets — deferred income taxes
$
12.2
$
9.1
Non-current assets — other assets*
0.5
0.4
Current liabilities — accrued expenses and other liabilities*
(2.8
)
(2.6
)
Long-term liabilities — deferred income taxes
(8.9
)
(8.9
)
Net deferred tax asset/ (liabilities)
$
1.0
$
(2.0
)
*
Included in "other assets" and "accrued expenses and other liabilities" respectively.
12.
Borrowings
Short-term debt
Short-term debt amounted to US$4.1 million and US$1.7 million as of March 31, 2006 and 2005
respectively. Short-term debt represents export packing credit facility of Nipuna at floating rate
of interest of LIBOR+0.25% which is secured by a charge on book debts, accounts receivable and
other moveable assets. The weighted-average interest rate on this borrowing was 5.33% and 3.61% for
the years ended March 31, 2006 and 2005 respectively.
Long-term debt
Long-term debt outstanding comprise of:
(US$ in millions)
As of March 31,
2006
2005
Secured debts,
representing obligation principally to banks and financial institutions
— 10.25% Rupee loans of SC-Trust, maturing serially through fiscal 2008
$
1.3
$
1.9
— 0.95% above 6 month LIBOR working capital term loan maturing
serially through fiscal 2009
5.6
—
— 0.95% above 6 month LIBOR external commercial borrowing maturing
serially through fiscal 2009
10.5
—
Hire Purchase Loans
2.9
2.4
Total Debt
20.3
4.3
Less: Current portion of long-term debt
(2.4
)
(3.1
)
Long-term debt, net of current portion
$
17.9
$
1.2
Rupee loans are secured by equity shares of Satyam Computer Services' held by the SC-Trust. In
2003, SC-Trust has repaid its rupee loans maturing in January 2004 and March 2004, amounting to
US$1.2 million and US$1.4 million, respectively, with an interest rate of 13% p.a. and has replaced
them with new rupee loans in same principal amounts with a fixed interest rate of 10.75% p.a.
maturing in July 2005.The SC-Trust has further renewed these upto September 2007 with a revised
interest rate of 10.25%.
Aggregate maturities of long-term debt subsequent to March 31, 2006, are US$2.4 million in fiscal
2007, US$1.6 million in fiscal 2008 and US$16.3 million in fiscal 2009.
Unused lines of credit
Unused lines of credit comprise of:
(US$ in millions)
As of March 31,
2006
2005
Short-term debt
$
3.8
$
3.4
Long-term debt
3.9
20.0
Non-fund facilities
4.4
14.1
Total Unused lines of credit
$
12.1
$
37.5
F-22
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
On January 6, 2005, Nipuna obtained a credit facility from a bank for long term borrowings to
the extent of US$20 million with an interest rate of 0.95% above 6 month LIBOR. Satyam Computer
Services has given a corporate guarantee to the bank for the borrowing. As per the terms of the
facility, Nipuna was required to draw the funds prior to September 30, 2005 and Nipuna has got a
further extension upto June 30, 2006. The borrowing is repayable in 3 years from each draw down of
the borrowing. As of March 31, 2006, Nipuna has availed US$16.1 million under the above
arrangement.
13.
Employee Benefits
The Gratuity Plan
The following table sets forth the status of the Gratuity Plan of Satyam, and the amounts
recognized in Satyam's consolidated balance sheets and statements of income.
(US$ in millions)
Year ended March 31,
2006
2005
2004
Accumulated benefit obligation
$
5.7
$
2.6
$
1.9
Change in projected benefit obligation
Projected benefit obligation at beginning of the period
$
5.2
$
4.0
$
2.5
Service cost
1.9
1.5
0.9
Interest cost
0.4
0.3
0.2
Actuarial loss/(gain)
0.9
(0.3
)
0.3
Benefits paid
(0.5
)
(0.3
)
(0.2
)
Effect of exchange rate changes
(0.1
)
—
0.3
Projected benefit obligation at end of the period
7.8
5.2
4.0
Change in plan assets
Employer contribution
0.5
0.3
0.2
Benefits paid from plan assets
(0.5
)
(0.3
)
(0.2
)
Fair value of plan assets at end of the period
—
—
—
Funded status of the plans
(7.8
)
(5.2
)
(4.0
)
Unrecognized net actuarial loss
1.3
0.4
1.2
Amount recognized during the period
—
—
—
Accrued benefit cost
$
(6.5
)
$
(4.8
)
$
(2.8
)
The components of net gratuity costs are reflected below:
Service cost
1.9
$
1.5
$
0.9
Interest cost
0.4
0.3
0.2
Amortization
—
—
—
Amount recognized during the period
—
—
—
Net gratuity costs
$
2.3
$
1.8
$
1.1
F-23
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The assumptions used in accounting for the gratuity plan for the years ended March 31, 2006,
2005 and 2004 are set out below:
Weighted-average assumptions used to determine benefit obligations:
Year ended March 31,
2006
2005
2004
Discount rate
8
%
8.0
%
7.0
%
Long-term rate of compensation increase
7
%
7.0
%
7.0
%
Weighted-average assumptions used to determine net periodic benefit cost:
Year ended March 31,
2006
2005
2004
Discount rate
8
%
7.0
%
7.0
%
Long-term rate of compensation increase
7
%
7.0
%
7.0
%
Cash Flows
Satyam expects to contribute US$1.5 million to its Gratuity plan during the year ending March 31,
2007. The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:
(US$ in millions)
For the financial year ended March 31,
Expected contribution
2008
$
1.7
2009
2.0
2010
2.5
2011
3.1
2012 — 2015
13.0
Provident Fund
Satyam's contribution towards the Provident Fund amounted to US$10.7 million, US$6.8 million and
US$3.4 million for the years ended March 31, 2006, 2005 and 2004 respectively.
Superannuation Plan
Satyam Computer Services' contribution towards the Superannuation Plan maintained by LIC amounted
to US$1.2 million, US$0.9 million and US$0.4 million for the years ended March 31, 2006, 2005 and
2004 respectively.
14.
Earnings per Share
Basic earning per share is computed on the basis of the weighted average number of shares
outstanding (weighted average number of shares issued less unallocated, unvested and unexercised
shares held by the SC — Trust). Allocated but unvested or unexercised shares not included in the
calculation of weighted-average shares outstanding for basic earnings per share were 53,300 and
240,500 as of March 31, 2006 and 2005 respectively. Diluted earnings per share is computed on the
basis of the weighted average number of shares outstanding plus the effect of outstanding stock
options using the "treasury stock" method.
In addition to the above, the unallocated shares held by SC — Trust, which are by definition
unvested, have been excluded from all earnings per share calculations. Such shares amounted to
1,139,840 and 1,183,840 as of March 31, 2006 and 2005 respectively.
F-24
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
The components of basic and diluted earnings per share were as follows:
(US$ in millions except per share data)
Year ended March 31,
2006
2005
2004
Net income
$
249.4
$
153.8
$
111.9
Equity Shares:
Average outstanding shares (in millions)
320.6
316.2
313.2
Dilutive effect of Associate Stock Options (in millions)
10.8
7.4
3.9
Share and share equivalents
(in millions)
331.4
323.6
317.1
Earnings per share
Basic
$
0.78
$
0.49
$
0.36
Diluted
$
0.75
$
0.48
$
0.35
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 13,000,000 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. As and when the SC-Trust issues warrants to eligible
associates, the difference between the market price and the exercise price is accounted as deferred
stock based compensation and amortized over the vesting period. The warrants vest immediately or
vest over a period ranging from two to three years, depending on the associate's length of service
and performance. Upon vesting, associates have 30 days in which to exercise these warrants. As of
March 31, 2006, warrants (net of lapsed and cancelled) to purchase 11,849,860 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 41,727,140 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, 2006, options (net of lapsed and cancelled) to
purchase 31,381,633 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 2,574,665 ADSs (5,149,330 shares)
to be issued to eligible associates with the intention to issue the warrants at a price per option
which is not less than 90% of the value of one ADS as reported on 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, 2006, warrants (net of lapsed
and cancelled) for 1,660,971 ADSs representing 3,321,942 equity shares have been granted to
associates under the ASOP ADS since inception.
Warrant grants
During the year ended March 31, 2006, the SC-Trust issued immediately vesting warrants for 13,200
shares and warrants for 30,800 (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 492,181 (net of 2,797,595 warrants
cancelled) shares to the associates. During the same period, under the ASOP (ADS), Satyam Computer
Services issued warrants for 69,993 ADS representing 139,986 (net of warrants for 90,222 ADS
representing 180,444 shares cancelled) shares to associates under the ASOP (ADS) plan.
F-25
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
During the year ended March 31, 2005, the SC-Trust issued immediately vesting warrants for
50,840 and warrants for 384,500 (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 11,957,233 (net of 2,248,524 warrants cancelled) shares to
the associates. During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
2,64,560 ADS representing 529,120 (net of warrants for 102,164 ADS representing 204,328 shares
cancelled) shares to associates under the ASOP (ADS) plan.
During the year ended March 31, 2004, the SC-Trust issued immediately vesting warrants for 92,500
and warrants for 89,500 (net of 11,700 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 4,465,271 (net of 645,528 shares cancelled) shares to the
associates During the year, under the ASOP (ADS), Satyam Computer Services issued warrants for
63,143 ADS representing 126,286 (net of warrants for 64,200 ADS representing 128,400 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,
2006
2005
2004
Number of
Weighted
Number of
Weighted
Number of
Weighted
ASOP Plan
equity
Average
equity
Average
equity
Average
shares
Exercise
shares
Exercise
shares
Exercise
Price
Price
Price
Balance at the beginning of the year
240,500
$
2.35
58,200
$
1.99
1,167,380
$
1.31
Granted
44,000
$
2.74
435,340
$
2.24
193,700
$
1.68
Exercised
(231,200
)
$
2.26
(253,040
)
$
2.09
(523,140
)
$
1.81
Cancelled
—
—
—
—
(11,700
)
$
1.90
Lapsed
—
—
—
—
(768,040
)
$
1.18
Balance at the end of the year
53,300
$
2.83
240,500
$
2.35
58,200
$
1.99
Exercisable at the end of the year
—
—
—
—
4,600
$
1.81
Weighted average fair value of options
granted during the year
44,000
$
12.15
435,340
$
7.65
193,700
$
8.72
Year ended March 31,
2006
2005
2004
Number of
Weighted
Number of
Weighted
Number of
Weighted
ASOP B
equity
Average
equity
Average
equity
Average
shares
Exercise
shares
Exercise
shares
Exercise
Price
Price
Price
Balance
at the beginning of the year
26,830,315
$
7.14
17,510,481
$
6.05
14,464,148
$
5.33
Granted
3,289,776
$
9.41
14,205,757
$
8.06
5,110,799
$
6.33
Exercised
(4,519,802
)
$
6.10
(2,637,399
)
$
5.02
(1,418,938
)
$
5.09
Cancelled
(2,797,595
)
$
7.54
(2,248,524
)
$
6.67
(645,528
)
$
5.53
Balance at the end of the year
22,802,694
$
7.47
26,830,315
$
7.14
17,510,481
$
6.05
Exercisable at the end of the year
5,124,404
$
6.86
5,695,198
$
6.76
4,517,111
$
6.31
Weighted average fair value of options
granted during the year
3,289,776
$
9.41
14,205,757
$
8.06
5,110,799
$
6.33
F-26
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
Year ended March 31,
2006
2005
2004
Number of
Weighted
Number of
Weighted
Number of
Weighted
ASOP (ADS)
equity
Average
equity
Average
equity
Average
shares
Exercise
shares
Exercise
shares
Exercise
Price
Price
Price
Balance at the beginning of the year
2,515,802
$
7.42
2,362,864
$
5.92
2,526,550
$
5.08
Granted
320,430
$
11.48
733,448
$
11.42
254,686
$
8.65
Exercised
(664,446
)
$
5.38
(376,182
)
$
5.41
(289,972
)
$
5.42
Cancelled
(180,444
)
$
14.81
(204,328
)
$
7.82
(128,400
)
$
5.41
Balance at the end of the year
1,991,342
$
8.49
2,515,802
$
7.42
2,362,864
$
5.92
Exercisable at the end of the year
932,882
$
5.93
713,700
$
5.43
343,506
$
4.91
Weighted average fair value of options
granted during the year
320,430
$
11.48
733,448
$
11.42
254,686
$
8.65
Information about number of equity shares representing stock options outstanding as on March
31, 2006:
Outstanding
Exercisable
Range of Exercise Price
Weighted
Weighted
Number of
Weighted
Number of
(per equity share)
Average Exercise
Average
equity shares
Average Exercise
equity shares
Price (per equity
remaining
arising out of
Price (per equity
arising out of
share)
contractual life
options
share)
options
Rs 111.68-
$
2.51-
Rs 210.24
Rs 211.34
Rs 236.95
$
5.33
$
4.73
0.48
4,710,074
$
4.75
2,475,018
Rs 236.96-
$
5.33-
Rs 364.10-
Rs 349.36
Rs 554.53
$
12.47
$
8.19
1.02
19,860,179
$
7.85
3,471,231
Rs 554.54-
$
12.47-
Rs 621.64-
Rs 625.39
Rs 716.06
$
16.10
$
13.98
1.46
277,083
$
14.06
111,037
The US$ numbers in the above tables have been translated using the closing exchange rate as of
March 31, 2006 1US$= Rs 44.48
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.
During the year ended March 31, 2006 Nipuna issued options for 1,215,506 equity shares at weighted
average exercise price of Rs.80 (US$1.78) being the fair market value per share. No options were
exercised during the period.
Deferred Stock-based compensation
Satyam Computer Services recognized deferred stock-based compensation of US$0.9 million, US$2.2
million and US$0.8 million for the years ended March 31, 2006, 2005 and 2004 respectively. Satyam
Computer Services amortized and charged to income US$0.8 million, US$1.9 million and US$1.7 million
for the years ended March 31, 2006, 2005 and 2004 respectively.
Pursuant to APB 25, deferred stock-based compensation has been computed as of grant date based on
the difference between the exercise price of the warrants and the market price of underlying shares
of Satyam Computer Services. Deferred stock compensation is amortized on a graded vesting basis
over the vesting period of the warrants.
F-27
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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. Upto March 31, 2005, Satyam provided segmental disclosures based on three
business groups: IT services, Business Process Outsourcing, and Software Products. Subsequent to
March 31, 2005, executive management evaluates Satyam's operating segments based on the following
two-business groups, since the revenues from Software Product segment are no longer meaningful and
management does not evaluate this segment any longer:
•
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 for the year ended
March 31, 2006 includes the results of Citisoft and Knowledge
Dynamics which were acquired during the year.
•
Business Process Outsourcing,
providing BPO services covering HR,
Finance & Accounting, Customer Contact (Voice, Mail and Chat), and
Transaction Processing (industry-specific offerings).
Satyam's operating segment information for the years ended March 31, 2006, 2005 and 2004 are as
follows:
Business Segments
(US$ in millions)
IT
BPO
Elimination
Consolidated
Services
totals
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 and amortization
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 / (loss)
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
F-28
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
IT
BPO
Elimination
Consolidated
Services
totals
For the year ended March 31, 2004
Revenue — External customers
$
565.1
$
1.3
—
$
566.4
Revenue — Inter-segment
0.5
1.1
$
(1.6
)
—
Total Revenues
565.6
2.4
(1.6
)
566.4
Operating income
125.2
(4.1
)
—
121.1
Equity in earnings/(losses) of associated
companies, net of taxes
(2.6
)
—
—
(2.6
)
Net income
116.0
(4.1
)
—
111.9
Segment assets
719.3
9.9
(15.4
)
713.8
Depreciation
24.0
0.4
—
24.4
Capital expenditures for long-lived assets
15.6
2.5
—
18.1
The capital expenditures for long-lived assets in the above table represent the additions to
premises and equipment (fixed assets) of each segment.
Geographic Information
The revenues that are attributable to countries based on location of customers and long-lived
assets are as follows:
(US$ in millions)
Year ended March 31,
2006
2005
2004
Revenues
Long-lived
Revenues
Long-lived
Revenues
Long-lived
from external
assets
from external
assets
from external
assets
customers
customers
customers
North America
$
711.2
$
4.0
$
542.4
$
4.0
$
414.9
$
4.0
Europe
206.3
0.9
131.7
0.6
77.8
0.5
India
45.1
133.1
27.2
92.2
16.1
77.5
Japan
15.5
0.5
13.9
0.5
11.1
0.2
Rest of the World
118.2
2.3
78.4
2.3
46.5
1.8
Total
$
1,096.3
$
140.8
$
793.6
$
99.6
$
566.4
$
84.0
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,
2006
2005
2004
Infrastructure and other services provided by Satyam to
Sify, its subsidiaries and associated companies
—
$
0.1
$
0.1
Satyam Venture
$
0.5
0.3
1.2
Short term advance provided by Satyam to
CA Satyam
0.1
—
—
Total
$
0.6
$
0.4
$
1.3
Infrastructure and other services received by Satyam from
Sify, its subsidiaries and associated companies
$
2.9
$
1.5
$
1.4
Satyam Venture
8.6
7.1
5.4
Total
$
11.5
$
8.6
$
6.8
F-29
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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
2006
2005
Satyam Venture
$
(1.8
)
$
(3.1
)
CA Satyam
0.1
—
Total
$
(1.7
)
$
(3.1
)
18.
Shareholders' Equity-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$786.9 million, US$559.8 million
and US$422.7 million for the years ended March 31, 2006, 2005 and 2004 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. Further Satyam
Computer Services is required to subscribe to convertible debentures amounting to US$20 million
based on certain provisions in the agreement. These convertible debentures shall bear an interest
rate equal to the prime lending rate of the State Bank of India prevailing at that time and are
convertible upon the election of Nipuna into Ordinary Shares at any time after issuance.
Satyam Computer Services, Nipuna and the investors have also entered into a warrant agreement
whereby Nipuna agrees 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 at any time during
the period commencing from the date of initial closing and ending in June 2007 from business
referred to Nipuna or its subsidiaries by an investor or its affiliates. These warrants are
convertible into ordinary equity shares of Nipuna subject to a maximum of 7.5% of the then
outstanding equity share capital of Nipuna on a fully diluted basis during the exercise period at
the price per share then in effect and subject to other terms and conditions set forth in the
agreement. As of March 31, 2006, 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$13.4 million and US$8.2 million as of March 31, 2006 and 2005
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$26.7 million and US$8.8
million as of March 31, 2006 and 2005 respectively. Contractual commitments for capital
expenditures are relating to acquisition of premises and equipment.
F-30
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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$17.5
million, US$12.5 million and US$9.1 million for the years ended March 31, 2006, 2005 and 2004
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, 2006 are US$4.1 million in fiscal
2007, US$2.4 million in fiscal 2008, US$0.6 million in fiscal 2009, US$1.0 million in fiscal 2010
and thereafter.
20.
Concentration of Credit Risk
Accounts receivable balances are typically unsecured and are derived from revenues earned from
customers primarily located in the United States. Satyam monitors the creditworthiness of its
customers to which it grants credit terms in the normal course of business. The following table
gives details in respect of percentage of revenues generated from top two and top five customers:
Year ended March 31,
2006
2005
2004
Revenues generated from top two customers
Customer I
8.80
%
10.81
%
14.28
%
Customer II
5.14
%
7.35
%
9.92
%
Total revenues from top five customers
24.21
%
29.21
%
36.45
%
21.
Financial Instruments
Forward and options contracts
Satyam Computer Services enters into foreign exchange forward and options contracts where the
counter party is generally a bank. Satyam Computer Services considers the risks of non-performance
by the counter party as not material.
The following tables give details in respect of our outstanding foreign exchange forward and
options contracts:
(US$ in millions)
As of March 31,
2006
2005
Aggregate contracted principal amounts of contracts outstanding:
Forward contracts
$
79.0
$
160.0
Options contracts
137.0
141.5
Total
$
216.0
$
301.5
Balance sheet exposure:
Forward contracts
$
0.4
$
1.0
Options contracts
(1.8
)
0.1
Total
$
(1.4
)
$
1.1
The outstanding foreign exchange forward and options contracts as of March 31, 2006 mature
between one to eleven months.
Gains/(losses) on foreign exchange forward and options contracts included under the head other
income/(expense) in the statement of income are as stated below:
(US$ in millions)
Year ended March 31,
2006
2005
2004
Forward contracts
$
0.8
$
(0.5
)
$
2.4
Options contracts
(1.6
)
0.2
—
Total
$
(0.8
)
$
(0.3
)
$
2.4
F-31
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
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$20.3 million and US$4.3
million as of March 31, 2006 and 2005 respectively as compared to the carrying amounts of US$20.3
million and US$4.3 million as of March 31, 2006 and 2005 respectively.
22.
Schedules of Balance sheet
a)
Cash and Cash Equivalents
The cash and cash equivalents consist of:
(US$ in millions)
As of March 31,
2006
2005
Cash and bank balances
$
258.9
$
128.1
Cash equivalents
33.9
1.7
Cash and cash equivalents
$
292.8
$
129.8
b)
Accounts receivable and allowance for doubtful debts
Accounts receivable consist of:
(US$ in millions)
As of March 31,
2006
2005
Customers (trade)
$
238.1
$
178.3
Related parties
1.0
0.1
Less: Allowance for doubtful debts
(19.1
)
(17.5
)
Accounts receivable
$
220.0
$
160.9
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,
2006
2005
Interest accrued on bank deposits
$
24.9
—
Prepaid expenses
5.3
$
4.4
Directors liability insurance
0.4
0.4
Advance for expenses
12.0
5.6
Loans and advance to employees
6.2
4.7
Other advances and receivables
2.4
2.7
Less: Allowance for doubtful advances
(2.3
)
(1.7
)
Prepaid expenses and other receivables
$
48.9
$
16.1
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$0.4 million and US$30 thousand
as of March 31, 2006 and 2005 respectively.
F-32
Table of Contents
Satyam Computer Services Limited
Notes to the Consolidated Financial Statements
d)
Other Assets
Other assets consist of:
(US$ in millions)
As of March 31,
2006
2005
Interest accrued on bank deposits
—
$
5.6
Deposits
$
17.0
9.6
Loans and advances to employees due after one year
0.8
0.9
Deferred taxes on income
0.5
0.4
Others
1.4
1.8
Less: Allowance for doubtful advances
(1.5
)
(1.5
)
Other Assets
$
18.2
$
16.8
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$0.7 million and US$0.3 million as of March 31,
2006 and 2005 respectively. Telephone and other deposits are primarily attributable to deposits
with government organizations principally to obtain leased telephone lines and electricity supplies
and advance payments to vendors for the supply of goods and rendering of services.
e)
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of:
(US$ in millions)
As of March 31,
2006
2005
Accrued expenses
$
56.3
$
28.3
Unclaimed dividend
1.1
1.0
Provision for taxation, net of payments
8.5
10.7
Provision for gratuity and unutilised leave
16.9
9.5
Deferred taxes on income
2.8
2.6
Others
23.3
12.7
Accrued expenses and other current liabilities
$
108.9
$
64.8
23.
Subsequent event:
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.
F-33
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,
2006
2005
2004
At the beginning of the year
$
21.1
$
17.6
$
15.3
Change during the year
3.3
3.5
0.8
Change due to foreign exchange
(0.4
)
—
1.5
At the end of the year
$
24.0
$
21.1
$
17.6
2. Allowance for doubtful accounts on trade accounts receivable:
(US$ in millions)
Year ended March 31,
2006
2005
2004
At the beginning of the year
$
17.5
$
13.9
$
9.2
Additions
4.2
7.5
6.3
Write offs, net of recoveries
(2.2
)
(3.8
)
(2.7
)
Change due to foreign exchange
(0.4
)
(0.1
)
1.1
At the end of the year
$
19.1
$
17.5
$
13.9
3. Allowance for doubtful advances:
a)
Prepaid Expenses and Other Receivables
(US$ in millions)
Year ended March 31,
2006
2005
2004
At the beginning of the year
$
1.7
$
1.6
$
1.2
Additions
0.6
0.1
0.3
Write offs, net of recoveries
—
—
—
Change due to foreign exchange
—
—
0.1
At the end of the year
$
2.3
$
1.7
$
1.6
b)
Other Assets
(US$ in millions)
Year ended March 31,
2006
2005
2004
At the beginning of the year
$
1.5
$
1.5
$
1.4
Additions
—
—
—
Write offs, net of recoveries
—
—
—
Change due to foreign exchange
—
—
0.1
At the end of the year
$
1.5
$
1.5
$
1.5
F-34