Shyam Telecom Limited16th Annual Report

2009

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Dear Shareholders,

Your Directors have immense pleasure in presenting theirSixteenth Annual Report together with the Audited Accountsfor the year ended 31st March 2009.

Scenario of Telecom Industry

Indian Telecommunication Industry is the fastest growing Telecomindustry in the world. By 2010, the industry is poised to becomethe second largest Telecom industry globally, with a totalsubscriber base of more than 500 million in wireless andwireline segments.

The Indian Wireless Industry, with 41% penetration, is onlysecond after China in terms of subscriber base at 441 million.Most of this growth has come from urban India wherepenetration is close to 60%, but in rural markets it is less than15%, where the industry now sees the opportunity for growth.

The Revenue of Telecom operators in India is expected to bearound Rs. 1.60 Lakh Crore for the fiscal year 2009-10, whilethe adjusted gross revenue is likely to stay at Rs. 1,38,000 Crore.The share of the Department of Telecom (DOT) in the adjustedrevenue will be 12%, equivalent to around Rs.16,500 Crore.After tax, the revenue from the Telecom sector will be thesecond leading contributor to the Indian Government.

Major Telecom operators from around the World are constantlyworking to enhance their presence in India by coordinating andbuilding partnerships with local players. According to anestimation from DOT, foreign direct investment in India soared2.5 times from US $ 478 Million in 2006-07 to US $ 1261Million in 2007-08. Moreover, a total of 15.64 Million newwireless subscribers added to the base in March 2009 and thenumber of wireline subscribers increased marginally for thefirst time in the last two years. Rise in the number of bothwireless and wireline subscribers depict the growth of theTelecom sector as a whole.

The booming domestic Telecom market has been attracting hugeamount of investments, which is likely to accelerate with theentry of new players and launch of new services. Norway-basedTelecom operator Telenor has bought a 60% stake in Unitech

Wireless for US $ 1.23 billion, Singapore Telecommunications(SingTel), which has a 31% stake in Bharti Airtel, has receivedthe government’s approval to offer long distance services inIndia. Telecom operator Aircel, which launched GSM Mobileservices in Bangalore on February 23, 2009, plans to invest US

$ 220.58 Million over the next year to set up base stationsacross the state.

With reference to India’s Telecom equipment manufacturingsector, it is set to become one of the largest globally by2010. Mobile phone production is estimated to grow at a

Compound Annual Growth Rate (CAGR) of 28.30% from2006 to 2011, totaling 107 million handsets by 2010. Revenuesare estimated to grow at a CAGR of 26.60% from 2006 to

2011, touching US $ 13.6 billion. Currently the Telecomhardware manufacturing sector is dominated by internationalmajors like Nokia, Ericsson and LG who have set upmanufacturing bases in India.

Our Government has taken many proactive initiatives to facilitatethe rapid growth of the Telecom industry like 100% ForeignDirect Investment (FDI) is permitted through the automaticroute in Telecom equipment manufacturing, the FDI ceiling inTelecom services has been raised to 74%.The Government isimplementing a program of connecting 66,822 uncovered villagesunder the Bharat Nirman programme. Further, it will invest US$ 2 billion to set up 1.12 lakh community service centres inrural India to provide broadband connectivity in 2008-09.

In another move, the Finance Ministry has declared a five-fold(from US $ 100 million to US $ 500 million) increase in theExternal Commercial Borrowings amount, which companiesinvolved in infrastructure sectors can borrow from overseasto spend in India. The Reserve Bank of India (RBI) has also easedits mobile-banking norms, by raising the caps on fund transfersas well as mobile- based payments and increasing the transactionlimit to US $ 96.81 per day for fund transfers.

OPPORTUNITIES

Telecom growth in the Country has been mainly fuelled byincreasing subscriber- base, domestic demand, new licensees /players and R & D investments in new emerging technologieslike 3G, WiMAX and LTE. Growth of optical networks to carrygreater bandwidths is also a result of the above expectationsand opportunities. The growth that was triggered by thederegulation of the Telecom industry and the issue of new licensesfor different circles has spiraled into a big Telecom revolution inthe country.

The wireless subscriber base in India is growing at a very fastrate and the way broad band’s growth is being projected it willbe a further shot-in-the-arm for the Telecom growth in thecountry. This clubbed with the near-term planned 3G and WiMAXroll –out would fuel the growth of this sector. Major Telecomcompanies as well as Department of Telecommunication (DOT)are expected to open test houses in the near future for cateringto the needs of conformance testing on Telecom products beingdeveloped in India.

Your Company has been a proven supplier of the TelecomEquipment to Huawei, Ericsson, Nokia, Vodafone, Idea, Aircel,Alcatel, ZTE etc., besides other GSM operators. The Companydeals in In- building solutions & State of the Art Turnkey projectsand has penetrated the GSM & CDMA Markets. Majorcontribution to the Topline is from dealing in GSM Handsetsand Accessories. The increasing demand of Telecom Equipmentsis certainly good news for your Company, since the Company isinto manufacturing of repeaters. Many new operators likeUnitech, Swan, Datacom, MTS etc have also shown interest inour products and some of them have placed order also. Many ofthese operators are going in big way in In-building solutionwhere your company is one of the leading solution provider.

Around 10 Million New Subscribers are added every month.New operators like MTS is buying handset from your company.MTS has already launched services in 7 circles. The Handsetbusiness will grow many fold in next few months.

Your company is first one to get the TEC Certification of product.This will help us to boost the products sales to governmentorganisation, BSNL, MTNL etc.

DIRECTORS’ REPORT

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Your Company offers an entire suite of both In-building andoutdoor Repeater and DAS Products. All of Shyam products areavailable in nearly any frequency band, supporting all technologiesbetween 380MHz and 2.5GHz.Your Company offers a wide rangeof Band selective repeaters from Low Power up to very HighPower, available in a single and dual band version allowing anyfrequency combination in GSM/DCS, GSM/CDMA, DCS/CDMA,with support up to 6 sub bands. In Accessories, your Companymanufactures Outdoor Directional Antenna, Slim Line CeilingAntenna, Multi Band Omni Ceiling Antenna, Low Loss PowerTapper and 4 Way Splitter.

The future plans of your Company includes developmentof New Repeaters with Advanced Technologies and Repeaterswith Single Chip Solution. The Company is currentlyworking on the advance software feature which will helpour products to become user friendly. Your Companywould also develop IP Cellular Backhaul Solutions which willenable delivering High Bandwidth Connectivity at a fraction ofthe cost.

As many new operators have received license to operateservices in India, they have a recurring requirement for the In-building Services & Repeaters and your Company has beensuccessful in procuring orders from most of these operators.The Company is also expecting big orders from OEM/Government operators.

In International Market also, your Company has marked itspresence in Asia Pacific, USA, Europe and Russia. The Companyhas also been successful in procuring big orders from LatinAmerica for repeaters. Your Company also got the productapproved from operators in North & South America and is alsotesting various products with major operators in Europe.

Shyam as a Company plans to enter and develop the IBS businessworldwide on turnkey basis. Our major customers includeMagtiCom & Geocell, Georgia, MobiCom, Mongolia, USI, Russia.Our ongoing projects include Georgia Metro, Highway coverage

at Mongolia and tender at UMC (MTS), Ukraine.

FINANCIAL PERFORMANCE

(Rupees in Lacs)

F inanc ia l F inanc ia lPARTICULARS Year Year

2008-2009 2007-2008

Sales and Services 18943.74 21908.54

Profit on Sale of Investment - 607.17

Profit before Tax &

Extraordinary Items 80.73 1060.21

Provision for Income Tax

Current Tax 12.92 74.22

Deferred Tax 0.78 339.25

MAT Credit available for set-off (12.92) -

Wealth Tax 0.93 0.97

Fringe Benefit Tax 35.90 36.66

Income Tax for earlier year 23.48 -

Extraordinary Item –

Profit on sale of Land (Net of taxes) 56.27 -

Profit after Tax &

Extraordinary Items 75.91 609.11

OPERATIONS

During the period under review your Company has registereda turnover of Rs.18,943.74 Lacs against Rs.21,908.54 Lacs in theyear 2007-08. A net profit of Rs.75.91 Lacs was made during thisperiod as against a net profit of Rs.609.11 Lacs in the previousperiod. In the last financial year, substantial profit was earnedout of sale of long term investment.

EXPORTS

Your Company is exporting Telecommunication products andsystem to various countries worldwide.

Your Company has done some major exports in the NewMarkets which includes Lebanon, Mozambique, Zanzibar, CostaRica, Bolivia, Australia, Sri Lanka etc. The Export revenue isgrowing on yearly basis. In the recent past the Company hascompleted some major In-building projects in different countries.The Company has taken Turnkey Projects worldwide, whichincludes the survey, planning, installation, commissioning etc.The products are being sold to more than 100 operators in40 countries. We have also appointed more than 50 Agents/Distributors/ Value Added Resellers worldwide. In the recentpast we have been short listed as a preferred supplier for manyoperators in Europe, Africa, Latin America etc. The product wasrecently approved by one of the biggest operator in USA i.e.Verizon. We are expecting many big orders from the North andSouth America.

DIVIDEND

The Board, considering prudent to conserve resources forinvestments in business, regrets its inability to recommend anydividend for the year ended 31st March 2009.

SUBSIDIARY COMPANIES

The Company has only one subsidiary namely, Shyam TelecomInc, USA and therefore as per Sec.212 of the Companies Act,1956 the Reports and Audited Accounts of the SubsidiaryCompany along with the statement, form part of the Annualreport.

PUBLIC FIXED DEPOSIT

The Company has not accepted deposits from Public underSection 58A of the Companies Act, 1956.

DIRECTORS

In accordance with the provisions of Section 256 of theCompanies Act, 1956 and Article 86 of the Articles of Associationof the Company, Mr. Ajay Khanna, Mr. Achintya Karati andMr.Ravi Kant Jaipuria, Directors of the Company, retire byrotation at the ensuing Annual General Meeting and being eligible,offer themselves for re-appointment.

Mr. P.K. Bhatia and Mr. C.S. Malhotra were appointed as AdditionalIndependent Directors in the Board Meetings held on23rd October, 2008 and 20th January, 2009 respectively and thustheir office stands terminated at the date of the ensuing Annual

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General Meeting. Board deemed appropriate to appointthem as Independent Directors and their office shall be liable toretire by rotation at the ensuing Annual General Meeting.Their brief profile has been stated in the Corporate GovernanceReport.

Mr. Hemant Kumra, Non-Executive and Independent Director,has ceased to be a Director w.e.f. 3rd September, 2008.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provision of section 217 (2AA) of the CompaniesAct, 1956 your Directors confirm that:

i) In the preparation of the Annual Accounts, the applicableAccounting Standards had been followed along with properexplanation relating to material departures, wherenecessary.

ii) The Directors had selected such Accounting Policies andapplied them consistently and made judgements andestimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company atthe end of financial year 2008-09 and of the profit of thecompany for the year ended on that date.

iii) The Directors had taken proper and sufficient care for themaintenance of adequate Accounting Records in accordancewith the provisions of this Act for safeguarding the Assetsof the Company and for preventing and detecting fraud andother irregularities.

iv) The Directors have prepared the Annual Accounts on agoing concern basis.

AUDITORS

M/S Mehra Goel & Co., Chartered Accountants, retiringAuditors of your Company expressed their willingness tocontinue as Auditors, if re- appointed at the Annual GeneralMeeting to hold the office until the conclusion of the next AnnualGeneral Meeting. The Company has received from the Auditorsa certificate to this effect that their appointment, if made, wouldbe within the prescribed limit under section 224(1-B) of theCompanies Act, 1956.

AUDITOR’S REPORT AND CLARIFICATION

The notes to the accounts in Auditor’s Report are self-explanatory and no further explanation is considered necessary.

PARTICULARS OF CONSERVATION OF ENERGY,ABSORPTION OF TECHNOLOGY AND FOREIGNEXCHANGE EARNINGS AND OUTGO

The information relating to Conservation of Energy, as requiredunder Section 217(1)(e) of the Companies Act, 1956 read withthe Companies (Disclosure of Particulars in the Report of Boardof Directors) Rules, 1988 is annexed and forms part of thisReport.

PARTICULARS OF THE EMPLOYEES

In compliance with the provisions of Section 217(2A) of theCompanies Act, 1956 read with Companies (Particulars of

Employees) Rules, 1975 a statement of particulars of employeesis annexed hereto and forms part of this report.

INDUSTRIAL RELATIONS

Relations with the Employees remain cordial and your Directorswish to place on record their appreciation of the co-operationand contribution made by the employees at all levels.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause49 of the Listing Agreement, as applicable, forms part of thisreport.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis as requiredunder Clause 49 of the Listing Agreement, as applicable, formspart of this report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard 21 AuditedConsolidated Financial Statements have been attached whichform part of this report & accounts.

COMPOSITION OF AUDIT & FINANCE COMMITTEE

Disclosure pursuant to the provisions of Section 292A of theCompanies Act, 1956 the Audit & Finance Committee of theCompany consists of:

Mr. Achintya Karati - NED, ID & Chairman

Mr. Arun Khanna - NED & Member

Mr. N. Kumbhat - NED & Member

Mr. Ravikant Jaipuria - NED, ID & Member

Dr. Vinod Juneja - NED, ID & Member

Mr. P.K. Bhatia - NED, ID& Member

Mr. C.S. Malhotra - NED, ID & Member

Mr. Dharmender Dhingra - V.P.(Legal) & Company Secretary

ACKNOWLEDGMENT

Your Directors acknowledge with gratitude the co-operationreceived from Bankers, Central and State GovernmentDepartments, Local Authorities and customers abroad for theircontinued guidance and support.

Your Directors also convey their gratitude to the Shareholders,Statutory Auditors and Employees of the Company for theircommitment and support which has contributed to the growthand success of the Company.

On Behalf of the Board of Directors ofSHYAM TELECOM LIMITED

Sd/-PLACE: New Delhi RAJIV MEHROTRADATE : 7th August, 2009 Chairman & Managing Director

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ANNEXURES TO DIRECTORS’ REPORT

ANNEXURE-1

STATEMENT OF PARTICULARS WITH RESPECT TOCONSERVATION OF ENERGY, ABSORPTION OFTECHNOLOGY AND FOREIGN EXCHANGEEARNINGS AND OUTGO IN ACCORDANCE WITHTHE COMPANIES (DISCLOSURE OF PARTICULARSIN THE REPORT OF THE BOARD OF DIRECTORS)RULES, 1988 ARE GIVEN HEREIN BELOW:

CONSERVATION OF ENERGY

(a ) Energy Conservation measures taken:

a. All high-energy lighting is controlled to switch offat preset timing with the help of timers, thusconsuming energy only during essential periods.

b. Employment of highly efficient low power consumingmanufacturing equipment e.g. Automatic WaveSoldering Machines, Progressive Assembly,Conveyer Belt system and utilizing state-of-the arttechnology.

c. Factory layout helps to utilize daylight forillumination in working areas and passages, thusreducing substantially the consumption of electricalenergy.

d. Permanent use of Fiberglass axial flow coolingtowers consume 25% less power than otherwise.

e. Conservation of existing chilled water coil plain airwasher system to chilled water air-washer systemin 180 TR central air-conditioning plant.

f. Use of programmable and high efficiency powersupply units for our equipment consumes lesspower than other power supplies.

g. Use of displacement ventilation, minimizing Air-conditioning usage.

h. Use of Automatic power factor correction panelfor energy conservation.

( b ) Additional investments and proposals, if any,being implemented for reduction in consumptionof energy:

A continuous study is being made on measures to

conserve energy and several new measures areunder implementation.

( c ) Impact of measures at (a) and (b) above:

By high level of integration and automation in the

manufacturing process cycle, saving in the energy/fuel consumption has been achieved which definitelyhas an impact on the production cost.

DISCLOSURE OF PARTICULARS WITH RESPECT TOABSORPTION OF TECHNOLOGY

With its established in-house Research and DevelopmentDepartment, Shyam has built its reputation with its customersby offering a winning combination of sophisticated technicalexpertise, innovative design and high volume manufacturing.

We understand the economic and competitive pressures of therapidly growing Telecom Market and have responded to thiswith the on-going development program to increase overallvalue to our customers. Efforts are being made to hire highlyqualified and experienced personnel in the said Department, tofurther enhance the quality of work, processes and productsfor this could come out to be another step towards customersatisfaction and thus in-turn capturing more share in the market.

Shyam has indigenously designed and developed complete rangeof radio Frequency Transreceivers for Indian and Internationalsatellite. The Remote Load Management system for power sectorhas been designed, developed successfully produced anddeployed in the field.

TECHNOLOGY ABSORPTION, ADAPTATION ANDINNOVATION

Efforts, in brief, made towardsTechnology absorption,adaptation and innovation

Benefits derived as a result ofthe above efforts, e.g. productimprovement, cost reduction,product development, importsubstitution, etc.

In case of imported technology(imported during the last 5years reckoned from thebeginning of the information)may be furnished:

(a) Technology imported

(b) Year of import.

(c) Has technology beenfully absorbed?

(d) If not fully absorbed,areas where this hasnot taken place,reasons thereforeand further plans ofaction.

The commercialization of in-house developed technologyhas been done to provideenhanced infrastructuremanagement services.

Technical up-gradation hasbeen done with the unstintedefforts of its R & D which haslead to total control ofTechnology.

Increased the range ofservices offerings todomestic and internationalcustomers. With continuousefforts, the benefits derivedare namely coverage of areaalong with cost reduction.

Optimum utilization ofindigenously developedtechnology is done so as tocater the market with betterfeatures in terms of coverageand cost effectiveness, sinceit has inversely affectedEuropean countries and alsoChina, in terms of both, priceand performance.

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Enabling growth and extending the reach of Wireless inunder-developed sectors of an economy, mobile operatorsrequire innovative and cost-effective solutions that makebusiness sense and connect even the remotest villages toglobal information.

During the period under review the product of the Companyare being used in more than 15 network worldwide. Thecompany has also got favorable response by participating inmore than 15 exhibitions in North and South America,Europe, South East Asia and the Indian Subcontinent.

2 ) Total foreign exchange used:

a) Expenditure in Foreign Currency (Rs. in Lacs)

- Travelling 92.41

- Commission 10.97

- Exhibition Expenses 10.81

- Product Certification Charges 41.78

- Legal, Professional and

Consultancy Charges 69.96

- Raw Material 1848.89

- Capital Goods 142.75

- Mobile Handsets & Accessories 12645.14

b) Income in Foreign Currency 2652.79

FOREIGN EXCHANGE EARNINGS AND OUTGO

1 ) Activities relating to exports, initiatives taken toincrease exports, development of new exportmarkets for products & services and exportsp lans :

The company has added Tri-Band RF & Optical Repeaters inexisting product range with new features such as SNMPprotocol, sleep mode, oscillation detection, potential freecontacts etc. All our repeaters have advance features wherethe operators can Remotely Monitor and Control variousparameters from a central location.

The Company exports has increased due to enormousdemand of Repeaters and Accessories in various countriesacross the globe including USA, Russia, Argentina, France,Bulgaria, Italy, Bahrain, Spain, Costa Rica, Indonesia, Nigeria,Ghana and many more, outpacing their competitors likeChinese and European Companies in terms of price,performance and services.

Company is committed towards developing in-buildingcoverage solutions that help its customer’s address theirneeds. Company leverages its experience of the entireTelecom value-chain to provide customized solutions forits customers, whether mobile operators, real-estateowners/developers, or neutral-host providers.

INFORMATION AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956 READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES)RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FROM 01.04.2008 TO 31.03.2009.

S. No. Name De s i g n a t i o n Remune r a t i o n Nature of Other terms Nature of Q u a l i f i c a t i o n Date of A g e L a s t % of

R e c e i v e d E m p l o y m e n t & condit ions D u t i e s & Experience C o m m e n c e m e n t ( Ye a r s ) E m p l o y m e n t E q u i t y

(Rs. in Lacs) of Employment S h a r e s

h e l d

( A ) Employed throughout the year in receipt of remuneration of note less than Rs. 24 Lakh p.a.

1 Rajneesh Khullar V.P. 26.68 Regular As per the Sales & B.A.; 21 years 22nd Nov. 2004 42 Jobsahead Nil

service rules Marketing

of the Company

2 Jaideep S. Thosar V.P. 27.11 Regular As per the Sales & B.E., M.M.M.; 20th Nov. 2007 43 Asian Electronic Nil

service rules Marketing 19 years Ltd.

of the Company

( B ) Employed for part of the year and in receipt of remuneration at the rate of Rs. 2 Lakh p. m. or more

3 Umesh Garg C.F.O. 9.27 Regular As per the Finance & B.Com., C.A., 1st Jan. 2009 48 H.F.C.L. Nil

service rules Accounts 25 years

of the Company

Note: 1. Remuneration shown above includes salary, bonus, house rent allowance, or perquisite for accommodation, leave travel allowance, medical reimbursement, commission, perquisite for use

of furniture and company’s contribution to provident fund but doesn’t include leave encashment and Company’s contribution to the gratuity fund. The monetary value of Perquisites is

calculated in accordance with the provisions of the Income Tax Act, 1961 and Rules made thereunder.

2. None of the Employees are related to the Directors of the Company.

ANNEXURE II

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Corporate Governance refers to the process of and structure by which the business and affairs of the Company are directed &managed, in order to enhance the long term shareholder value through enhancing Corporate Performance & accountability whilsttaking into account the interest of other stakeholders. It is emphatically practiced as a Corporate culture of consciousness, transparencyand openness.

Good Corporate Governance plays a vital role in underpinning the integrity & efficiency of financial market.

At the core of our corporate governance practice is the Board which oversees how the management serves & protects the long-terminterests of all the stakeholders of the company. The Company believes in good governance & the Board comprises of Independentprofessionals who believe in and have consistently endeavoured in complying with good corporate governance practice.

A . BOARD OF DIRECTORS

Composition of Board of Directors

Name of the Category Des ignat ion Number of Number of Number ofD irec tor Directorsh ip membership in Chairmanship in

held in other Committees of Committees ofCompan ies the Board of the Board of

Other Companies Other Companies

Rajiv Mehrotra Promoter & Chairman & 3 - -

Executive Managing Director

Ajay Khanna Promoter & Managing Director 4. 2 -

Executive

Alok Tandon Promoter & Managing Director 4 2 -Executive

Arun Khanna Non Executive Director 1 2 2

N. Kumbhat Non Executive Director 2 - -

Ravi Kant Jaipuria Independent & Director 8 - -

Non-Executive

Achintya Karati Independent & Director 7 3 -

Non-Executive

Vinod Juneja Independent & Director 5 - -Non-Executive

Praveen Kumar Bhatia Independent & Director 1 - -

Non-Executive

C. S. Malhotra Independent & Director - - -Non-Executive

NOTES:

1. Number of other Directorships and Committee Membership indicated above is exclusive of Private Limited Companies, ForeignCompanies, Companies U/s Section 25 of the Companies Act, 1956 and only 2 Committees viz. the Audit Committee, theShareholders’ Grievance Committee are considered.

2. Mr. Ajay Khanna and Mr. Arun Khanna are related to each other as brothers.

3. The Company has a broad based Board. As on 31st of March 2009 the Board has strength of ten Directors comprising of executive,non-executive and independent Directors which ensure the transparency, rationality and professionalism in decision making.

There are seven non-executive Directors out of which five are independent Directors. All the members are eminent and highlyexperienced professionals drawn from the field of business, finance and public enterprises. Chairman of the Board is executive.The Composition of the Board is as under:

● Total Strength : 10

● Executive Directors : 3

● Non-Executive Directors : 7

CORPORATE GOVERNANCE REPORT 2008-2009

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As per Clause 49 of the Listing Agreement, if the Companyhas an Executive Chairman, the Company is required tohave at least ½ of the Board comprising of IndependentDirectors and if the Chairman is Non-Executive then theCompany is required to have at least 1/3 of the Directorsas Independent Directors. The Company is complying withthe said provision of Clause 49 of the Listing Agreement.

4. SHAREHOLDING OF DIRECTORS AS ON 31.03.09

S .No . Name of the Director No. of Shares heldas on 31.03.09

1. Mr. Rajiv Mehrotra 52605

2. Mr. Ajay Khanna 4518

3. Mr. Alok Tandon 17570

4. Mr. Arun Khanna 490

5. Mr. Narendra Kumbhat 100

6. Mr. Ravikant Jaipuria -

7. Mr. Achintya Karati -

8. Dr. Vinod Juneja 402

9. Mr. P. K. Bhatia -

10. Mr. C. S. Malhotra -

B. BOARD MEETINGS

In the Financial Year 2008-2009 the Board of Directors met onfive occasions in compliance with Sec 285 of the CompaniesAct, 1956 and Clause 49 of the Listing Agreement.

The Board held its meetings on the following dates:

● 30th April, 2008

● 31st July, 2008

● 29th August, 2008

● 23rd October, 2008

● 20th January, 2009

Attendance of each Director at Board Meetings and Last Annual

General Meeting

Name of Number of Presence at thethe Director Board Fifteenth Annual

Meet ings General Meetingattended held on 30 th

September 2008at Jaipur.

Rajiv Mehrotra 0 NO

Ajay Khanna 5 YES

Alok Tandon 5 YES

Arun Khanna 4 YES

Narendra Kumbhat 5 YES

Ravi Kant Jaipuria 0 NO

Achintya Karati 5 NO

Vinod Juneja 1 NO

Praveen kumar Bhatia 2 NO

C S Malhotra 1 NO

Note – Mr. Hemant Kumra has attended three Board Meetingsafter which he ceased to be the Director with effect from3rd September, 2008 & Mr. Ashutosh Garg has attended oneBoard Meeting after which he ceased to be the Director witheffect from 31st July, 2008.

● In accordance with Clause 49 of the Listing Agreement, therequired information was placed before the Board andwas also made a part of the minutes of the Board Meeting.

● None of the Directors are member of more than tenCommittee of Board nor are they Chairman of more thanfive committees in which they are members.

● All Pecuniary relationship or transactions of the Non-Executive Directors viz.-a viz. the Company, if any, havebeen disclosed in financial statements of the Company forthe year ended 31st March, 2009. (Refer Note No. 9 ofSchedule 15 Notes to Accounts to the Balance Sheet).

BOARD PROCESS

It has always been the Company’s policy and practice that apartfrom matters requiring Board’s approval by statute, all majordecisions including quarterly results of the Company, financialrestructuring, capital expenditure proposals, collaboration,material investment proposal in joint venture/ promotedcompanies, sale and acquisition of material nature of assets,mortgages, guarantees, donations etc. are regularly placed beforethe Board.

CODE OF CONDUCT

Pursuant to Clause 49 of the Listing Agreement with the StockExchanges, the Board Members and Senior ManagementPersonnel of the Company have confirmed compliance with theCode of Conduct for the period ending March 31st 2009.

SEBI (Prohibition of Insider Trading) Regulations,1992, areadhered strictly.

CEO/CFO CERTIFICATION

CERTIFICATE BY THE CHIEF EXECUTIVE OFFICER(CEO) & CHIEF FINANCIAL OFFICER (CFO) ONFINANCIAL STATEMENT OF THE COMPANY:

We, B.S. Yadav, Acting C.E.O & Umesh Garg, CFO of thecompany, hereby certify and affirm that as on & upto the date ofthis certificate, there has been due compliance of AccountingStandards and other related functions as laid down by thecompany, under Clause 49 V of Listing Agreement, honestly and

ethically.

We heading & discharging the finance function hereby certify tothe Board that:

(a) We have reviewed financial statements and the cash flow

statement for the year and that to the best of our knowledgeand belief:

(i) these statements do not contain any materially untrue

statement or omit any material fact or containstatements that might be misleading;

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(ii) these statements together present a true and fair viewof the company’s affairs and are in compliance withexisting accounting standards, applicable laws andregulations.

(b) There are, to the best of our knowledge and belief, notransactions entered into by the company during the yearwhich are fraudulent, illegal or violative of the company’scode of conduct.

(c) We accept responsibility for establishing and maintaininginternal controls and that we have evaluated theeffectiveness of the internal control systems of the companyand have disclosed to the Auditors and the AuditCommittee, deficiencies in the design or operation ofinternal controls, if any, of which we were aware and thesteps we have taken or propose to take to rectify thesedeficiencies.

(d) We have indicated to the Auditors and the Audit committee:

(i) significant changes in internal control over financialreporting during the year;

(ii) significant changes in accounting policies during theyear and that the same have been disclosed in thenotes to the financial statements; and

(iii) instances of significant fraud of which they have becomeaware and the involvement therein, if any, of themanagement or an employee having a significant rolein the company’s internal control system over financialreporting.

This certificate is given by the undersigned & full reliance can beplaced for what has been stated above.

B S YADAV UMESH GARG

(Acting CEO) ( CFO)

C . COMMITTEES OF THE BOARD

Audit & Finance Committee.

Shareholder & Investor Grievance Committee.

Remuneration Committee

In compliance of Clause 49 of the Listing Agreement the Board

of Directors has constituted following Committees -

1 . AUDIT & FINANCE COMMITTEE

COMPOSITION OF THE COMMITTEE

The Committee comprises of seven Non Executive Directors,five of whom are Independent Directors and all the Directorsare having Financial & Accounting knowledge. The Chairman ofthe Committee is an Independent Director. All the membersare well versed with Accounting and Financial Knowledge.

Mr. Dharmender Dhingra, V.P.(Legal) & Company Secretary, actsas the Secretary to the Committee.

The Chairman of the Committee was unable to attend the lastAnnual General Meeting of the Company, in place of whom

Mr. Arun Khanna, Member was appointed to answer the queriesof Shareholders.

● During the Financial Year 2008-2009 the CommitteeMeetings were held Five times:

● 30th April 2008, 31st July 2008, 29th August 2008,23rd October 2008 and 20th January, 2009

● Attendance of the Members at its meetings during theYear 2008-2009

Name of the C a t e g o r y Des i gna t ion Number of

Member Mee t i n g s

a t t e n d e d

Mr. Achintya Karati NED & ID Chairman 5

Mr. N. Kumbhat NED Member 5

Mr. Arun Khanna NED Member 4

Mr. Ravikant Jaipuria NED & ID Member 0

Dr. Vinod Juneja NED & ID Member 1

Mr. P. K. Bhatia NED & ID Member 2

Mr. C. S. Malhotra NED & ID Member 1

Note :-

Mr. Hemant Kumra has attended three Audit & FinanceCommittee Meetings as a Chairman after which he ceased to bethe Director with effect from 3 rd September, 2008 &Mr. Ashutosh Garg has attended one Committee Meeting as amember after which he ceased to be the Director with effectfrom 31st July, 2008

NED- Non Executive Director; ID- Independent Director.

The Committee deals with accounting matters, financial reportingand internal controls. The power, role and terms of referenceare as prescribed in Section 292A of the Companies Act, 1956and guidelines as prescribed in Clause 49 of the ListingAgreement.

ROLE & POWERS OF AUDIT & FINANCECOMMITTEE-

The role and the powers of the Audit Committee are as per

guidelines set out in the listing Agreement with the StockExchanges and provisions of Section 292A of the CompaniesAct, 1956.

ROLE

The Audit Committee will assist the Board of Directors infulfilling its oversight responsibilities for:

1. The integrity of the Company’s statements;

2. The Company’s compliance with legal and statutory

requirements;

3. The Independent Auditor’s Qualifications and independenceand

4. The performance of the Company’s Internal Audit functionand Independent Auditors.

9

Powers

The Audit Committee shall have powers, which should includethe following –

■ To investigate any activity within its terms of reference.

■ To seek information from any employee.

■ To obtain outside legal or other professional advice.

■ To secure attendance of outsiders with relevantexpertise, if it, considers necessary.

Brief description of the terms of reference:

■ Oversight of Company financial reporting process andthe disclosure of its financial information to ensurethat the financial statement is correct, sufficient andcreditable.

■ Review major issues regarding Accounting principlesand financial statements presentations, including anysignificant changes in the Company’s selection orapplication of Accounting principles, the effect ofregulatory and accounting initiatives, as well as off-balance sheet structures on the financial statementsof the company

■ Recommending to the Board, to appoint, re-appointand oversee the work of the public accounting firmemployed by the organization to conduct the statutoryexternal auditors and, if required, the replacement orremoval of the Statutory Auditor and the fixation ofaudit fees.

■ Approval of payment of Statutory Auditors for anyother services rendered by the Statutory Auditors.

■ Reviewing with the management, the annual financialstatements before submission to the Board forapproval, with particular reference to:

● Matters required to be included in the Director’sresponsibility statement to be included in theBoard’s report in terms of clause (2AA) of section217 of the Companies Act, 1956.

● Changes, if any, in accounting policies and practices

and reasons for the same .

● Major accounting entries involving estimates

based on the exercise of judgment bymanagement.

● Significant adjustments made in the financial

statements arising out of audit findings.

● Compliance with listing and other legalrequirements relating to financial statements.

● Disclosure of any related party transactions.

● Qualification in the draft Audit Report.

■ Reviewing with the management, the quarterlyfinancial statements before submission to the Boardfor approval. Such review will include scrutiny of

earnings and the effects of any changes in accountingpractice.

■ Reviewing with the management effectiveness of theCompany’s the internal control systems.

■ Review with management and the Chief InternalAuditors the charter, plans, activities, including thestructure of the internal audit function, staffing andseniority of the official heading the department,reporting structure coverage and frequency of internalaudit.

■ Obtain and review a report by the independent Auditordescribing the firm’s internal quality-controlprocedures; any material issues raised by the mostrecent internal quality- control review, or peer reviewof the firm and assess the auditor’s independence.

■ Discussion with management the Company’s majorpolicies with respect to risk assessment and riskmanagement.

■ Reviewing the company’s procedure for detectingfraud and ensure that arrangements are in place bywhich staff may, in confidence, raise concerns aboutpossible improprieties in matters of financialreporting, financial control or any other matters

■ Discussion with statutory auditors before the auditcommences, about the nature and scope of audit aswell as post- audit discussion to ascertain any areas ofconcern.

■ To look into the reasons for substantial defaults inthe payment to the depositors, debenture holders,shareholders (in case of non payment of declareddividends) and creditors.

■ Carrying out any other function as is mentioned inthe terms of reference of the Audit Committee.

REVIEW OF INFORMATION BY AUDIT & FINANCECOMMITTEE

The Audit & Finance Committee shall mandatorily review the

following information.

1. Management Discussion and Analysis of Financial conditionand results of operations.

2. Statement of significant related party transactions (asdefined by the audit committee), submitted by management.

3. Management letters/letters of internal control weaknessesissued by the Internal auditors.

4. Internal audit reports relating to internal controlweaknesses and,

5. The appointment, removal and terms of remuneration ofthe chief internal auditor shall be subject to review by the

audit committee.

SUBSIDIARY COMPANY

■ The Company has only one subsidiary namely ShyamTelecom Inc. USA.

10

■ The Audit & Finance Committee of the companyreviews the financial statements of the subsidiarycompany.

■ The Minutes of Board meetings of subsidiary companyare placed before the board of the company andreviewed in detail.

2. REMUNERATION COMMITTEE

The Company has a Remuneration Committee consisting offour non-executive Directors and all of them being IndependentDirectors.

Composition of the Committee

Name of the Member Category Des ignat ion

Achintya Karati NED & ID Chairman

Ravi Kant Jaipuria NED & ID Member

Praveen Kumar Bhatia NED & ID Member

C.S. Malhotra NED & ID Member

There was no meeting held of the Remuneration Committeeduring the year under review.

Terms of Reference:

The following terms of reference have been specified for theCommittee:

● To determine the Company’s policy on and approve,remuneration packages for executive directors andtheir relatives working in the Company, includingpension rights and compensation payment.

● To approve the remuneration payable to the managerialpersonnel (Under the Companies Act, 1956), takinginto account the financial position of the Company,

trend in the industry, the appointee’s qualification,experience, past remuneration and performance.

Remuneration Policy:

The Remuneration Policy as outlined by the Committee aims at

■ Recognizing and rewarding performance andachievements.

■ Motivating and inducing the concerned executive toput in their best.

This policy is in tune with current national and internationalpractices considering the highly competitive business scenario.

3. SHAREHOLDERS GRIEVANCE COMMITTEE

Mr. Arun Khanna, a Non Executive Director is the Chairmanof the Committee along with Mr. Narendra Kumbhat, whoin his absence chairs the meeting and Mr. Dharmender

Dhingra, V.P.(Legal) & Company Secretary acts as thecompliance officer of the Committee.

Brief description of terms of reference:

The Company has Share Transfer and Investors GrievanceCommittee which looks after the following matters:

Redressal of shareholder and investor’s complaints etc. relatingto transfer of shares, non receipt of Balance Sheet, non receiptof declared Dividends.

■ Consolidation and sub-division of Share Certificates

■ Approval of Transfer and Transmission of ShareCertificates

■ Issue of Duplicate or Fresh Share Certificates

During the period under review the committee met 21 times.

Composition of Committee at its meetings during the year2008-09:

Name of the Member C a t e g o r y Des i gna t ion

Arun Khanna Non Executive Director Chairman

N. Kumbhat Non Executive Director Member

Dharmender Dhingra V.P. (Legal) & Compliance

Company Secretary Officer

Details of Queries/Complaints received and solved during theyear under review:

Nature of Queries/Complaints Received Solved Pending

(No.’s) (No.’s) (No.’s)

Non- receipt of Share Certificate NIL NIL NIL

No. of requests for change of address NIL NIL NIL

No. of requests for Transfer 245 245 NIL

Issue of Duplicate Share Certificates NIL NIL NIL

Non-receipt of Dividend Warrants NIL NIL NIL

Revalidation of Dividend Warrants NIL NIL NIL

Non - receipt of Annual Report NIL NIL NIL

TOTAL 2 4 5 2 4 5 NIL

The Company addresses all complaints, suggestions andgrievances expeditiously and replies are sent /issues resolvedusually within 15 days.

The Company has complied with submission of its response tothe queries/clarifications sought by the Stock Exchanges onvarious market related information like clarifications on marketrumors, etc. from time to time. These responses have not been

included in the above list.

11

Registrar and Transfer agent does share Transfer Works and ason 31st March 2009 no complaints were pending.

D. GENERAL BODY MEETINGS:

■ The Details of last three Annual General Meetingsare given below:

A G M Ye a r Day & Date T ime Ve n u e

13TH AGM 2006 Monday, 10.30 AM “THE RISALA”,

August 7, 2006 26 Karni Nagar,Queens Road,

Jaipur- 302021

14TH AGM 2007 Wednesday, 11.30A.M Hill View

December 12, Restaurant, Near

2007 Anokhi Farm,Jagatpura,

Jaipur-302025

15TH AGM 2008 Tuesday 10.00 A.M. “Hotel Pink

September 30, Pearl” 10 Mile,

2008 Mahapura,Ajmer Road,

Jaipur – 302026

■ Special Resolution passed in previous 3 AnnualGeneral Meetings

Mr. Nitin Mehrotra s/o Mr. Rajiv Mehrotra, Chairman &Managing Director of the Company, was appointed as theAssistant Vice President of the Company w.e.f. 30th January,2007.

■ POSTAL BALLOT

There has been no resolution passed through Postal Ballotduring the year 1st April, 2008 to 31st March, 2009.

E. DISCLOSURES :

■ Disclosure on materially significant related partytransactions i.e. transactions of the Company of material

nature, with its promoters, Directors or the management,their subsidiaries or relative that may have potential conflictwith the interest of the Company at large:

Disclosure on related party transaction is made in NoteNo.9 of Schedule 15 to the Balance sheet.

■ Details of non-compliance by the Company, penalties,strictures imposed on the Company by Stock Exchangesor SEBI or any Statutory Authority, on any matter related

to capital markets, during the last three years:

The Company has complied with the requirement ofregulatory authorities of capital markets and no penalties /Strictures have ever been imposed against it in the last

three years.

■ The Company has effective Whistle Blower Policymechanism in place & during the year no personnel hasbeen denied access to the Audit Committee.

■ The Company has stringently complied with all themandatory requirements of this clause & the non-mandatoryrequirements were followed to the extent possible.

■ Management Discussion & Analysis Report

It forms a part of Annual Report

■ Risk Management

The Company has laid down procedures to inform Boardmembers about the risk assessment and minimizationprocedures. Audit Committee reviews the risk assessmentand control process in the Company every quarter and issatisfied that the process is appropriate to the Companyneeds. The Board also periodically reviews the riskassessment procedure and risk mitigation procedures laiddown by the company.

The company is complying with all the mandatoryrequirements and is also complying with various non-mandatory requirements.

■ Accounting Treatment

The Company financial statements are prepared as per theguidelines of Accounting Standards.

F. DETAILS OF REMUNERATION TO ALL THEDIRECTORS

A. Remuneration to Executive Directors

The Company is not paying any remuneration to itsExecutive Directors.

B . Details of Remuneration to Non-ExecutiveDirectors :

Non-Executive are entitled to Sitting Fees only forattending the Board and Committees meetings. TheCompany does not pay any other remuneration tothem besides sitting fees. Appropriate records aremaintained in respect of the payment made to them.

G. MEANS OF COMMUNICATIONS

■ Quarterly results

Quarterly Results along with the notes are normallypublished in Business Standard, Jalte Deep and alsoinformed to all Stock Exchanges where the shares of theCompany are listed.

■ EDIFAR:

In accordance with clause 51 of the Listing Agreement theQuarterly as well as Annual Results are simultaneouslyposted on the Electronic Data Information Filing and

Retrieval website namely www.sebiedifar.nic.in. Thewebsite is also accessible through a hyperlink EDIFARthrough SEBI’s official website www.sebi.gov.in

■ WEB-SITE/INVESTORS GRIEVIANCE ID:

The results and official news are displayed on the

Companies website viz. www.shyamtelecom.com. Furtherthe Investor Grievance ID as per listing Agreement for

12

Month BSE (In Rs.) NSE (In Rs.)

H igh L o w High L o w

April 2008 114.90 71.75 114.60 71.80 May 2008 104.85 83.70 105.85 83.10 June 2008 93.80 69.60 94.85 70.15 July 2008 90.00 67.10 90.50 67.50 August 2008 108.00 86.50 104.50 82.60 September 2008 109.40 70.00 109.40 61.60 October 2008 86.50 36.60 89.70 36.05 November 2008 53.50 38.00 53.00 36.10 December 2008 55.50 36.50 55.10 38.60 January 2009 61.70 40.00 55.50 37.10 February 2009 50.80 39.05 50.50 39.00 March 2009 61.40 34.55 61.65 35.15

The Performance of the Shyam Equity share relative to the BSESensitive Index (Sensex) is given in the chart below:

investors queries has been generated on the company’swebsite which is as follow:

Investors@shyamtelecom.com

H . GENERAL SHAREHOLDERS INFORMATION

Annual General Meeting

A G M Ye a r Day & Date T ime Ve n u e

16th AGM 2009 Friday, 10:00 A.M Hotel Pink

25th September, Pearl, 10th Mile,

2009 Mahapura,

Ajmer Road,

Jaipur-302026

■ Financial Calendar

The Company follows Financial Year from 1st April to31st March each year.

Par t i cu l a r s Due Date

First Quarter Results Released on July 31st, 2008

Second Quarter Results Released on October 23rd, 2008

Third Quarter Results Released on January 20sth, 2009

Fourth Quarter Results Released on April 25th, 2009

Audited Annual Results Released on 30th July, 2009

Audited Consolidated Results Released on 7th August, 2009

■ Date of Book Closure

21st September, 2009 to 25th September 2009 (both daysinclusive)

■ Dividend Payment Date

The Company has not declared dividend for the financialyear ending 31st March 2009.

■ Listing on Stock Exchanges

The Company’s Shares are listed on The National StockExchange of India Limited and The Stock Exchange,Mumbai .

The Company has paid the Annual Listing Fees due to allstock exchanges upto the year 2009-2010.

■ Stock Code

BSE, Mumbai 517411

NSE SHYAMTEL

ISIN INE635A01023

■ Market price data: High, Low during each month in the

financial year 2008-09.

■ Registrar and Transfer Agents

Share transfer work in physical as well as demat mode isdone by Company’s Registrar & Transfer Agent.

■ Indus Portfolio Pvt. Ltd.

G-65, Bali Nagar,New Delhi – 110015.

Email:”mailto:rnt@indusinvest.com”rnt@indusinvest.com

■ Share Transfer System

Physical share transfers are registered and returned withina period of 15 days of receipt, if the documents are correct

and valid in all respects.

■ Distribution of Shareholding

Distribution of shareholding as on 31st March, 2009

Number of No. of % of Total No. of % of

s h a r e s sh a reho l de r s sh a reho l de r s Shares held To t a l E q u i t y

Upto 100 13,269 78.53 5,51,399 4.89

101-500 3,003 17.76 6,92,098 6.14

501-1000 344 2.04 2,66,328 2.36

1001-5000 207 1.23 4,36,495 3.87

5001-10000 28 0.17 1,95,561 1.74

10001-20000 21 0.12 3,17,226 2.81

20001-30000 3 0.02 67,145 0.60

30001-40000 2 0.01 67,701 0.60

40001-50000 3 0.02 1,41,530 1.26

50001-100000 2 0.01 1,09,802 0.97

100001-500000 8 0.05 24,95,024 22.15

500001 and above 7 0.04 59,29,691 52.61

To t a l 1 6 , 8 9 7 1 0 0 1 , 1 2 , 7 0 , 0 0 0 1 0 0

13

■ Dematerialization of Shares and Liquidity

The Securities and Exchange Board of India (SEBI) mandatedcompulsory trading in shares of the Company by allinvestors in electronic form. As on March 31, 2009,1,12,18,591 shares of the Company, held by shareowners,are in dematerialized form, aggregating to 99.54 % of theEquity Share Capital. With this, the problem associatedwith the physical delivery will now be reduced to a largeextent.

■ Outstanding ADRs/GDRs

The Company has no Outstanding ADRs / GDRs / Warrants/ any Convertible Instruments which have likely impact onits equity.

■ Investor Query/ Address for Correspondence:The Company Secretary,

Shyam Telecom Limited, A-60, Naraina Industrial Area,

Phase – I, New Delhi –110028.

Telephone No.: 011 41411088, 41411070,71,72,

Fax No.: 011 25794981, 25793752

Email: d.dhingra@shyam.co.in

■ Plant Location:

246, Phase-IV, Udyog Vihar,Gurgaon-122015, Haryana,

India.Tel: 91-124-4311600 to 609.

Brief Resume of the Directors proposed to be re-appointed :

■ AJAY KHANNA

Name of the Director Mr. Ajay Khanna

Date of Birth 25.01.1956

Date of Appointment 03.07.1992

Qualification B.Com, Diploma in Leather Technology

Mr. Ajay Khanna, was inducted on the Board of Shyam in the year1992 and holds the position as Managing Director in the company.

He has been principally involved in setting up Distributors/Channel Network for Cable TV and Cellular Business and alsoco-ordination and high level liason with all Local Authority/

Statutory Regulatory bodies to ensure smooth function ofvarious group companies. He has promoted various Businessof Shyam Group Viz; Hexacom, Telelink & Essel Shyam. He

Successfully did an IPO of Shyam Telecom in 1994 which got anOverwhelming response and over Subscribed by 25 times.

He is heading the Commercial Operations as well as Financial

Management’s and Credit Monitoring for the group. Financial/Technical Operations of the Group. He was instrumental increating consortiums and closing the financing for the Cellular

and V-SAT business of the Group.

He is also responsible for exploring new expansionopportunities in the Telecom sector, raising resources for their

successful financial closure besides financial planning.

Other Directorships

Sl. No. Name of the Company Pos i t i on

1. Sistema Shyam Teleservices Ltd. Managing Director

2. Shyam Antenna Electronic Ltd. Director

3. RMS Automation Systems Ltd. Director

4. Kribhco Shyam Fertilizers Ltd. Director

(Mr Ajay Khanna is also Director in 6 other Private Companiesbut for the purpose of consistency the names of the PrivateCompanies have not been mentioned.)

Committee Membership in other Companies:

Sl. No. Name of the Company Commit tee Pos i t i on

1. Sistema Shyam Audit Member

Teleservices Ltd. Committee

2. Shyam Antenna Audit MemberElectronic Ltd. Committee

■ MR. ACHINTYA KARATI

Name of the Director Mr. Achintya Karati

Date of Birth 23rd March 1956

Date of Appointment 27th September 2004

Qualification Bachelor in Law, Bachelor in Commerce.

Mr. Achintya Karati was inducted on the Board in the year 2004.He has worked in ICICI Ltd from the year 1978 till 2001 holdingresponsible business development positions starting fromDeputy Zonal Manager- North, Head of Major Client Group-North and finally taking charge as Country Head of Governmentand Institutional Solutions Group. His tenure at ICICI Ltd.included top level interactions with large PSUs including NTPC,NHPC, PGCIL, BHEL etc. and large corporates including HeroHonda, Escorts, Honda Motors etc. April 2004 onwards. He, inICICI, headed the department which dealt with Governmentand Institutional funds. He was advisor to NCDEX, a CommodityExchange promoted by ICICI Bank, NABARD, LIC, NSE, CRISIL,etc. and acted as a Senior Advisor of ICICI Securities withresponsibility to interact with Govt., PSU & Large Corporatesfor Investment Banking Solutions. He was associated with ICICIPrudential for ‘Fund Management’ by ICICI Prudential as approvedby IRDA in respect of Gratuity & Superannuation Fund of PSU &other large Corporate.

Other Directorships

Sl. No. Name of the Company Pos i t i on

1. Uflex Ltd. Nominee Director

2. ICICI- West Bengal Infrastructure Nominee DirectorDevelopment Corporation Ltd.

3. Sangam (India) Ltd. Director

4. J.K. Cement Ltd. Director

5. Neel Metals Products Ltd. Director

6. Tech Process Solutions Ltd. Director

7. Delton Cables Ltd. Director

14

Committee Membership in other Companies:

Sl. No. Name of the Commit tee Pos i t i onC o m p a n y

1. J.K. Cement Ltd.. Audit Committee Member

2. Uflex Ltd. Audit Committee Member

3. Sangam India Ltd. Audit Committee Member

4. Sangam India Ltd. Management Committee Member

5. Sangam India Ltd. Remuneration Committee Member

■ MR.RAVIKANT JAIPURIA

Name of the Director Mr. Ravikant Jaipuria

Date of Birth 28th November, 1954

Date of Appointment 20th December, 2002

Qualification MBA

Mr. Ravikant Jaipuria was inducted on the board of the Companyw.e.f from 20th December, 2002.He is having a vast experiencein setting up and running Pepsi-Cola Bottling Plants in India andNepal. He belongs to the family, having over 40 years ofexperience in beverage industry. He was adjudged the Best PepsiBottler of the world for the year 1998. He was presented withthe Donald M. Kendall Bottler of the year award, the highesthonour to any franchisee. He is also associated with fast foodindustry. He, under the flagship of Jaipuria Group, has thefranchise of Yum! Restaurants ( India ) Pvt. Ltd. to run a fast foodchain under the name of PIZZA HUT in northern India andEastern India. He has also entered into the field of running andmaintaining educational institutions by entering into anagreement , under Jaipuria Group, with Delhi Public Schools tomanage its school at Gurgaon & Jaipur.

All the group companies under his guidance are doing very wellin terms of Profitability, Growth, Market Leadership and enjoygood credibility with its business associates including Pepsi FoodLtd.He has a special niche for exploring new business venturesand transforming them into total success.

Other Directorships

Sl. No. Name of the Company Pos i t ion

1. Devyani International Ltd. Director

2. Goa Bottling Company Ltd. Director

3. Inbev India International Ltd. Director

4. Parkview City Ltd.. Director

5. R J Corp Ltd. Director

6. Sameer Agriculture & Livestock Ltd. Director

7. Universal Breweries Ltd. Director

8. Varun Beverages Ltd. Director

*He is also Director in 32 other Private Companies but for thepurpose of consistency the names of the Private Co. have notbeen mentioned.

Committee Memberships in other Companies : NIL

■ PRAVEEN KUMAR BHATIA

Name of the Director Mr. P.K. Bhatia

Date of Birth 10th November 1954

Date of Appointment 23rd October 2008

Qualification B.A.(Hons.) Economics, FCA

Mr. P.K. Bhatia is a senior partner of M/s Kumra Bhatia & Co., aleading firm of Chartered Accountants and has been engaged inpractice since past 28 years. He has been associated with variousBanks (State Bank of India, Punjab National Bank, Canara Banketc), Public Sector Undertakings ( Vayudoot Ltd, U.P. State BridgeCorporation, Jammu & Kashmir H.P. Marketing and ProcessingCorporation Ltd.).

He has handled Special Assignments like Concurrent Audit ofState Bank of India, CAG Branch which is the largest branch ofany bank in the country, conducted management and systemsaudit and compiled Internal Control Manual for Super Bazarand is also on the panel of Special Auditors maintained by theIncome- Tax Department.

Other Directorships

Sl. No. Name of the Company Position

1. Trident Finvest Ltd. Director

*He is also Director in 4 other Private Companies but for thepurpose of consistency the names of the Private Co. have notbeen mentioned.

■ C.S. MALHOTRA

Name of the Director Mr. C.S. Malhotra

Date of Birth 1st April 1931

Date of Appointment 20th January 2009

Qualification M.A., DBM, MBA

Mr. C.S. Malhotra is the Management advisor to Delhi FlyingClub. He was also the Ex- Director of Indian Airlines, ShyamTelelink Ltd. & Pro Agro Seeds. He got an extensive experienceof over 42 years in HR and General Management and was anadvisor to IGRU academy, Delhi, Sahara Airlines and HexacomIndia.

He has worked with Indian Airlines from 1947-1988 and retiredas Director heading eight departments mainly HRD, IndustrialRelations, handling trade unions, ground services, employeeswelfare etc. As a head of HR, he has dealt with eight tradeunions representing different crafts. He was instrumental innegotiating and finalizing long term settlements on wages andother terms and conditions of employment with various unions.Responsible for Crisis Management including strikes and wasinvolved in policy making activity at the top level.

He was on the Panel of Experts of International Civil AviationOrganization, IATA and also attended as a member of theEmployers’ team in the ILO conference at Hague, Netherland.

15

CERTIFICATE

To the Members of

Shyam Telecom Limited

We have examined the compliance of conditions of Corporate

Governance by SHYAM TELECOM LIMITED, for the year

ended on 31st March 2009, as stipulated in clause 49 of the

Listing Agreement of the said company with stock exchange(s).

The compliance of conditions of Corporate Governance is the

responsibility of the management. Our examination has been

limited to a review of the procedures and implementation

thereof, adopted by the Company for ensuring the compliance

of the conditions of Corporate Governance. It is neither an

audit nor an expression of opinion on the financial statements

of the Company.

In our opinion and to the best of our information and according

to the explanations given to us and the representations made

by the Directors and Management, we certify that the Company

has during the year complied with the conditions of Corporate

Governance as stipulated in the above-mentioned Clause of

Listing Agreement.

We state that no investor grievance(s) is pending for a period

exceeding one month against the Company as per the records

maintained by the Company.

We further state that such compliance is neither an assurance

as to the future viability of the Company nor the efficiency or

effectiveness with which the management has conducted the

affairs of the Company.

For MEHRA GOEL & CO.,CHARTERED ACCOUNTANTS

GEETIKA MEHRAPlace: New Delhi (Partner)Date : 30th July, 2009 M. No. 510525

■ Categories of shareholders as on 31st March 2009:

Shareholder’s Category % of holding

Promoters, relative and associates 2.802

Bodies Corporate (Domestic)* 69.672

Banks & Financial Institutions (FIs) 0.006

Mutual Funds 0.009

Foreign Institutional Investors (FIIs) 7.509

Non-Resident Indians (NRIs) &

Overseas Corporate Bodies (OCBs) 0.362

Resident Individuals 18.943

Any Other** 0.697

Tota l 100

*Out of total shareholding of Bodies Corporate, 63.476% formspart of shareholding of Promoter and Promoter group.

**Any Other includes shares held by Clearing Houses, ClearingMembers & Trust.

■ Shareholding with more than one percent holdingas on 31st March, 2009.

Shareho lders % of holding

Intell Invofin India Pvt. Ltd. 15.06

Mehrotra Invofin India Pvt. Ltd. 13.85

Cellcap Invofin India Pvt. Ltd. 7.26

A T Invofin India Pvt. Ltd. 7.19

Teletec Finsec India Pvt. Ltd. 7.14

Cellphone Credit & Securities India Pvt. Ltd. 6.75

Shyam Antenna Electronic Ltd. 6.21

Melchior Indian Opportunity Fund 3.28

Cresta Fund Limited 4.19

Upturn Securities Private Ltd. 2.29

Rakesh Kanwar 1.65

16

INDUSTRY STRUCTURE AND OPPURTUNITIES

Indian Telecommunication Industry is the fastest growing Telecom industry in the world. By 2010, the industry is poised to become the

second largest Telecom industry globally, with a total subscriber base of more than 500 million in wireless and wireline segments.

The Indian Wireless Industry, with 41% penetration, is only second after China in terms of subscriber base at 441 million. Most of this

growth has come from urban India where penetration is close to 60%, but in rural markets it is less than 15%, where the industry now

sees the opportunity for growth.

The booming domestic Telecom market has been attracting huge amount of investments, which is likely to accelerate with the entry of

new players and launch of new services.

Our Government has taken many proactive initiatives to facilitate the rapid growth of the telecom industry like 100% Foreign Direct

Investment (FDI) is permitted through the automatic route in telecom equipment manufacturing, the FDI ceiling in telecom services

has been raised to 74%.The Government is implementing a program of connecting 66,822 uncovered villages under the Bharat Nirman

programme. Further, it will invest US $ 2 billion to set up 1.12 lakh community service centres in rural India to provide broadband

connectivity in 2008-09.

The future of the Indian Telecom industry is extremely bright. This sunrise industry in India is at an inflection point and the onset of 3G

services will catapult it among the technologically most advanced telecom industries worldwide, along with countries like Hong Kong,

Finland and Japan. The entry of foreign players in the industry will provide necessary technological know-how as well as huge funding

to upgrade the existing infrastructure. As far as the Telecom companies are concerned, they will see falling Average Revenue per User

in the next few quarters, though the Average Minutes of Use may go up on account of more penetration in the rural market.

ADVANTAGE SHYAM

Your Company is today a part of a complete Telecom Solution Provider – the Shyam Group. As a Group, Shyam covers the complete

spectrum of Telecom manufacturing and services through its member companies. The Company has added Tri-Band RF & Optical

Repeaters in existing product range with new features such as SNMP protocol, sleep mode, oscillation detection, potential free

contacts etc. All our repeaters have advance features where the operators can Remotely Monitor & Control various parameters from

a central location.

As many new operators have received license to operate services in India, they have a recurring requirement for the In Building

Services & Repeaters and your Company has been successful in procuring orders from most of these operators. Your Company is also

expecting big orders from OEM/Government operators.

Your Company offers an entire suite of both in-building and outdoor Repeater and DAS Products. All of Shyam Products are available

in nearly any frequency band, supporting all technologies between 380MHz to 2.5GHz. The products are being sold to more than 100

operators in 40 countries. We have also appointed more than 50Agents/Distributors/Value Added Reseller worldwide to give boost

to the exports.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company believes in formulating adequate and effective internal control system and implementing the same to ensure that the

assets and interests of the Company are safeguarded and reliability of accounting data and its accuracy are ensured with proper checks

and balances.

The Board of Directors has constituted an Audit Committee as per the provisions of Section 292A of the Companies Act, 1956 and

Corporate Governance requirements specified by the Sock Exchanges.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

17

We maintain adequate internal control systems to ensure that assets are safeguarded against loss from unauthorized use or disposition

and that the transactions are authorized, recorded and reported correctly. The internal audit function is empowered to examine the

adequacy, relevance and effectiveness of control systems, compliance with the policies, plans and statutory requirements.

The top management and the Audit & Finance Committee of the Board review the findings and recommendations of the Internal audit

panel.

RISKS AND CONSTRAINTS

Rapid changes in the global economic environment, entry of new players in the market, clients expectations, severe competition within

and outside domestic boundaries brings new challenges and various risk scenarios such as depletion in profits, adverse foreign-

exchange fluctuations, reduced margins, unforeseen legal requirements etc.

To name few, risks which are inherent in the Telecom sector are as follows:-

■ Competition : With foreign players entering in Telecom manufacturing industry, intense competition would emerge causing

longer gestation periods in Revenue Realisations. Consumers demand long term vendor credit lines which creates mismatch of

cash inflow with cash outflow and enhanced funds requirements.

■ Attracting and managing talent and intellectual capital – With fierce competition comes the talent poaching. Attracting

pool of talent and retaining it for long term basis is very critical to the success of any organization. Companies should have some

talent retention measures in place.

We continuously monitor business and operations risk through business process re-engineering and reviewing. Further our

ability to properly identify, measure, monitor and report risk is critical to our sound practices and profitability. We confirm to the

following risk management techniques to smooth functioning of our business:

● Risk Identification: We identify the risk by assessing the potential impact of internal and external factors on business transactions.

● Risk measurement: Measurement models and related assumptions are routinely reviewed to ensure that our risk estimates

are reasonable and reflective of underlying positions.

● Risk monitoring/control: We have established risk management policies and procedures. These policies have approved limits

set out for various parameters relating to customers, products and businesses, which are monitored periodically as appropriate.

● Risk reporting: It covers all lines of businesses and is provided to the management on a daily, weekly or monthly basis as

appropriate.

18

TO THE MEMBERS OF SHYAM TELECOM LIMITED

1 . We have audited the attached Balance Sheet of SHYAM

TELECOM LIMITED as at 31st March, 2009, and also the

Profit & Loss Account and the cash flow statement of the

Company for the year ended on that date annexed thereto.

These financial statements are the responsibility of the

Company’s management. Our responsibility is to express

an opinion on these financial statements based on our audit.

2 . We conducted our audit in accordance with the auditing

standards generally accepted in India. 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.

An audit also includes assessing the accounting principles

used and significant estimates made by the Management, as

well as evaluating the overall financial statement

presentation. We believe that our audit provides a

reasonable basis for our opinion.

3 . As required by the Companies (Auditors’ Report) Order,

2003, issued by the Central Government of India in terms

of sub-section (4A) of Section 227 of the Companies Act,

1956, we enclose in the Annexure a statement on the

matters specified in paragraphs 4 and 5 of the said order.

4 . Further to our comments in the Annexure referred to in

paragraph 3 above, we report that: -

(a) We have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required

by law have been kept by the company so far as appears

from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash

Flow Statement dealt with by this report are in

agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit & Loss

Account and Cash Flow Statement dealt with by this

report comply with the Accounting Standards referred

to in sub-section (3C) of section 211 of the Companies

Act, 1956;

(e) On the basis of written representations received from

the directors as on 31st March, 2009 and taken on

record by the Board of Directors, we report that

none of the directors is disqualified as on 31st March

2009 from being appointed as a director in terms of

clause (g) of sub-section (1) of section 274 of the

Companies Act, 1956;

(f) In our opinion, and to the best of our information and

according to explanations given to us, the said accounts

give the information required by the Companies Act,

1956, in the manner so required and give a true and

fair view in conformity with the accounting principles

generally accepted in India:

i. in the case of the Balance Sheet, of the state

of affairs of the company as at 31st March, 2009;

ii. in the case of the Profit and Loss Account, of the

Profit for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the

cash flows for the year ended on that date.

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

PLACE: NEW DELHI R.K.MEHRADATED: 30 th July 2009 PARTNER

M.No. 6102

A N N E X U R E(Referred to in paragraph 3 of our report of even date)

i) The Company has maintained records showing full

particulars, including quantitative details and situation of

fixed assets. The fixed assets covering significant value have

been physically verified by the management during the year,

which in our opinion is reasonable, having regard to the

size of the Company and the nature of its assets. On the

basis of the information and explanations given by the

management, no material discrepancies have been noticed

on such verification.

ii) In our opinion, the Management at reasonable intervals has

physically verified the inventories of the Company in its

possession. Stocks in the possession and custody of the

third parties have been verified by the Management with

regard to confirmation or statement of account or

correspondence of the third parties or subsequent receipt

of goods. The procedures of physical verification of

inventory of the Company followed by the Management

are reasonable and adequate in relation to the size of the

Company and nature of its business.

iii) As per information & explanation given to us, the company

has not granted or taken any loans, secured or unsecured

to/from companies, firms or other parties listed in the

Register maintained under Section 301 of the Companies

Act, 1956.

iv) In our opinion and according to the information and

explanations given to us, there are adequate internal control

systems commensurate with the size of the company and

A U D I T O R S’ R E P O R T

19

the nature of its business for the purchase of inventory,

fixed assets and for the sale of goods and services. During

the course of Audit, no major weakness has been noticed

in the internal controls systems.

v) In our opinion and according to the information and

explanations given to us, the particulars of contracts or

arrangements referred to in section 301 of the Act have

been entered into the register maintained under Section

301 of the Companies Act, 1956. In our opinion and

according to the information and explanations given to

us, the transaction made in pursuance of contracts or

arrangements entered in the register maintained under

Section 301 of the Companies Act, 1956 have been made

at prices which are reasonable having regard to the

prevailing market prices where available on the parties at

which the transaction for the similar items have been

made with other parties, where comparable.

vi) To the best of our knowledge and according to the

information and explanations given to us, the Company

has not accepted any deposits covered under Section

58A and 58AA or any other relevant provisions of the

Companies Act, 1956.

vii) To the best of our knowledge and as per the information

and explanations given to us, the Company has a

reasonable internal audit system, being carried by a firm

of Chartered Accountants, commensurate with its size

and nature of its business.

viii) The central government has under clause (d) of sub section

(1) of section 209 of the Companies Act, 1956 prescribed

maintenance of cost records for the company and the

company has maintained the prescribed records.

ix) To the best of our knowledge and according to the

information and explanations given to us, the Company is

generally regular in depositing undisputed statutory dues

including Investor Education and Protection fund,

Employee State Insurance, Provident Fund, Wealth Tax,

Custom Duty, Excise Duty, Service Tax, Cess and any other

statutory dues, where applicable with the appropriate

authorities However some delays have been noticed in

depositing Income Tax, ESI & Provident fund.

There were no arrears of outstanding statutory dues at

the last day of financial year for a period of more than six

months from the date they became payable.

Further according to the information and explanations

given by the management, there were no disputed dues of

sales tax, income tax, custom duty, wealth tax, excise duty,

service tax and cess.

x) The Company has no brought forward losses and has not

incurred any cash losses during the financial year and in

the immediate preceding financial year.

xi) On an examination of the records of the company &

information & explanation given to us, the company has

not defaulted in the repayment of dues to any financial

institutions or bank or debenture holder as at the balance

date.

xii) On the basis of verification of accounts and records

maintained by the Company and to the best of our

knowledge & belief, the Company has not granted any

loans and advances on the basis of security by way of

pledge of shares, debentures and other securities.

xiii) In our opinion, and to the best of our information and

according to the explanation by the management, we are

of the opinion that the company is neither a chit fund nor

a nidhi/mutual benefit society.

xiv) To the best of our knowledge and according to information

given to us, the Company is not dealing or trading in

shares, debentures and other securities.

xv) To the best of our knowledge and according to the

information and explanation given to us, the Company

has not given guarantee for loans taken by others from

Banks/ Financial Institutions, the terms and conditions

whereof are not prejudicial to the interest of the

Company.

xvi) To the best of our knowledge and according to the

information and explanations given to us, the term loans

were applied for the purpose for which the loans were

obtained.

xvii) According to the Cash Flow Statement and other records

examined by us and information and explanations given to

us, on an overall basis, funds raised on short-term basis

have, prima facie, not been used during the year for long-

term investment.

xviii) According to the information & explanations given to us,

the Company has not made any preferential allotment of

shares during the year to parties and companies covered

in the Register maintained under section 301 of the

Companies Act, 1956.

xix) According to the information & explanations given to us

the Company has not issued any debentures during the

year.

xx) According to the information & explanations given to us,

the Company has not raised any money by Public Issue

during the year.

xxi) Based upon the audit procedure performed and

information and explanation given by the management we

report that no fraud on or by the Company has been

noticed or reported during the year.

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

PLACE: NEW DELHI R.K.MEHRADATED: 30th July 2009 PARTNER

M.No. 6102

20

BALANCE SHEET AS AT 31st MARCH, 2009

SCHEDULE AS AT AS AT

NO. 31-Mar-2009 31-Mar-2008

I SOURCES OF FUNDS (Rs . ) (Rs . )

SHAREHOLDER’S FUNDS

Share Capital 1 112,700,000 112,700,000

Reserves and Surplus 2 388,987,341 381,396,620

LOAN FUNDS 3

Secured Loans 83,627,165 162,335,495

Unsecured Loans 261,616,158 127,250,000

Deferred Tax Liability (Net) 65,119,475 65,040,918

912,050,139 848,723,033

I I APPLICATION OF FUNDS

FIXED ASSETS 4

Gross Block 536,664,690 507,546,669

Less : Depreciation 144,062,108 112,981,316

Net Block 392,602,582 394,565,353

Capital Work in Progress 404,580 -

INVESTMENTS 5 26,205,787 26,112,351

CURRENT ASSETS, LOANS & ADVANCES

Current Assets

Inventories 6 281,726,024 141,807,841

Sundry Debtors 7 1,056,668,548 935,511,053

Cash & Bank Balances 8 117,591,852 329,153,547

Loans & Advances 9 308,671,580 229,901,002

1,764,658,004 1,636,373,443

Less : CURRENT LIABILITIES & PROVISIONS 1 0

Current Liabilities 1,258,167,337 1,199,178,750

Provisions 13,653,477 9,149,364

1,271,820,814 1,208,328,114

NET CURRENT ASSETS 492,837,190 428,045,329

912,050,139 848,723,033

SIGNIFICANT ACCOUNTING POLICIES 1 4

NOTES TO ACCOUNTS 1 5

The schedules referred above form an integral part of the Balance Sheet.

As per our report of even date attached

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

R.K. MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Partner Chairman & Managing Director Managing Director Managing Director

M. No. 6102

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 30th July, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

21

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2009

SCHEDULE YEAR ENDED YEAR ENDEDNO. 31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

INCOME

Sales & Services 1,895,986,319 2,230,553,577

Less : Excise Duty & Service Tax 43,234,785 67,766,886

Net Sales 1,852,751,534 2,162,786,691

Other Income 1 1 41,622,685 28,067,503

1,894,374,219 2,190,854,194

EXPENDITURE

Manufacturing & Other Expenditure 1 2 1,815,453,336 2,066,237,824

Financial Charges 1 3 37,387,698 47,295,391

1,852,841,034 2,113,533,215

PROFIT BEFORE INCOME FROM INVESTMENT,DEPRECIATION & TAX 41,533,185 77,320,979

Income from Investment

Profit On Sale of Long Term Non Trade Investments - 60,717,254

PROFIT/(LOSS) BEFORE DEPRECIATION & TAX 41,533,185 138,038,233

Less : Depreciation 33,459,778 32,016,986

PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEMS & TAX 8,073 ,407 106,021,247

Provision for Taxation

Income Tax

- Current Tax 1,292,374 7,422,000

- Deferred Tax 78,557 33,925,114

- MAT Credit available for set-off (1,292,374) -

Wealth Tax 93,000 97,000

Fringe Benefit Tax 3,590,000 3,666,000

Income Tax For Earlier Year 2,347,785 -

PROFIT/(LOSS) AFTER TAX & BEFORE EXTRAORDINARY ITEMS 1,964 ,065 60,911,133

Extraordinary Items

Profit on Sale of Land (Net of Tax) 5,626,656 -

PROFIT/(LOSS) AFTER TAX & AFTER EXTRAORDINARY ITEMS 7,590 ,721 60,911,133

Basic and Diluted Earning Per Share before extraordinary items

( Refer Point No. 6 of Schedule 15 ) 0.17 5.40

Basic and Diluted Earning Per Share after extraordinary items

( Refer Point No. 6 of Schedule 15 ) 0.67 5.40

Nominal Value of equity share 10 10

SIGNIFICANT ACCOUNTING POLICIES 1 4

NOTES TO ACCOUNTS 1 5

The schedules referred above form an integral part of the Profit & Loss Account.

As per our report of even date attached

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

R.K. MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Partner Chairman & Managing Director Managing Director Managing Director

M. No. 6102

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 30th July, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

22

CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31ST MARCH, 2009

(Rs. in lacs)Current Year Previous Year

(A ) CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit after tax and before extraordinary items 19.64 609.11

Adjustments for :

Depreciation 334.60 320.17

Interest and Financial Charges 373.88 472.95

Loss / (Profit) on Sale of Investment - (607.17)

Interest & Dividend Income (65.86) (63.12)

Provision for Tax 61.09 451.10

Bad Debts Written Off 251.10 76.17

Provision for Doubtful Debts/ Advances 1.69 -

Provision (Leave Encashment & Retirement Benefit ) 45.04 4.41

(Profit) / Loss on Sale of Fixed Assets 5.80 2.68

Exchange Fluctuation (0.93) 15.94

Operating Profit before working capital change 1,026.05 1 ,282 .24

Adjustments for :

Trade & Other Receivables (2,236.89) (2,721.48)

Inventories (1,399.18) (36.07)

Trade & Other Payables 477.82 2,643.26

Cash Generated From Operations (2,132.20) 1 ,167 .95

Direct Taxes Paid (75.49) (219.01)

Cash flow from operating activities (A ) (2 ,207.69) 948.94

(B ) CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Aseets (including Capital Work in Progress) (347.27) (224.23)

Sale of Fixed assets 78.72 16.76

Advance for Capital Goods received back - 1,830.23

Interest & Dividend Income 65.86 63.12

Investments - 708.92

Net cash (used in) / from Investing Activities ( B ) (202 .69) 2 ,394 .80

( C ) CASH FLOW FROM FINANCING ACTIVITIES :

Proceed from Long Term Borrowings 1,417.51 498.73

Repayment of Long Term Borrowings (487.61) (2,334.61)

Short Term Borrowings (net) (373.33) 646.79

Interest and financial charges paid (261.81) (357.26)

Net cash (used in ) / from financing activities ( C ) 294.76 (1 ,546.35)

Net increase / (decrease ) in cash and cash equivalents (A+B+C) (2 ,115 .62) 1 ,797 .39

Cash and cash equivalents at beginning of the year 3,291.54 1,494.15

Cash and cash equivalents at the end of the year 1,175.92 3,291.54

Notes :

1. Cash flow statement has been prepared following the “indirect method” as set out in the Accounting Standarard-3 on Cash

flow statement .

2. Cash and cash equivalents represent cash and bank balance including bank deposit .

As per our report of even date attached

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

R.K. MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Partner Chairman & Managing Director Managing Director Managing Director

M. No. 6102

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 30th July, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

23

SCHEDULES FORMING PART OF THE ACCOUNTSAS AT AS AT

31-Mar-2009 31-Mar-2008(Rs . ) (Rs.)

SCHEDULE - 1 SHARE CAPITAL

AUTHORISED

50,000,000 Equity Shares of Rs. 10/- each 500,000,000 500,000,000

2,500,000 Preference Shares of Rs 100/- each. 250,000,000 250,000,000

750,000,000 750,000,000

ISSUED , SUBSCRIBED AND PAID UP

11,270,000 Equity Shares of Rs 10/- each, fully paid up 112,700,000 112,700,000

112,700,000 112,700,000

SCHEDULE - 2 RESERVES & SURPLUS

Investment Subsidy

Acquired under the scheme of arrangement 1,500,000 1,500,000

Profit & Loss Account

As per last Balance Sheet 379,896,620 319,383,206

Add: Balance transferred from Profit & Loss account 7,590,721 60,911,133

387,487,341 380,294,339

Less: Impact of transitional adjustment for employee benefits - 397,719

387,487,341 379,896,620

388,987,341 381,396,620

SCHEDULE - 3 LOAN FUNDS

SECURED LOANS

Term Loans

- From Bank (*) - 36,880,200

- Vehicle Loans (**)(#) 6,176,143 9,395,978

- From Corporate Bodies ( ** ) 891,968 2,167,650

Cash Credit

- From Bank (***) 76,559,054 113,891,667

83,627,165 162,335,495

UNSECURED LOANS

- From Bank 26,251,158 -

- From Corporate Bodies 235,365,000 127,250,000

261,616,158 127,250,000

(*) Rs.Nil ( P.Y Rs.368.80 Lacs ) are Secured by way of assignment of the Key Man Insurance Policies taken from Insurance Company and

personal guarantee of directors of the company.

(**) Secured by hypothecation of specific Assets.

(***) Secured by first charge on current assets of the company (both present & future) by way of hypothecation of Stocks of all types, Book

Debts & second charge on the company’s all movable and immovable assets both present and future in Pari Passu with the banks providing

Term Loan for working capital and personal guarantee of three Promoter Directors.

(#) Includes Rs. 61.76 Lacs (Previous year Rs. 93.96 Lacs) from Banks.

24

SCHEDULE - 5 INVESTMENTS

NON TRADE

QUOTED - Fully Paid-up(*)

Long - Term ( At Cost )

3,300 Equity Shares of Rs 10/- each of Intec Securities Limited 33,000 33,000

1,41,427 Equity Shares of Rs10/- each of Spanco Telesystem and Solutions Ltd. 5,232,799 5,232,799

4,86,667 Equity Shares of Rs10/- each fully paid up in Sparsh BPO Services Ltd. 18,006,679 18,006,679——————— ———————

23,272,478 23,272,478

TRADE INVESTMENTS

UNQUOTED - Fully Paid-up

IN SUBSIDIARY COMPANIES

100 Common stock of $ 1.00 each of Shyam Telecom Inc.USA 4,374 4,374

IN OTHERS

2,92,544 Equity Shares of Rs. 10/- each of Shyam Telelink Ltd. 1,834,251 1,834,251

ADVANCE FOR INVESTMENT

IN SUBSIDIARY COMPANY

Shyam Telecom Inc, USA 1,094,684 1,001,248——————— ———————

2,933,309 2,839,873——————— ———————

26,205,787 26,112,351——————— ———————

( * ) Aggregated market value of Quoted Investments Rs.151.86 Lacs (Previous Year Rs. 937.70 Lacs) including cost where market value is not

readily available.

SCHEDULE - 6 INVENTORIES

(As taken, valued and certified by the Management)

Raw Material 136,685,367 97,641,742

Finished Goods 123,550,551 22,465,747

Work In Process 20,450,841 19,234,253

Packing Material 154,972 6,170

Stores & Spares 264,584 287,762

Material In Transit 619,709 2,172,167——————— ———————

281,726,024 141,807,841——————— ———————

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE - 4 FIXED ASSETS

ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

AS AT A d d i t i o n s D e l e t i o n s / As At As At D u r i n g W r i t t e n Up to As At As At0 1 - A p r- 0 8 D u r i n g Adjustments 3 1 - M a r- 0 9 0 1 - A p r- 0 8 t h e B a c k 3 1 - M a r- 0 9 3 1 - M a r- 0 9 3 1 - M a r- 0 8

the year during the y e a ry e a r

(R s . ) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Tangible Assets

Land Free Hold 885,900 - 708,750 177,150 - - - - 177,150 885,900

Land Lease Hold 6,719,694 - - 6,719,694 - - - - 6,719,694 6,719,694

Building 44,474,745 - - 44,474,745 5,297,827 1,485,457 - 6,783,284 37,691,461 39,176,918

Plant & Machinery 378,786,375 19,492,436 981,215 397,297,596 82,766,635 23,203,661 542,529 105,427,767 291,869,829 296,019,740

Electric Installation 4,388,824 7,485,966 - 11,874,790 723,009 275,640 - 998,649 10,876,141 3,665,815

Furniture & Fixture 14,811,963 222,995 - 15,034,958 4,681,510 935,415 - 5,616,925 9,418,033 10,130,453

Vehicles 27,158,363 214,754 3,312,315 24,060,802 6,593,292 2,347,276 1,776,720 7,163,848 16,896,954 20,565,071

Office Equipment 13,460,095 1,133,759 202,216 14,391,638 2,432,502 749,873 59,737 3,122,638 11,269,000 11,027,593

Computer Lease hold 3,998,203 - - 3,998,203 1,111,640 642,385 - 1,754,025 2,244,178 2,886,563

TOTA L 4 9 4 , 6 8 4 , 1 6 2 2 8 , 5 4 9 , 9 1 0 5 , 2 0 4 , 4 9 6 5 1 8 , 0 2 9 , 5 7 6 1 0 3 , 6 0 6 , 4 1 5 2 9 , 6 3 9 , 7 0 7 2 , 3 7 8 , 9 8 6 1 3 0 , 8 6 7 , 1 3 6 3 8 7 , 1 6 2 , 4 4 0 3 9 1 , 0 7 7 , 7 4 7

Intangible Assets

Software 12 ,862 ,507 5 ,772 ,607 - 18 ,635 ,114 9 ,374 ,901 3 ,820 ,071 - 13 ,194 ,972 5 ,440 ,142 3 ,487 ,606

GRAND TOTAL 5 0 7 , 5 4 6 , 6 6 9 3 4 , 3 2 2 , 5 1 7 5 , 2 0 4 , 4 9 6 5 3 6 , 6 6 4 , 6 9 0 1 1 2 , 9 8 1 , 3 1 6 3 3 , 4 5 9 , 7 7 8 2 , 3 7 8 , 9 8 6 1 4 4 , 0 6 2 , 1 0 8 3 9 2 , 6 0 2 , 5 8 2 3 9 4 , 5 6 5 , 3 5 3

Previous Year figures : 490,121 ,630 22,423 ,002 4 ,997 ,963 507,546 ,669 84,018,094 32,016,986 3,053,764 112,981,316 394,565,353

Capital Work in Progress 404 ,580 -

3 9 3 , 0 0 7 , 1 6 2 3 9 4 , 5 6 5 , 3 5 3

- Capital Work in Progress Includes advance for capital expenditure. (Unsecured, Considered Good.)

AS AT AS AT

31-Mar-2009 31-Mar-2008(Rs . ) (Rs.)

25

SCHEDULES FORMING PART OF THE ACCOUNTS

AS AT AS AT

31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

SCHEDULE - 7 SUNDRY DEBTORS

(Unsecured, Considered Good unless otherwise stated)Debts Outstanding for over 6 months- Considered Good 478,127,383 138,929,126- Considered Doubtful 9,896,043 27,357,840

———————— ————————488,023,426 166,286,966

Less : Provision for Doubtful Debt. 9,896,043 27,357,840———————— ————————

478,127,383 138,929,126Others 578,541,165 796,581,927

———————— ————————1,056,668,548 935,511,053

———————— ————————

SCHEDULE - 8 CASH & BANK BALANCES

Cash in Hand 860,957 909,827Balance With Scheduled Banks in :- Fixed Deposits (including interest accrued) (*) 61,827,019 89,180,103- Current Account 54,903,876 239,063,617

———————— ————————117,591,852 329,153,547

———————— ————————(*) Under lien with Bank as Margin Money

SCHEDULE - 9 LOANS & ADVANCES

(Unsecured, Considered Good unless otherwise stated)Advances recoverable in cash or in kind or for value to be received- Considered Good 52,982,189 59,995,651- Considered Doubtful - 35,083,267

———————— ————————52,982,189 95,078,918

Less : Provision for Doubtful Advances - 35,083,267———————— ————————

52,982,189 59,995,651Security Deposits 12,490,475 11,774,247Due From Subsidiary (interest Free) 189,174,803 120,827,311Cenvat Receivable 29,961,322 15,974,986Balance with Excise Department 12,077 89,105Advance Tax (Net) 22,758,340 21,239,702MAT Credit available 1,292,374 -

———————— ————————308,671,580 229,901,002

———————— ————————

SCHEDULE - 10 CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIESSundry Creditors 722,069,844 836,650,440Advance From Customers 490,060,182 327,515,188

Book Overdraft 1,099,951 912,497Interest Accrued But Not Due on Loans 44,937,360 33,731,245Unclaimed Dividend ( * ) - 369,380

———————— ————————1,258,167,337 1,199,178,750

———————— ————————PROVISIONSLeave Encashment 8,835,623 4,260,429Retirement Benefit 4,817,854 4,888,935

———————— ————————13,653,477 9,149,364

———————— ————————

( * ) The outstanding amount includes Rs. Nil ( Previous Year Rs. Nil ) due & outstanding to be credited to investor education andprotection fund.

26

SCHEDULE - 11 OTHER INCOME

Interest on Deposits (*) 6,301,405 6,056,185Dividend on Non Trade Long Term Investments 284,502 256,266Exchange rate Fluctuation ( Net) 8,646,779 -Miscellaneous Income (**) 26,389,999 21,755,052

——————— ———————41,622,685 28,067,503

——————— ———————(*) Tax deducted at source Rs. 14.48 Lacs (Previous Year Rs 11.84 Lacs)(**) Includes Rs.200.00 Lacs ( Previous Year Rs. 200.00 Lacs ) received by assigning a keyman policy to a Managing Director.

SCHEDULE - 12 MANUFACTURING & OTHER EXPENDITURE

Material Consumed & Goods Traded 1,591,165,648 1,767,298,858

Network planning, Projects, Software & Software Systems 661,647 6,619,875

Stores & Spares Consumed 6,271,222 10,930,839

Power & Fuel 7,353,915 6,706,731

Manufacturing Expenses 6,208,403 4,866,585

Excise Duty on Closing Stock ( Finished Goods) 1,327,589 1,493,299

Salary, Wages & Bonus 101,376,569 101,536,814

Employer’s Contribution to P.F. & Other Fund 5,958,583 6,879,448

Staff Welfare 8,518,943 8,208,086

Repair to:

Plant & Machinery 1,804,394 1,658,024

Building 10,407,076 939,707

Auditor’s Remuneration :

Audit Fee 644,442 550,000

Tax Audit Fee 150,000 150,000

Other Services 217,864 210,000

Exchange rate Fluctuation ( Net) - 12,251,322

Communication Expenses 10,444,067 8,569,685

Printing & Stationery 1,872,472 1,409,844

Travelling & Conveyance 34,198,737 38,500,064

Rent 12,093,615 8,502,101

Director Sitting Fees 46,000 32,000

Insurance 2,255,941 2,117,562

Rates & Taxes 6,486,020 3,762,910

Advertisement & Publicity 12,912,163 16,029,412

Packing & Forwarding 12,109,192 9,648,386

Provision for Doubtfull Debts & Advances 169,467 -

Sundry Balance Written off 17,152 -

Prior Period Adjustments (Net) 2,733,973 26,718

Bad Debts Written Off ( Net) 25,109,715 7,617,287

Legal & Professional Charges 27,360,234 21,764,032

Other Administrative Expenses 27,300,006 22,049,257

Loss on Sale of Fixed Assets (Net) 579,679 268,388——————— ———————1,917,754,728 2,070,597,234

Add / Less Decrease / Increase in Stocks :

Add : Opening Stock :

Work In Process 19,234,253 20,420,911

Finished Goods 22,465,747 16,919,679

Less : Closing Stock :

Work in Process 20,450,841 19,234,253

Finished Goods 123,550,551 22,465,747——————— ———————1,815,453,336 2,066,237,824——————— ———————

SCHEDULES FORMING PART OF THE ACCOUNTS

YEAR ENDED YEAR ENDED

31-Mar-2009 31-Mar-2008(Rs . ) (Rs.)

27

SCHEDULE - 13 FINANCIAL CHARGES

Interest on

- Fixed Period Loans 2,316,484 6,570,356

- Others 27,931,631 29,159,622

Bank Charges 7,139,583 11,565,413——————— ———————

37,387,698 47,295,391——————— ———————

SCHEDULE - 14 SIGNIFICANT ACCOUNTING POLICIES

1 . BASIS FOR PREPARATION OF ACCOUNTS

The Financial Statements have been prepared under historical cost convention on accrual basis in accordance with generally

accepted accounting principles and applicable Accounting Standards and the provisions of Companies Act, 1956.

2 . USE OF ESTIMATES

The presentation of financial statements in conformity with the Indian GAAP requires the management to make estimates and

assumptions to be made that may affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at

the date of the financial statements and the reported amounts of incomes and expenses during the reporting period. Although

these estimates are based upon management best knowledge of current events and actions, actual results could differ from those

estimated.

3 . FIXED ASSETS

Fixed Assets are stated at cost, net of VAT/ CENVAT, less accumulated depreciation. All costs including borrowing costs till

commencement of commercial production are capitalised. Capital expenditure on assets not owned by company is reflected in

capital work in progress account till the period of completion and thereafter in the fixed assets. Machinery spares that can be used

only in connection with an item of fixed asset and their use is expected to be irregular are capitalized. Replacement of such spares

is charged to revenue.

4 . INTANGIBLE ASSETS

In accordance with the Accounting Standard (AS) 26 relating to intangible assets, all costs incurred on technical know-how / license

fee relating to production process are charged to revenue in the year of incurrence. Costs incurred on technical know-how /

license fee relating to process design/ plants/ facilities are capitalized, at the time of capitalization of the said plant/ facility and

amortized on pro-rata basis over a period of five years. Computer software is capitalised on the date of installation and is

amotised over a period of three years.

5 . IMPAIRMENT OF ASSETS

Carrying amount of cash generating units/ assets is reviewed for impairment. Impairment, if any, is recognized where the carrying

amount exceeds the recoverable amount being the higher of net realizable price and value in use.

6 . EXPENDITURE INCURRED DURING CONSTRUCTION PERIOD

Expenditure directly relating to construction activity including trial run production expenses (net of income, if any) is capitalized.

Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent to

which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure (including

borrowing costs) incurred during the construction period which is not related to the construction activity nor is incidental

thereto, is charged to the Profit & Loss Account.

7 . INVESTMENTS

Investments are classified into current and long-term investments. Current investments are stated at the lower of cost and

quoted/ fair value. Long term investments are stated at cost less any provision for permanent diminution in value.

8 . REVENUE RECOGNITION

Sales are inclusive of excise duty, service tax and net of sales tax. Export sales are net of ocean freight and insurance.

SCHEDULES FORMING PART OF THE ACCOUNTS

YEAR ENDED YEAR ENDED

31-Mar-2009 31-Mar-2008(Rs . ) (Rs.)

28

Revenue in respect of long-term turnkey works contracts is recognized under percentage of completion method, subject to such

contracts having progressed to a reasonable extent.

9 . INVENTORY VALUATION

Inventories are valued at lower of cost or net realizable value except scrap which is valued at net realizable value. The cost is

determined by using first-in-first-out (FIFO) method. Finished goods and work-in progress include costs of conversion and other

costs incurred in bringing the inventories to their present location and condition.

Excise duty on closing stock of finished goods and scrap are accounted for on the basis of payments made in respect of goods

cleared as also provision made for goods lying in the factory and included in the value of such stocks.

10 . DEPRECIATION

Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in Schedule XIV

to the Companies Act, 1956. Individual assets costing Rs.5000 or less are depreciated in full in the year of purchase.

Leasehold land for lease period below 90 years is amortised over the period of lease from the date of commencement of

commercial operations.

11 . PRODUCT WARRANTY EXPENSES

Liability for Warranties is recognized at the time the claim is accepted. The necessary provisions are made with respect to

warranties claimed and accepted, which are received up to the end of one month from the close of the year.

12 . FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the date of the transaction.

Monetary items denominated in foreign currencies outstanding at the year-end are translated at exchange rate applicable as on that

date. Non monetary items are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account

of exchange difference either on settlement or on translation is recognized in the profit and loss account.

13 . BORROWING COST

Borrowing costs that are attributable to the acquisition or the construction of qualifying assets are capitalized as part of cost of

such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other

borrowing costs are charged to revenue.

14 . INCOME ON INVESTMENTS

Dividend on shares is accounted for, as and when the right to receive the same is established.

15 . CLAIMS

Claims receivables are accounted for depending on the certainty of receipt and claims payables are accounted at the time of

acceptance.

16 . EMPLOYEE’S BENEFITS

i . Short term employee benefit are recognized as an expenses at the undiscounted amount in the profit and loss account of

the year in which related service is rendered.

i i . The company has defined contribution plans for post-retirement benefit, namely Employee Provident

Fund Scheme administered through Provident Fund Commissioner and company contribution are charged to revenue

every year.

i i i . Company contribution to state plans namely Employees State Insurance Fund & Employee Welfare Fund are charge to

revenue every year.

iv. The company has defined benefit plan namely Leave Encashment / Compensated absence and Gratuity, the liability for which

is determined on the basis of an actuarial valuation at the end of the year. Gratuity Trust is administrated through Life

Insurance Corporation of India (LIC).

v. Termination benefits are recognized as an expenses immediately.

vi. Gain or Loss arising out of actuarial valuation are recognized immediately in the profit & loss account as income or

expenses.

29

17. TAXATION

Provision for current income tax is made after taking credit for allowances and exemptions. In case of matters under appeal, due

to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

In accordance with the Accounting Standard 22-Accounting for Taxes on income, the deferred tax for timing differences between

the book & tax profit for the period is accounted for using the tax rates and the tax laws that have been enacted or substantively

enacted as of the balance sheet date.

Deferred tax assets arising from temporary timing difference are recognized to the extent there is virtual certainty that the asset

will be realized in future.

Minimum alternative tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the

Company will pay income tax higher than that computed under MAT, during the period that MAT is permitted to be set off under

the Income Tax Act, 1961 (specified period). In the year, in which the MAT credit becomes eligible to be recognised as an asset in

accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India

(ICAI), the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. The

Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the

extent there is no longer convincing evidence to the effect that the Company will pay income tax higher than MAT during the

specified period.

18 . GOVERNMENT GRANTS

Government grant in the nature of promoter’s contribution is treated as capital receipt and credited to investment subsidy

account.

Grant in the nature of revenue subsidy is treated as revenue receipt and credited to profit and loss account.

19 . PROVISION AND CONTINGENT LIABILITIES

Show cause notices issued by various government authorities are not considered as obligation. When the demand notice are

raised against such show cause notice and are disputed by the company then these are classified as possible obligations.

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result

of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are

disclosed in notes.

20 . LEASES

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as

operating leases. Annual lease payments are recognized as an expense on straight-line basis and in accordance with the respective

lease agreements.

Assets acquired under leases where company has substantially all the risks and rewards of ownership are classified as finance

lease. Assets acquired under the finance lease are capitalized and corresponding lease liability is recorded at an amount equal to

the fair value of the leased asset at the inception of the lease or present value of minimum lease payment, whichever is lower.

21 . PROPOSED DIVIDEND

Dividend as proposed by Board of Directors is provided for in the books of account, pending approval at the Annual General

Meeting.

22. CENVAT/VAT

CENVAT / VAT claimed on capital assets are credited to assets/ capital work in progress account. CENVAT / VAT on purchase of

raw materials and other materials are deducted from the cost of such material.

SCHEDULE - 15 NOTES TO ACCOUNTS

Current Year Previous Year1 Contingent liabilities : (Rs in Lacs) (Rs in Lacs)

i) Claim against the company not acknowledged as debt 108.13 108.13

ii) Estimated amount of contracts remaining to be executed on capital account (Net of advance) 133.45 -

iiI) Outstanding Guarantee Issued by Banks 276.49 -

iv) Letter of Credits issued by the Banks (Agst. which Goods have not been despatched) 1,532.32 -

30

Purchase Purchase

2 Details of investment purchased and sold during the year. Un i t s R s . Un i t s R s .

Shares of Spanco Telesystem and Solution Ltd. - - 5,319 1,308,687

3 The deferred tax liability at the year end comprise of the following : (Rs in Lacs)

AS AT 31.03.2009 AS AT 31.03.2008

Deferred Tax Liability on account of :

Timing difference between book & Tax Depreciation 733.65 785.86

733.65 785.86

Deferred Tax assets on account of;

Disallowance under Section 43B 48.57 7.18

Others 33.89 82.46 128.27 135.45

Net deferred tax liabil ity/(assets) 651.19 650.41

4 Bad debts debited to accounts include : (Rs in Lacs)

Current Year Previous Year

Debit balances written off 254.00 77.40

Credit balances written back 2.90 1.23—————— ——————

Net 251.10 76.17—————— ——————

5 Director’s Sitting Fees 0.46 0.32

6 EARNING PER SHARE Current Year Previous Year

a ) Weighted Average No. of Equity shares

Opening balance of Equity shares ( Nos.) 11,270,000 11,270,000

Closing balance of Equity shares ( Nos.) 11,270,000 11,270,000

Weighted Average of Equity Shares (Nos.) 11 ,270,000 11,270,000

b ) Profit/(Loss) after Tax before extra ordinary items (Rs. in lacs) 19.64 609.11

c ) Profit/(Loss) after Tax after extra ordinary items (Rs. in lacs) 75.91 609.11

d ) Basic & Diluted Earning Per Share(Rs)

-Before Extraordniary Items (b/a) 0.17 5.40

-After Extraordniary Items (c/a) 0.67 5.40

7 The company acquired computer under finance lease with respective assets as security, minimum lease payments outstanding as

on 31st March, 2009 in respect of these are as under

(Rs in Lacs)

Part icu lars Not later Later then Later then

then One Year Five Year Tota l

one year to five year

Total minimum lease payment outstanding as on 31st March, 2009 9.32 - (Nil) 9.32

(14.54) (9.32) (Nil) (23.86)

Interest Not Due 0.35 - (Nil) 0.35

(1.84) (0.35) (Nil) (2.19)

Present Value of minimum lease payment as on 31st March, 2009 8.97 - (Nil) 8.97

(12.70) (8.97) (Nil) (21.67)

P.Y. figures has been shown in brackets

8 The Company had transaction for supply and procurement of goods with M/s KTP Exports Pte Limited and M/s Aquarius

technology Pte Limited which belongs the same group. An amount of Rs 4894.81 lacs recoverable and shown in Sundry Debtors

and amount Rs.4673.57 lacs has been shown as payable & included in creditor. The compnay applied to Reserve Bank of India

for set off of the amount payable against amount receivable. The permission of Reserve Bank of India is awaited.

31

9 RELATED PARTY INFORMATION

RELATIONSHIP

a) Names of the related parties where control exists are as under :

- Subsidiary

Shyam Telecom Inc.

b) Key Management Personnel : Mr. K. N. Mehrotra , Mr. Rajiv Mehrotra , Mr Alok Tondon and Mr. Ajay Khanna [Previous year

Mr K.N.Mehrotra, Mr Alok Tondon]

c) Enterprises over which Key Management Personnel and relatives are able to exercise significant influence: Shyam Antenna

Electronics Ltd., Intercity Cable System Pvt. Ltd, Shyam Communication Systems, Shyam Basic Infrastructures Projects Pvt.

Ltd, Shyam Telecom Systems Pvt. Ltd, A.T. Invofin India Pvt Ltd, Cell cap Invofin India Pvt Ltd, Intell Invofin India Pvt Ltd, Shyam

digital satellite Communication Pvt Ltd, Sistema Shyam TeleServices Limited,Ubico Networks Pvt.Ltd.

Note: Related party relationship is as identified by the Company and relied upon by the auditors.

Transactions with the above related parties are as follows: (Rs In Lacs)

PARTICULARS Subsidiary Companies Key Management Enterprises over which they Grand TotalPersonnel have significant influence

Year Ended Year EndedYear Ended Year Ended Year Ended Year Ended Year Ended Year Ended

31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08

Sale of Products / Services 516.78 324.89 - - 1,901.43 205.63 2,418.21 530.52

Sale of Investments/land 77.25 - 77.25 -

Assignment of Key Man Insurance Policy 200.00 200.00 200.00 200.00

Rent Agreements (Paid) 1.20 1.20 41.41 38.40 42.61 39.60

Interest Provided 149.15 145.34 149.15 145.34

Loans Taken 1,155.00 425.00 1,155.00 425.00

Repayment of Loan 73.85 1,298.00 73.85 1,298.00

Loans Given 683.47 238.23 683.47 238.23

Out standings :-

Receivables 222.76 169.59 327.40 147.83 550.16 317.42

Payables 2,978.16 660.29 2,978.16 660.29

Loans Taken 2,353.65 1,272.50 2,353.65 1,272.50

Loans Given 1,891.75 1,208.27 1,891.75 1,208.27

1 0 SEGMENT INFORMATION

The Company’s operations predominantly relate to providing Telecommunication products , Turnkey Projects , Trading and

respective related Services. The company has considered business segment as the primary segment for disclosure. The segments

have been identified taking into account the nature of the products, the deferring risk and returns, the organisation structure and

internal reporting system . The company caters mainly to the needs of the domestic market and export turnover is not significant

in context of the total turnover, hence there is no reportable geographical segment . The Telecom products & Services segment

comprise of manufacturing and services in the related area. Turnkey Projects and trading services segment includes the turnkey

Projects and Trading in Telecom Products. Investments are primarly in the companies which are dealing in IT and telecommunication

sectors.

Revenue & expenditure which relates to enterprises as a whole and are not attributable to segments are included in unallocable

expenditure ( Net of unallocable income ) . Assets used in the Company’s business or liabilities contracted have not been

identified to any of the reportable segment , as all the assets and services are used interchangeably between segments, The

Company believes that it is currently not practicable to provide segment disclosure relating to total assets and liabilities since a

meaningful segregation of the available data is onerous.

32

Rs in Lacs

Segment Reporting Year Ended Year Ended

Part icu lars 31-Mar-2009 31-Mar-2008

Segment Revenue

- Telecom Products & Services 6,328.16 5,735.01

- Turnkey Projects and Trading 12,199.36 15,892.86

- Investments 2.85 609.73—————— ——————

Gross Sales / Income From Operations 18,530 .37 22,237 .60

Less : Inter / Intra Segment Sales - -—————— ——————

Net Sales 18,530 .37 22,237 .60—————— ——————

Segment Results

(Profit before Amortisation, Interest, Tax and unallocable overheads)

- Telecom Products & Services 613.42 1,439.96

- Turnkey Projects and Trading 190.04 156.60

- Investments 2.85 609.73—————— ——————

Tota l 806.31 2 ,206 .29

Less :

- Depreciation & Amortisation 334.60 320.17

- Interest & Financial Charges 373.88 472.95

Other un-allocable Expenditure ( Net of un-allocable Income) (39.17) 352.96—————— ——————

Profit Before Tax (net of Extraordinary Items) 137.00 1 ,060 .21

Taxes (net of MAT Credit) 61.09 451.10—————— ——————

Net profit after taxes 75.91 609.11—————— ——————

1 1 Some of the personal accounts are subject to adjustments / reconciliation / confirmation .

1 2 In the opinion of Board of Directors - Fixed Assets, Current Assets, Loans and Advances have a value on realisation in ordinary

course of business at least equal to the amount at which they are stated in the Balance Sheet and provision for all liabilities have

been made in the Accounts, which has been relied upon by the auditors.

1 3 In compliance with the accounting standards 15 (revised 2005) “Employee Benefits” the company has got the employee benefits

evaluated from actuarial valuer.

The Company has calculated the various benefits provided to employees as under:

A . Provident Fund

During the year the Company has recognized Rs. 49.31 Lacs (previous Year Rs. 49.13 lacs) in the Profit and Loss account.

B . State Plans

Employer’s contribution to Employee State insurance and to welfare fund

During the year the Company has recognised Rs. 4.65 Lacs (Previous Year Rs. 5.74 lacs) in the Profit and Loss accounts.

C . Defined Benefit Plans

a) Leave Encashment/ Compensated Absence

b) Contribution to Gratuity Fund - Employee’s Gratuity Fund.

In accordance with Accounting Standard 15 (revised 2005), the actuarial valuation carried out in respect of the aforesaid

defined benefit plans is based on the following assumption.

33

Current Year Previous Year

i ) Actuarial Assumptions Leave Emp loyee Leave Emp loyeeEnca shment Gr a t u i t y Enca shment Gr a t u i t y

/Compensated F u n d /Compensated F u n d

Absence Absence

Discount Rate (per annum) 7.50% 7.50% 8.00% 8.00%

Rate of increase in compensation levels 5.50% 5.50% 5.50% 5.50%

Rate of return on plan assets - 8.50% / 9.00% - 8.00%

(Rs in Lacs) (Rs in Lacs) (Rs in Lacs) (Rs in Lacs)

i i ) Change in the obligation during the year ended 31 st March, 2009

Present value obligation as at 31st March, 2008 42.61 83.64 46.57 58.70

Impact of Transition provision of AS-15 - - - 6.03

Interest cost 3.36 6.69 3.73 5.18

Past Service cost - - - -

Current service cost 18.87 12.12 7.22 11.65

Curtailment cost - - - -

Settlement cost - - - -

Benefits Paid (5.19) (13.53) (10.22) (11.60)

Actuarial (gain)/ loss on Obligations 28.71 (6.36) (4.69) 13.68

Present value obligation as at 31st March, 2009 88.36 82.56 42.61 83.64

Receivable from other company’s fund - (4.76) - (4.76)

Net Present value obligation as at 31st March, 2009 88.36 77.80 42.61 78.88

i i i ) Change in fair value plan Assets

Fair value of Plan Assets as at 31st March, 2008 - 29.99 - 24.21

Expected return on Plan Assets - 2.40 - 1.94

Contributions - 7.72 - 15.22

Benefits Paid - (13.52) - (11.60)

Actuarial gain/ (loss) on Obligations - (0.23) - 0.22

Fair value of Plan Assets as at 31st March, 2009 - 26.36 - 29.99

i v ) Reconcil iation of Present value of Defined Benefit obligationand Fair value of Assets

Present value obligation as at 31st March, 2009 88.36 77.80 42.60 78.88

Fair value of Plan Assets as at 31st March, 2009 - 26.36 - 29.99

Funded Status (88.36) (51.44) (42.60) (48.89)

Present value of un-funded obligation as at 31st March, 2009 - - - -

Un-recognized Actuarial (gains)/ losses - 0.20 - 0.25

Un-funded Net Asset/ (Liability) recognised in Balance Sheet. (88.36) (51.44) (42.60) (48.89)

v ) Expenses recognised in Profit and Loss Account

Current service cost 18.87 12.12 7.22 11.65

Past Service cost - - - -

Interest cost 3.36 6.69 3.73 5.18

Expected return on Plan Assets - (2.40) - (1.94)

Curtailment cost - - - -

Settlement cost - - - -

Net Actuarial (gain)/ loss recognised during the year 28.71 (6.13) (4.69) 13.46

Received / Receivable from other company’s fund - 4.76 - (8.69)

————— ————— ————— —————Net Expense recognised in Profit and Loss Account 50.94 15.04 6.26 19.66

————— ————— ————— —————

34

1 4 The Company has not received any intimation from “suppliers” regarding their status under the Micro, small and Medium

Enterprises Development Act, 2006 and hence disclosure, if any, relating to amounts unpaid as at the year end together with

interest paid/payable as required under the said Act have not been furnished

1 5 Previous year figures have been regrouped/reclassified wherever considered necessary

1 6 Additional information pursuant to Part II of Schedule VI of the Companies Act, 1956.

(As certified by the management)

Current Year Previous Year

A . LICENSED CAPACITY N.A. N.A

B . INSTALLED CAPACITY

Most of the Plant & Machinery is common for different products manufactured N.A. N.A.

by the company, the installed capacity depends on products mix which in turn is

decided by actual demand for various products from time to time, as such it is

not practical to ascertain product-wise installed production capacity

Current Year Previous Year

C . PRODUCTION Qty Value Qty Value

(Nos) (Rs . ) (Nos) (Rs . )

- Repeator 8,515 - 8,869 -

D. OPENING STOCK

- Repeator 207 10,925,444 150 9,946,768

- Communication Systems & Accessories 44,889 11,540,303 38,660 6,972,911——————— ———————

22,465,747 16,919,679——————— ———————

E . TURNOVER (Including Services)

- Repeator 8,593 468,488,469 8,812 560,908,180

- Communication Systems & Accessories 875,282 136,668,348 183,997 23,518,233

- Mobile Handsets & Accessories 680,354 1,219,935,894 782,443 1,570,817,859

- Turnkey contracts and services - 4,672,588 - 20,750,756

- Service Charges - 61,096,985 - 50,018,523

- Others - 5,124,035 - 4,540,026——————— ———————1,895,986,319 2,230,553,577——————— ———————

F. CLOSING STOCK

- Repeator 129 7,784,997 207 10,925,444

- Communication Systems & Accessories 95,614 16,978,129 44,889 11,540,303

- Mobile Handsets & Accessories 63,824 98,787,425 - -——————— ———————

123,550,551 22,465,747——————— ———————

G . PURCHASE OF GOODS TRADED

- Communication Systems & Accessories 926,007 93,089,169 190,226 19,655,841

- Mobile Handsets & Accessories 744,178 1,295,355,122 782,443 1,555,029,767——————— ———————

Sub-Tota l 1 ,388,444,291 1,574,685,608——————— ———————

35

H . CONSUMPTION OF RAW MATERIAL

- Electronic Components 9,361,936 145,221,620 9,949,845 135,941,670

- Mechanical Components 3,479,457 57,499,737 981,394 56,671,580

- Others -——————— ———————

Sub-Tota l 202,721,357 192,613,250——————— ———————

Tota l 1 ,591,165,648 1,767,298,858——————— ———————

I . EARNINGS IN FOREIGN CURRENCY

- F.O.B. Value of Export Goods 264,527,709 770,140,297

- F.O.B. Value of Export Services 752,000 4,588,962

J . EXPENDITURE IN FOREIGN CURRENCY

- Travelling 9,241,386 10,218,785

- Commission 1,096,830 1,567,261

- Exhibition Expenses 1,080,892 11,070,468

- Product Certification Charges 4,178,038 -

- Scholarship - 641,917

- Legal ,Professional and consultancy Charges 6,995,802 4,265,087

K . C.I.F. VALUE OF IMPORTS

- Raw Material ( in Rs.) 184,888,572 146,955,917

- Capital Goods ( in Rs.) 14,274,645 5,416,946

- Mobile Handsets & Accessories 1,264,514,017 1,555,029,767

L . VALUE OF IMPORTED AND INDIGENOUS RAW MATERIALS SPARE PARTS AND COMPONENTS

CONSUMED :

Current Year Previous Year

RAW MATERIAL Value (Rs.) % of Total Value (Rs.) % of Total

Consumpt ion Consumpt ion

IMPORTED 158,131,976 78.00 154,607,284 80.27

INDIGENOUS 44,589,381 22.00 38,005,966 19.73——————— ——————— ——————— ———————

TOTAL 202,721,357 100.00 192,613,250 100.00——————— ——————— ——————— ———————

As per our report of even date attached

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

R.K. MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Partner Chairman & Managing Director Managing Director Managing Director

M. No. 6102

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 30th July, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

Current Year Previous Year

(Rs ) (Rs )

36

i REGISRATION DETAILS

Registration No. State Code

Balance Sheet Date

i i CAPITAL RAISED DURING THE YEAR (Amount in Rs Thousand)

Public Issue Right Issue

Bonus Issue Private Placement

i i i POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs Thousand)

Total Liabilities Total Assets

SOURCES OF FUNDS

Paid up capital Reserve & Surplus

Advanced for Share Capital Unsecured Loans

Secured Loans Deferred Tax Liability

APPLICATION OF FUNDS

Net Fixed Assets (Including Capital Work in Progress) Investment (Including advance for investment)

Net Current Assets Preoperative Expenditure

iv PERFORMANCE OF COMPANY (Amount in Rs. Thousand)

Turnover (Including other income ) Total Expenditure

Profit Before Tax Profit After Tax and Extraordinary items

Basic and Diluted Earning Per Share before extraordinary items in Rs. Dividend Rate

Basic and Diluted Earning Per Share after extraordinary items in Rs.

v GENERAL NAMES OF THREE PRINCIPAL PRODUCTS / SERVICES OF COMPANY

( As per monetary terms ) N. A.

Item Code No. ( ITC Code ) 852520.09

Product Description Other Radio Communication Equipment including VHF, UHF &

Microwave Communication Equipment

RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Chairman & Managing Director Managing Director Managing Director

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 30th July, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

1 7 - 1 7 7 5 0

3 1 0 3 2 0 0 9

1 7

N I L N I L

N I LN I L

050219

007211

LIN

72638

700393

38294

4734981

370

71.0

789883

616162

02156

60262

LIN

1036881

1957

LIN

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

7

76.0

050219

8

37

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO

SECTION 212 OF THE COMPANIES ACT 1956.

RAJIV MEHROTRA AJAY KHANNA ALOK TANDON

Chairman & Managing Director Managing Director Managing Director

PLACE : NEW DELHI UMESH GARG DHARMENDER DHINGRA

DATED : 7th August, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

1. Name of the Subsidiary Company

2. Financial Year of the Subsidiary Company ended on

3. Financial Year of Holding Company ended on

4. Holding Company’s Interest as on 31.03.09

5. Net aggregate amount of profit / (loss) of the Subsidiary

Company so far as it concerns the members of Shyam Telecom

Limited.

(a) Not dealt with the accounts of Shyam Telecom Limited.

(i) For the subsidiary’s financial year ended on 31.03.09

(ii) For the previous subsidiary’s financial year of

subsidiary’s since it became Subsidiary of Shyam

Telecom Limited.

(b) Dealt with the accounts of Shyam Telecom Limited.

(i) For the subsidiary’s financial year ended on 31.03.2009

(ii) For the previous subsidiary’s financial year of

subsidiary’s since it became Subsidiary of Shyam

Telecom Limited.

6. Material changes which have occurred between the end of

financial year of the Subsidiary Company and the end of the

holding company’s financial year in respect of

(a) Fixed Assets (including capital work in progress of the

subsidiary company)

(b) Investment of subsidiary company.

(c) Money lent by subsidiary company.

(d) Money borrowed by Subsidiary company for any purpose

other than that of meeting current liabilities.

Shyam Telecom Inc.

31st March 2009

31st March 2009

Holders of the entire issued, subscribed & paid up

Equity share capital of 100 shares of 1 US$ each.

(US$ 1,86,118)

(US$ 14,98,333)

N.A.

N.A

38

DIRECTORS ’ R E P O R T

Your Directors have pleasure in presenting their Annual Report on the Business and Operations of the Company together with theAudited Accounts for the Financial Year ended 31st March, 2009.

CAPITAL

The Company has an Issued, Subscribed and Paid-up Capital of 100 shares of USD 1/- each amounting to 100 US$ (Rs. 4,374).

HOLDING COMPANY

Your Company is wholly owned Subsidiary of Shyam Telecom Limited, a Company incorporated in India.

FINANCIAL PERFORMANCE

PARTICULARS 2008-09 2007-08

In US$ In Rs. In US$ In Rs.

Sales & Other Income 1,723,037 78,400,590 970,814 34,760,228

Profit/(Loss) Before Tax (183,918) (25,900,935) (551,966) (19,837,892)

Provision for Tax 2,200 112,709 2,210 87,507

Profit/(Loss) After Tax (186,118) (26,013,644) (554,176) (19,925,399)

Balance brought forward fromprevious year (1,312,215) (54,447,419) (758,039) (34,522,020)

Balance carried to Balance Sheet (1,498,333) (80,461,063) (1,312,215) (54,447,419)

CORPORATE REVIEW

During the period under review your Company has registered an increase in turnover of US$ 1,723,037 as againstUS$ 970,814 in the year 2007-08. There is a decrease in net loss of US$ 186,118 as against a net loss of US$ 554,176 in theprevious period.

DIVIDEND

No dividends have been declared for the Financial Year 2008-2009.

DIRECTORS

Mr. B.A. Majmudar is the Director who holds office and looks after the affairs of the Company.

RELATED PARTIES TRANSACTIONS

Disclosures on Related Party Transactions is disclosed in Schedule 13 (Notes to Accounts) to the Balance Sheet under the headingRelated Parties.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provision of Section 217 (2AA) of the Companies Act, 1956 your directors confirm that:

i) In the preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanationrelating to material departures, where necessary.

ii) The Directors had selected such Accounting Policies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year 2008-09 and of the profit of the Company for the year ended on that date.

iii) The Directors had taken proper and sufficient care for the maintenance of adequate Accounting Records in accordance with theprovisions of this Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the Annual Accounts on a going concern basis.

AUDITORS

M/s. Mehra Goel & Co., Chartered Accountants, Auditors of your Company have audited the Annual Accounts of the Company for theFinancial Year 2008-2009 and expressed their willingness to continue as Auditors of the Company.

The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore, do not call for any furthercomments.

On Behalf of the Board of Directors of

SHYAM TELECOM INC

PLACE : New Delhi B. A MAJMUDAR

DATE : 7th August, 2009 Director

39

A U D I T O R S’ R E P O R T

To

The Shareholders of Shyam Telecom Inc.USA

We have audited the balance sheet of Shyam Telecom Inc. USA as at March 31, 2009, the Profit and Loss Account and also the Cash Flow

Statement of the company for the year ended on that date ( the financial statements) attached hereto, which have been prepared in

accordance with the Generally Accepted Accounting Principles in India.

Respective Responsibilities of the Management and Auditors

The Management of the Company is responsible for the preparation of the financial statements. It is our responsibility to form an

independent opinion, based on our audit of the financial statements.

Basis of Opinion

We conducted our audit in accordance with the auditing standards. An audit includes examination, on a test basis of evidence relevant

to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments

made by the management in the preparation of the financial statements and whether the accounting policies are appropriate to the

circumstances to the Company, consistently applied and adequately disclosed. We planned and performed audit so as to obtain all

information and explanation, which to the best of our knowledge and belief were necessary for the purpose of our audit.

The financial statements dealt with by this report are in agreement with books of accounts of the Company and have been compiled

solely for complying with Indian laws.

Opin ion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements read with the

accounting policies and notes thereon give a true and fair view:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

(ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

PLACE : New Delhi R.K. MEHRA

DATED : 7th August, 2009 Partner

M.No. 6102

40

BALANCE SHEET AS AT 31st MARCH, 2009

SCHEDULE AS AT AS AT AS AT AS ATNO. 31-Mar-09 31-Mar-09 31-Mar-08 31-Mar-08

U S $ R s . U S $ R s .

I SOURCES OF FUNDS:

SHAREHOLDER’S FUNDS

Share Capital 1 100 4,374 100 4,374

Advance Against Share Capital 25,050 1,094,684 25,050 1,001,249

Reserves and Surplus 2 - - - -————— ————— ————— —————

25,150 1,099 ,058 25,150 1,005 ,623

I I APPLICATION OF FUNDS

FIXED ASSETS 3

Gross Block 36,848 1,696,480 36,848 1,696,480

Less : Depreciation 20,135 927,304 12,518 574,538————— ————— ————— —————

Net Block 16,713 769 ,176 24,330 1,121 ,942————— ————— ————— —————

CURRENT ASSETS, LOANS & ADVANCES

Current Assets

Inventories 4 402,719 16,627,717 431,865 14,143,296

Sundry Debtors 5 678,815 34,585,603 515,926 20,621,563

Cash & Bank Balances 6 44,846 2,284,911 101,714 4,065,490

Loans & Advances 7 1,575,774 80,285,664 1,302,558 52,063,229————— ————— ————— —————2,702 ,154 133,783,895 2,352,063 90,893,578

Less : CURRENT LIABILITIES & PROVISIONS 8

Current Liabilities 4,189,850 213,802,986 3,661,248 145,368,983

Provisions 2,200 112,090 2,210 88,333————— ————— ————— —————4,192 ,050 213,915,076 3,663 ,458 145,457,316

NET CURRENT ASSETS (1,489,896) (80,131,181) (1,311,395) (54,563,738)

PROFIT & LOSS ACCOUNT 1,498,333 80,461,063 1,312,215 54,447,419————— ————— ————— —————

25,150 1,099 ,058 25,150 1,005 ,623

SIGNIFICANT ACCOUNTING POLICIES 1 2

NOTES TO ACCOUNTS 1 3

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K. MEHRA B.A. MAJMUDARPartner DirectorM.No. 6102

PLACE : New DelhiDATED : 7th August,2009

41

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2009

SCHEDULE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED

NO. 3 1 - M a r- 0 9 3 1 - M a r- 0 9 3 1 - M a r- 0 8 3 1 - M a r- 0 8

U S $ R s . U S $ Rs.

INCOME

Sales 9 1,617,208 73,011,422 970,814 34,760,228

Other Income 105,829 5,389,168 - -

—————— —————— —————— ——————1,723,037 78,400,590 970 ,814 34,760,228

EXPENDITURE

Cost of Goods Traded 1 0 1,196,865 49,416,907 620,601 29,248,725

Administration & Other Expenditure 1 1 702,473 54,531,852 894,556 26,921,806

—————— —————— —————— ——————1,899 ,338 103,948,759 1,515,157 56,170,531

PROFIT/(LOSS) BEFORE DEPRECIATION,PRIOR PERIOD

ADJUSTMENTS & TAX (176,301) (25,548,169) (544,343) (21,410,303)

Less : Depreciation 7,617 352,766 7,623 353,039

Add: Prior Period Items (Currency Translation Reserve) - - - 1,925,450—————— —————— —————— ——————

PROFIT/(LOSS) BEFORE TAX (183,918) (25,900,935) (551,966) (19,837,892)

Provision for Taxation 2,200 112,709 2,210 87,507—————— —————— —————— ——————

PROFIT/(LOSS) AFTER TAX (186,118) (26,013,644) (554,176) (19,925,399)

ADD : Profit / (Loss) brought forward (1,312,215) (54,447,419) (758,039) (34,522,020)

—————— —————— —————— ——————Balance Carried to Balance Sheet (1 ,498,333) (80,461,063) (1 ,312,215) (54,447,419)

SIGNIFICANT ACCOUNTING POLICIES 1 2

NOTES TO ACCOUNTS 1 3

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K. MEHRA B.A. MAJMUDARPartner DirectorM.No. 6102

PLACE : New DelhiDATED : 7th August,2009

42

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009

Current Year Previous YearU S $ R s . U S $ R s .

(A ) CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit after tax and before extraordinary items (186,118) (26,013,644) (554,176) (19,925,399)

Adjustments for :

Depreciation 7,617 352,766 7,623 353,039

Interest and Financial Charges 2,319 106,231 8,175 341,790

Provision for Tax 2,200 112,709 2,210 87,507

Provision for Doubtful Debts/ Advances 48,047 2,461,524 - -

Exchange Fluctuation - (14,062,662) - (11,032,934)

Prior Period Items - - - (1,925,450)

Operating Profit before working capital change (125,935) (37,043,076) (536,167) (32,101,447)

Adjustments for :

Trade & Other Receivables (484,152) (30,493,347) 178,145 14,348,238

Inventories 29,146 (2,484,421) (191,635) (3,307,426)

Trade & Other Payables 526,392 68,346,496 14,482 (2,650,467)

Cash flow from operating activities (A ) (54 ,549) (1 ,674,348) (535,176) (23,711,102)

(B ) CASH FLOW FROM INVESTING ACTIVITIES :

Net cash (used in) / from Investing Activities ( B ) - - - -

( C ) CASH FLOW FROM FINANCING ACTIVITIES :

Interest and Financial Charges Paid (2,319) (106,231) (8,175) (341,790)

Net cash (used in) / from financing activities ( C ) (2 ,319) (106,231) (8 ,175) (341,790)

Increase/(Decrease) In cash and cash equivalents

Net increase / (decrease ) in cash and cashequivalents (A+B+C) (56 ,868) (1 ,780,579) (543,351) (24,052,893)

Cash and cash equivalents at beginning of the year 101,714 4,065,490 645,065 28,118,383

Cash and cash equivalents at the end of the year 44,846 2,284,911 101,714 4,065,490

Notes :

1. Cash flow statement has been prepared following the “indirect method” as set out in the Accounting Standard-3 on Cashflow statement.

2. Cash and cash equivalents represent cash and bank balance including bank deposit

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K. MEHRA B.A.MAJMUDARPartner DirectorM.No. 6102

PLACE : New Delhi

DATED : 7th August,2009

43

SCHEDULE - 1 SHARE CAPITAL

AUTHORISED - - - -

ISSUED , SUBSCRIBED AND PAID UP

100 (Previous Year 100) Equity Shares of USD 1/- each 100 4,374 100 4,374————— ————— ————— —————

100 4,374 100 4,374————— ————— ————— —————

The Whole of the above shares are held by

Shyam Telecom Ltd., the holding company.

SCHEDULE - 2 RESERVES & SURPLUS

Currency Translation Reserve

Balance at the opening of the year - - - 1,925,450

Less Transfer to Profit and Loss Account - - - (1,925,450)————— ————— ————— —————

- - - -————— ————— ————— —————

SCHEDULE - 4 INVENTORIES

(As taken, valued and certified by the Management)

Finished Goods (Traded) 402,719 16,627,717 431,865 14,143,296————— ————— ————— —————

402 ,719 16,627,717 431 ,865 14,143,296————— ————— ————— —————

SCHEDULE - 5 SUNDRY DEBTORS

Debts Outstanding over 6 Months

Considered Good 416,118 21,201,187 137,139 5,481,436

Considered Doubtful 98,309 5,008,844 50,262 2,008,972

(Unsecured, Considered Doubtful)————— ————— ————— —————

514 ,427 26,210,031 187 ,401 7 ,490 ,408

Less : Provision for Doubtful Debts (98,309) (5,008,844) (50,262) (2,008,972)

Others 262,697 13,384,416 378,787 15,140,127————— ————— ————— —————

678 ,815 34,585,603 515 ,926 20,621,563————— ————— ————— —————

SCHEDULE - 6 CASH & BANK BALANCES

Balance with Banks in :

- Current Account 44,846 2,284,911 101,714 4,065,490————— ————— ————— —————

44,846 2,284 ,911 101 ,714 4 ,065 ,490————— ————— ————— —————

SCHEDULE - 7 LOANS & ADVANCES

(Unsecured, Considered Good)

Advances recoverable in cash or in kind or for value to be received 1,569,053 79,943,216 1,289,131 51,526,542

Security Deposits 6,721 342,448 6,721 268,648

Advance to Vendors - - 6,706 268,039————— ————— ————— —————

1,575,774 80,285,664 1,302,558 52,063,229————— ————— ————— —————

SCHEDULES FORMING PART OF THE ACCOUNTS

AS AT AS AT AS AT AS AT

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SCHEDULE - 8

CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIESSundry Creditors

- Others * 436,592 22,574,537 436,840 17,460,487Other Liabilities 18,662 950,804 39,646 613,572Due to Holding Company 3,712,950 189,174,803 3,022,950 120,827,312Advance From Customers 21,546 1,097,747 161,712 6,463,615Due to Director ** 100 5,095 100 3,997

————— —————— ————— ——————4,189 ,850 213,802,986 3,661 ,248 145,368,983————— —————— ————— ——————

PROVISIONSProvision for Tax (Net) 2,200 112,090 2,210 88,333

————— —————— ————— ——————2,200 112 ,090 2 ,210 88,333

————— —————— ————— ——————

* There are no dues to creditors coming under the definition of Small Scale Industrial Undertakings as at March 31, 2009* * Maximum amount outstanding during the year Rs.5095 (Previous year Rs.3997)

Year Ended Year Ended Year Ended Year Ended

3 1 - M a r- 0 9 3 1 - M a r- 0 9 3 1 - M a r- 0 8 3 1 - M a r- 0 8

SCHEDULE - 9 SALES U S $ R s U S $ R sSales of Products 1,617,208 73,011,422 970,814 34,760,228

————— —————— ————— ——————1,617,208 73,011,422 970 ,814 34,760,228————— —————— ————— ——————

SCHEDULE - 10 COST OF SALES

Cost of Traded Goods 1,167,719 51,901,328 812,236 32,556,151————— —————— ————— ——————1,167,719 51,901,328 812 ,236 32,556,151

Add / Less Decrease / Increase in Stocks :Add : Opening Stock

Trading 431,865 14,143,296 240,230 10,835,870Less : Closing Stock :

Trading 402,719 16,627,717 431,865 14,143,296————— —————— ————— ——————1,196,865 49,416,907 620 ,601 29,248,725————— —————— ————— ——————

SCHEDULE - 11

ADMINISTRATIVE & OTHER EXPENDITURE

Rent 29,170 1,346,942 30,990 1,247,388Rates & Taxes 957 41,227 575 24,141Salary & Wages 295,582 13,592,723 451,614 18,087,781Staff welfare 23,543 1,067,491 11,213 449,333Insurance 5,899 302,215 24,852 996,962Car lease/insurance 5,739 252,398 2,905 116,840Commission expenses 13,149 616,622 18,157 733,485Consultancy charges 133,986 5,948,346 91,947 3,797,007Clearing & forwarding expenses 23,502 1,067,942 21,154 852,052Sales promotion 600 25,692 - -Other administrative charges 3,994 186,947 5,692 227,148Legal and professional charges 14,733 595,610 4,484 178,297Telephone expenses 14,239 649,498 23,194 946,277Testing charges 25,000 1,225,083 70,410 2,855,861Traveling and conveyance expenses 35,855 1,670,164 66,374 2,677,951Advertisement and Exhibition expenses 23,930 1,119,094 60,450 2,428,719Misc expenses (639) (38,027) 30 1,198Bank charges 2,319 106,231 8,175 341,790Audit fees 2,868 146,932 2,340 94,442Exchange difference on conversion - 22,147,198 - (9,134,866)Provision for doubtful debts 48,047 2,461,524 - -

————— ————— ————— ——————702 ,473 54,531,852 894 ,556 26,921,806

————— ————— ————— ——————

SCHEDULES FORMING PART OF THE ACCOUNTS

AS AT AS AT AS AT AS AT

31-Mar-09 31-Mar-09 31-Mar-08 31-Mar-08 US$ Rs. US$ Rs.

46

SCHEDULE - 12

SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The accompanying financial statements have been prepared

under the historical cost convention in accordance with

Generally Accepted Accounting Principles in India and the

applicable accounting standards.

Use of Estimates

The preparation of the financial statements, in conformity with

the generally accepted accounting principles, requires estimates

and assumptions to be made that affect the reported amounts

of assets and liabilities on the date of the financial statements

and the reported amounts of revenues and expenses during the

reporting period.

Recognition of Income/Expenditure

All Income & Expenditure having a material bearing on the financial

statements is accounted for on an accrual basis and provision is

made for all known losses and liabilities.

Fixed Assets

Fixed Assets are stated at cost, net of Taxes, less accumulated

depreciation. All costs including borrowing costs till

commencement of commercial production are capitalized.

Capital expenditure on assets not owned by company is reflected

in capital work in progress account till the period of completion

and thereafter in the fixed assets. Machinery spares that can be

used only in connection with an item of fixed asset and their use

is expected to be irregular are capitalized. Replacement of such

spares is charged to revenue.

Intangible Assets

In accordance with the Accounting Standard (AS) 26 relating to

intangible assets, all costs incurred on technical know-how /

license fee relating to production process are charged to revenue

in the year of incurrence. Costs incurred on technical know-

how / license fee relating to process design/ plants/ facilities are

capitalized at the time of capitalization of the said plant/ facility

and amortized on pro-rata basis over a period of five years.

Computer software is capitalised on the date of installation and

is amortised over a period of three years.

Deprec iat ion

Depreciation on fixed assets is provided on straight-line method

at the rates and in the manner prescribed in Schedule XIV to

the Companies Act, 1956.

Inventor ies

Inventories of finished goods traded are valued at lower of

procurement cost (FIFO Method) or net realizable value.

Foreign Currency Transactions

i) Transactions in foreign currency are recorded at the original

rates of the exchange in force at the time transactions are

effected. Exchange differences arising on repayment of liabilities

incurred for the purpose of acquiring fixed assets are adjusted

in the carrying amount of the respective fixed asset. Exchange

differences arising on settlement of other transactions are

recognized in the Profit and Loss Account.

ii) Monetary items (other than those related to acquisition of

fixed assets) denominated in foreign currency are restated using

the exchange rates prevailing at the date of Balance Sheet and

the resulting net exchange difference is recognized in the Profit

and Loss Account.

Taxat ion

Provisions for tax consists of current tax and deferred tax.

Current tax provision is computed for current income based

on tax liability after considering allowances and exemptions.

Deferred tax assets and liabilities are computed on the timing

differences at the balance sheet date between the carrying

amount of assets and liabilities and their respective tax bases.

Deferred tax assets are recognized based on management

estimates of available future taxable income and assessing its

certainty.

Employee Benefits

Short term employee benefits are recognized as an expense at

the undiscounted amount in the profit and loss account of the

year in which related service is rendered.

The company does not have any long term benefit plans.

47

SCHEDULE - 13 NOTES TO ACCOUNTS

Company Overview

Shyam Telecom Inc. (STI or the Company), incorporated in

February 2005 under the laws of the State of New Jersey, is a

wholly owned subsidiary of Shyam Telecom Limited, a Company

incorporated in India. (Shyam or the Holding Company).

Basis of Preparation and Translation into Indian Rupees

(i) These financial statements have been prepared for the

purpose of compliance with the provisions of Section 211

and Section 212 of the Indian companies Act, 1956 and have

been translated to Indian Rupees (Rs.) in accordance with

Accounting Standard-11 as notified under Companies

Accounting Standard Rules, 2006 on the ‘The Effects of

Changes in Foreign Exchange Rates’. The functional currency

of the Company is United states Dollar(US$).

(ii) The translation of Foreign currency into Rs. has been carried

out:

(a) All Income and expenses are translated at the

monthly average rate of exchange prevailing during

the year except Depreciation which is calculated on

historical cost of assets.

(b) All Non- Monetary assets are translated at historical

rates and monetary assets and liabilities are

translated at the closing rate on the Balance Sheet

date.

(c) Share capital is translated at historical rates.

(d) Purchase from holding companies recorded at

transaction rate on the date of transaction.

(e) The resulting exchange difference arises are charged

to Profit and Loss account.

Segment Reporting:

Business Segments (Primary)

The Company operates only in ine business segment viz.

Repeaters. Accordingly there are no reportable business

segments.

Geographical Segments (Secondary)

The following is the distribution of the company’s consolidated

sales by geographical segment, regardless of where the goods

were produced:

( R u p e e s )

Revenue from U.S .A . Others Tota l

External customers 68,889,131 4,122,291 73,011,422

(27,572,096) (7,188,132) (34,760,228)

The Company has common assets for goods for overseas

markets and domestic markets. Hence, Separate Figures for

fixed assets etc. can not be furnished.

Related Parties (as identified by the management) are

classif ied as:

Holding Company – Shyam Telecom Limited, India

Subsidiaries – Nil

Note: Related party relationship is as identified by the company

and relied upon by the auditors.

Summary of significant related party transactions

Description & nature Ho ld ing Ho ld ingof Transactions company company Tota l Tota l

(US$ ) (Rupees) (US$ ) (Rupees)

Receiving of Goods 1,162,416 51,677,973 1,162 ,416 5 1 , 6 7 7 , 9 7 3(809,818) (32,488,861) (809,818) (32,488,861)

Loans Taken 690,000 68,347,492 690 ,000 6 8 , 3 4 7 , 4 9 2(587,000) (23,823,250) (587,000) (23,823,250)

Loans Paid - - - -(950,000) (40,450,000) (950,000) (40,450,000)

Sundry Creditors balance 430 ,740 22,276,381 430 ,740 2 2 , 2 7 6 , 3 8 1as at 31.03.2009 (424,303) (16,959,351) (424,303) (16,959,351)

Advances Balance as 3,712 ,950 189,174,803 3,712 ,950 1 8 9 , 1 7 4 , 8 0 3at 31.03.2009 (3,022,950) (120,827,311) (3,022,950) (120,827,311)

Brackets indicate previous year figures

48

Par t i cu l a r s Total minimum lease Total minimum lease

Payments O/s as on Payments O/s as on

31st March, 2009 31st March, 2008

US$ Rs. US$ Rs.

Not Later than One Year 24,100 12,27,895 2,450 97,927

Later than one year but 23,100 11,76,945 Nil Nil

not later than five years

Later than five years Nil Nil Nil Nil

Lease

Operating Lease:

The Company takes on lease office space, under various

operating leases ranging from one month to five years.

The future minimum lease payments and payment profile of

operating leases are as follows:

Deferred Tax

Deferred tax liability/asset is not recognized since there are no

timing differences between the carrying amount of assets and

liabilities and their respective tax bases.

Quantitative details of goods traded

I t em O p e n i n g Pu r ch a s e s Sa les C lo s i n g

s tock s tock

Telecom Nos. 1,015 3,972 3,408 1,579

Equipments

Amt-Rs. 14,143,296 51,901,328 73,011,422 16,627,717

Previous Nos. 782 1,951 1,718 1,015

Year

Amt-Rs. 10,835,870 32,556,151 34,760,228 14,143,296

Earning Per Share

The components of earnings per share are as follows:

Earning Per share is31 st March, 2009 31 st March, 2008calculated as follows

US$ Rs. US$ Rs.

Net Loss as per (186118) (26013644) (554176) (19925399)

Profit and Loss Account

Weighted average outstanding 100 100 100 100

common stock(Nos.)

Nominal value of common No Par No Par No Par No Par

stock

Basic and diluted earning per

share (1861.18) (260136.44) (5541.76) (199253.99)

Contingent Liabilities – Rs. Nil

Other disclosure requirements of Schedule VI to the Companies

Act, 1956 are not applicable to the Company.

In the opinion of the Board, Current assets, Loans

& advances have a value on realization in the ordinary

course of the company’s business which is at least

equal to the amount at which they are stated in the

balance sheet.

Previous period figures have been regrouped / reclassified

wherever considered necessary to conform to current year’s

classification.

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K.MEHRA B.A.MAJMUDARPartner Director

M.No. 6102

PLACE : NEW DELHI

DATED : 7th August, 2009

49

To the Board of Directors of

SHYAM TELECOM LIMITED

We have examined the attached Consolidated Balance Sheet,

Consolidated Profit & Loss Account and also Consolidated Cash

Flow Statement of Shyam Telecom Limited in which the audited

accounts of the subsidiary namely Shyam Telecom Inc. USA for

the year ending 31 March 2009, incorporated for the year ended

on that date, annexed thereto. These financial statements of

subsidiary have been prepared for the purpose of compliance

with the provisions of Section 211 and Section 212 of the

Companies Act, 1956. The Profit and Loss account of the said

subsidiary have been considered and included in the consolidated

accounts up to the appointed date on the basis of accounts

audited by us.

These consolidated financial statements are the responsibility

of the Company’s management. Our responsibility is to express

an opinion on these consolidated financial statements based on

our audit. We conducted our audit in accordance with generally

accepted auditing standards in India. These Standards require

that we plan and perform the audit to obtain reasonable assurance

whether the consolidated financial statements are prepared, in

all material respects, in accordance with an identified financial

reporting framework and are free of material misstatements.

An audit includes, examining on a test basis, evidence supporting

the amounts and disclosures in the consolidated financial

statements. An audit also includes assessing the accounting

principles used and significant estimates made by management,

as well as evaluating the overall consolidated financial statements.

We believe that our audit provides a reasonable basis for our

opinion.

We report that:-

a) The consolidated financial statements have been prepared

by the Company in accordance with the requirements of

Accounting Standard (AS) 21, Consolidated Financial

Statements, and on the basis of the separate audited financial

statements of the Company and audited financial statements

of its subsidiaries included in the consolidated financial

statements.

b) On the basis of the information and explanations given to

us and on the consideration of separate audit reports on

individual audited financial statements of the Company and

its subsidiaries, we are of the opinion that the said

consolidated financial statements give a true & fair view in

conformity with the accounting principles generally accepted

in India :-

i. in the case of the Consolidated Balance Sheet, of the

consolidated state of affairs of the Company and its

subsidiaries as at 31st March 2009;

ii. in the case of Consolidated Profit & Loss Account, of

the consolidated results of operations of Company

and its subsidiaries for the year then ended; and

iii. in the case of Consolidated Cash Flow Statement, of

the Consolidated cash flow of the Company and its

subsidiaries for the year then ended.

For MEHRA GOEL & CO.

CHARTERED ACCOUNTANTS

R. K. MEHRA

Place : New Delhi Partner

Dated : 7 th August, 2009 M. No. 6102

AUDITORS’ REPORT ON THE CONSOLIDATED

FINANCIAL STATEMENTS

50

CONSOLIDATED BALANCE SHEET AS AT 31st MARCH, 2009

SCHEDULE AS AT AS ATNO. 31-Mar-2009 31-Mar-2008

SOURCES OF FUNDS (Rs . ) (Rs.)

SHARE HOLDER’S FUNDS

Share Capital 1 112,700,000 112,700,000

Reserves and Surplus 2 300,564,247 321,679,100

DEFERRED TAX LIABILITY (Net) 65,119,475 65,040,918

LOAN FUNDS 3

Secured 83,627,165 162,335,495

Unsecured 261,616,158 127,250,000——————— ———————

823,627,045 789,005,513——————— ———————

APPLICATION OF FUNDS

FIXED ASSETS 4

Gross Block 518,887,976 495,542,562

Less : Depreciation 131,065,474 103,731,319——————— ———————

Net Block 387,822,502 391,811,243

Capital Work in Progress 404,580 -

INTANGIBLE ASSETS (Net) 5 5,549,256 3,876,052

INVESTMENTS 6 25,106,729 25,106,729

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 290,391,709 150,681,035

Sundry Debtors 8 1,068,977,770 939,173,265

Cash & Bank Balances 9 119,876,763 333,219,037

Loans & Advances 1 0 199,782,441 161,136,919——————— ———————1,679,028,683 1,584,210,256

Less : CURRENT LIABILITIES & PROVISIONS 1 1

Current Liabilities 1,260,631,228 1,206,849,403

Provisions 13,653,477 9,149,364——————— ———————1,274,284,705 1,215,998,767

NET CURRENT ASSETS 404,743,978 368,211,489——————— ———————

823,627,045 789,005,513——————— ———————

SIGNIFICANT ACCOUNTING POLICIES 1 5

NOTES TO ACCOUNTS 1 6

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDONPartner Chairman & Managing Director Managing Director Managing Director

M. No. 6102

PLACE : New Delhi UMESH GARG DHARMENDER DHINGRA

DATED : 7th August, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

51

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 st MARCH, 2009

SCHEDULE YEAR ENDED YEAR ENDED NO. 31-Mar-2009 31-Mar-2008

INCOME (Rs.) (Rs.)

Sales & Services 1,917,319,768 2,232,824,944

Less : Excise Duty & Service Tax 43,234,785 67,766,886——————— ———————

Net Sales 1,874,084,983 2,165,058,058

Other Incomes 1 2 38,365,074 29,992,953——————— ———————

1,912,450,057 2,195,051,011——————— ———————

EXPENDITUREManufacturing, Administrative & Other Expenditure 1 3 1,861,663,042 2,088,735,200

Financial Charges 1 4 37,493,929 47,637,181

Amortisation of Intangible Assets & Miscellaneous Expenditure 4,099,403 3,651,896——————— ———————1,903,256,374 2,140,024,277

PROFIT/(LOSS) BEFORE INCOME FROM INVESTMENT,DEPRECIATION & TAX 9,193 ,683 55,026,734

Income from Investment

Profit On Sale of Long Term Non Trade Investments - 60,717,254——————— ———————

PROFIT/(LOSS) BEFORE DEPRECIATION & TAX 9,193 ,683 115,743,988

Less : Depreciation 29,713,141 28,718,128——————— ———————

PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEMS & TAX (20,519,458) 87,025,860

Provision for Income Tax

- Current Tax 1,405,083 7,509,507

- Deferred Tax 78,557 33,925,114

- MAT Credit available for set-off (1,292,374) -

- Fringe Benefit tax 3,590,000 3,666,000

Provision for Wealth Tax 93,000 97,000

Income Tax for earlier years 2,347,785 -——————— ———————

PROFIT/(LOSS) AFTER TAX & BEFORE EXTRAORDINARY ITEMS (26,741,509) 41,828,239

Extraordinary Items

Profit on Sale of Land (Net of Tax) 5,626,656 -——————— ———————

(21,114,853) 41828239

Add : Profit / (Loss) brought forward 320,179,100 278,748,580——————— ———————

299,064,247 320,576,819

Less : Impact of transitional Adjustment for employee benefit - 397,719——————— ———————

Balance Carried to Balance Sheet 299,064,247 320,179,100——————— ———————

Profit/(Loss) Per Share (Face Value Rs 10 Each) (Refer Note No. 4 of Schedule 16)- Basic & Diluted Earning Per Share before extraordinary items (2.37) 3.71

- Basic & Diluted Earning Per Share after extraordinary items (1.87) 3.71SIGNIFICANT ACCOUNTING POLICIES 1 5

NOTES TO ACCOUNTS 1 6

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDONPartner Chairman & Managing Director Managing Director Managing DirectorM. No. 6102

PLACE : New Delhi UMESH GARG DHARMENDER DHINGRA

DATED : 7th August, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

52

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 st MARCH, 2009

(Rs. in Lacs)

A . CASH FLOW FROM OPERATING ACTIVITIES Current Year Previous Year

Net Profit/(Loss) after Tax and before prior period/ extra ordinary items (267.42) 418.28Adjustment for :

Depreciation 338.13 323.70Provision ( leave encashment ) 45.04 4.41Interest and financial charges 374.94 476.37Loss on sale / write off of Fixed Assets 5.80 2.68Provision for tax 62.22 451.97Bad debts / Provision for doubtful debts / advances 277.41 76.17Dividend on Investments (2.85) (2.56)Loss on Sale of Investment - (607.17)Interest Income (63.01) (60.56)Exchange Fluctuation (141.56) (94.39)Prior Period items - (19.25)

Operating profit before working capital change 628.70 969.65Adjustment for :

(Increase)/ Decrease in Trade and Other Receivables (427.31) (1,200.13)(Increase)/ Decrease in Inventories (1,397.10) (77.57)Increase /(Decrease) in Trade Payable (953.23) 1,238.89

Cash Generated from operations (2,148.94) 930.84Direct Taxes Paid (75.49) (219.01)Net Cash (used in) / From Operating Activities (2 ,224 .43) 711.83

B CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets including Capital Work in Progress (347.27) (224.23)Sale of Fixed Assets 78.72 16.76Dividend on Investments 2.85 2.56Sale of investment / Advance for Investment in subsidiaries (Net ) - 708.92Interest received 63.01 60.56Advance for Capital Goods received back - 1,830.23Net cash (used in) / from investing activities (202 .69) 2,394.80

C CASH FLOW FROM FINANCING ACTIVITIESProceeds from Long-term borrowing 1417.51 498.73Repayment of term loan to Banks (487.61) (2,334.61)Short-term borrowing (Net ) (373.33) 646.79Interest & Financial Charges (262.87) (360.68)Net cash (used in) / from Financing Activities 293.70 (1,549.77)

Net Increase/(Decrease) in cash and cash equivalents (A+B+C) (2 ,133 .42) 1,556.86Cash and cash equivalents at beginning of the Period 3,332.19 1,775.33Cash and cash equivalents at the end of the Period 1,198.77 3,332.19

Notes :1. Cash flow statement has been prepared following the “indirect method” as set out in the Accounting Standard-3 on cash flow statement.2. Cash and cash equivalents represent cash and bank balance including bank deposit.

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDONPartner Chairman & Managing Director Managing Director Managing DirectorM. No. 6102

PLACE : New Delhi UMESH GARG DHARMENDER DHINGRA

DATED : 7th August, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

53

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

AS AT AS AT31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

SCHEDULE - 1 SHARE CAPITAL

AUTHORISED

50,000,000 Equity Shares of Rs. 10/- each 500,000,000 500,000,000

2,500,000 Preference Shares of Rs 100/- each. 250,000,000 250,000,000——————— ———————

750,000,000 750,000,000——————— ———————

ISSUED SUBSCRIBED AND PAID UP

11,270,000 Equity Shares of Rs 10/- each, fully paid up 112,700,000 112,700,000——————— ———————

112,700,000 112,700,000——————— ———————

SCHEDULE - 2 RESERVES & SURPLUS

Investment Subsidy 1,500,000 1,500,000Profit & Loss Account - Balance transferred from Profit & Loss account 299,064,247 320,179,100

——————— ———————300,564,247 321,679,100

——————— ———————

SCHEDULE - 3 LOAN FUNDS

SECURED LOANS

Term Loans

- From Bank (*) - 36,880,200

- Vehicle Loans(**)(#) 6,176,143 9,395,978

- Cash Credit (***) 76,559,054 113,891,667

- Corporate Bodies (**) 891,968 2,167,650——————— ———————

83,627,165 162,335,495——————— ———————

UNSECURED LOANS

- From Bank 26,251,158 -

- From Corporate Bodies 235,365,000 127,250,000

——————— ——————— 261,616,158 127,250,000

——————— ———————

(*) Rs.Nil ( P.Y Rs.368.80 Lacs ) are Secured by way of assignment of the Key Man Insurance Policies taken from Insurance Companyand personal guarantee of directors of the company.

(**) Secured by hypothecation of specific Assets.

(***) Secured by first charge on current assets of the company (both present & future) by way of hypothecation of Stocks of all types,Book Debts & second charge on the company’s all movable and immovable assets both present and future in Pari Passu with thebanks providing Term Loan for working capital and personal guarantee of three Promoter Directors.

(#) Includes Rs.61.76 Lacs (Previous Year Rs 93.96 Lacs ) from banks.

54

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENT

SCHEDULE - 4 FIXED ASSETS

ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Cost As At Addit ions Deletions/ As At As At For the Deletions/ As At As At As At

01 - 4 - 2008 Adjustments 31 - 3 - 2009 01 - 4 - 2008 Year Adjustments 31 - 3 - 2009 31 - 3 - 2009 31 - 3 - 2008

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

Land Free Hold 885,900 - 708,750 177,150 - - - - 177,150 885,900

B u i l d i n g 44,474,745 - - 44,474,745 5,297,827 1,485,457 - 6,783,284 37,691,461 39,176,918

Leasehold Land 6,719,694 - - 6,719,694 - - - - 6,719,694 6,719,694

Plant & Machinery 379,023,695 19,492,436 981,215 397,534,916 82,827,211 23,242,129 542,529 105,526,811 292,008,105 296,196,484

Electric Instal lation 4,388,824 7,485,966 - 11,874,790 723,009 275,640 - 998,649 10,876,141 3,665,815

Furniture & Fixture 15,157,846 222,995 - 15,380,841 4,724,057 957,309 - 5,681,366 9,699,475 10,433,789

Ve h i c l e s 27,158,363 214,754 3,312,315 24,060,802 6,593,292 2,347,276 1,776,720 7,163,848 16,896,954 20,565,071

Office Equipment 13,735,292 1,133,759 202,216 14,666,835 2,454,283 762,945 59,737 3,157,491 11,509,344 11,281,009

Computer Lease hold 3,998,203 - - 3,998,203 1,111,640 642,385 - 1,754,025 2,244,178 2,886,563

TOTA L 495 ,542 ,562 28 ,549 ,910 5 ,204 ,496 518 ,887 ,976 103 ,731 ,319 29 ,713 ,141 2 ,378 ,986 131 ,065 ,474 387 ,822 ,502 391 ,811 ,243

Previous Year figures : 478,467,605 22,072,920 4,997,963 495,542,562 78,066,955 28,718,128 3,053,764 103,731,319 391,811,243

CAPITAL WORK IN PROGRESS

(Unsecured , Considered Good) 404,580 -————— ————

TOTAL 4 0 4 , 5 8 0 -————— ————

Note : Capital work in progress includes advance for capital expenditure (Unsecured, Considered Good)

SCHEDULE - 5 INTANGIBLE ASSETS

ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

Cost As At Additions Deletions/ As At As At For the Deletions/ As At As At As At

01-04-2008 Adjustments 31-3-2009 01-4-2008 Year Adjustments 31-3-2009 31-3-2009 31-3-2008

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

S o f t w a r e 13,700,587 5,772,607 - 19,473,194 9,824,535 4,099,403 - 13,923,938 5,549,256 3,876,052

TOTA L 13 , 700 , 587 5 , 772 , 607 - 19 , 473 , 194 9 , 824 , 535 4 , 099 , 403 - 13 , 923 , 938 5 , 549 , 256 3 , 876 , 052

Previous Year figures : 13,350,505 350,082 - 13,700,587 6,172,638 3,651,897 - 9,824,535 3,876,052

55

SCHEDULE - 6 INVESTMENTS

NON TRADE-QUOTED

Long Term

3,300 Equity Shares of Rs 10/- each of Intec Securities Limited 33,000 33,000

141,427 Equity Shares of Rs 10/- Each of Spanco Telesystem and Solutions Limited 5,232,799 5,232,799

486,667 Equity Shares of Rs.10/- each fully paid up in Sparsh BPO Services Ltd. 18,006,679 18,006,679

Current Investments

TRADE -UNQUOTED

292,544 Equity Shares of Rs.10/- each of Shyam Telelink Ltd. 1,834,251 1,834,251——————— ———————

25,106,729 25,106,729——————— ———————

SCHEDULE - 7 INVENTORIES

(As taken, valued and certified by the Management)

Raw Material 136,685,367 97,641,742

Finished Goods 132,216,236 31,338,941

Work In Process 20,450,841 19,234,253

Stores 264,584 287,762

Packing Material 154,972 6,170

Material In Transit 619,709 2,172,167——————— ———————

290,391,709 150,681,035——————— ———————

SCHEDULE - 8 SUNDRY DEBTORS

Debts Outstanding for over 6 months

Unsecured & Considered Good 499,328,570 138,929,126

Unsecured & Considered doubtful 14,904,887 29,366,812——————— ———————

514,233,457 168,295,938

Less : Provision for doubtful debts 14,904,887 29,366,812

Others debts

Unsecured & Considered Good 569,649,200 800,244,139——————— ———————1,068,977,770 939,173,265——————— ———————

SCHEDULE - 9 CASH & BANK BALANCES

Cash in Hand 860,957 909,827

Balance With Scheduled Banks in :

- Fixed Deposits / Margin Money (*) (including interest accrued) 61,827,019 89,180,103

- Current Account 54,903,876 239,063,617

Balance With Other Banks in :

- Current Account 2,284,911 4,065,490

(*) under bank lien as margin Money——————— ———————

119,876,763 333,219,037——————— ———————

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

AS AT AS AT31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

56

SCHEDULE - 10 LOANS & ADVANCES

(Unsecured, Considered Good unless otherwise stated )

Advances recoverable in cash or in kind or for value to be received

Considered Good 132,925,405 111,790,231

Considered Doubtful - 35,083,267

——————— ——————— 132,925,405 146,873,498

Less : Provision for doubtful amounts - 35,083,267

——————— ——————— 132,925,405 111,790,231

Advance Tax (Net) 22,758,340 21,239,702

Cenvat Receivable 29,961,322 15,974,986

Security Deposits 12,832,923 12,042,895

MAT Credit available 1,292,374 -

Balance with Excise Department 12,077 89,105

——————— ———————199,782,441 161,136,919

——————— ———————

SCHEDULE - 11 CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIES

Sundry Creditors 722,367,999 837,765,148

Advances and Deposits From Customers and Others 491,157,929 333,978,803

Other Liabilities 950,804 -

Book Overdraft 1,099,951 912,497

Due to Directors 5,095 3,997

Interest Accrued but not due on loans 44,937,360 33,731,245

Provision for Tax (Net) 112,090 88,333

Unclaimed Dividend - 369,380

——————— ——————— 1,260,631,228 1,206,849,403

——————— ———————

PROVISIONS

Retirement Benefits 13,653,477 9,149,364

——————— ——————— 13,653,477 9,149,364

——————— ———————

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

AS AT AS AT31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

57

SCHEDULE - 12 OTHER INCOMES

Dividend on Non Trade Long term Investments 284,502 256,266Interest on Deposits 6,301,405 6,056,185Miscellaneous Income 31,779,167 23,680,502

——————— ——————— 38,365,074 29,992,953

——————— ———————

SCHEDULE - 13 MANUFACTURING, ADMINISTRATIVE & OTHER EXPENDITURE

Material Consumed & Purchase of Goods Traded 1,591,389,003 1,767,366,148

Projects Services, Software & Software Systems 661,647 6,619,875

Stores & Spares Consumed 6,271,222 10,930,839

Power & Fuel 7,353,915 6,706,731

Manufacturing Expenses 6,208,403 4,866,585

Excise Duty on Closing Stock ( Finished Goods) 1,327,589 1,493,299

Salary, Wages & Bonus 114,969,292 119,624,595

Employer’s Contribution to P.F. & Other Fund 5,958,583 6,879,448

Staff Welfare 9,586,434 8,657,419

Repair to:

- Plant & Machinery 1,804,394 1,658,024

- Building 10,407,076 939,707

Auditor’s Remuneration :

- Audit Fee 791,374 644,442

- Tax Audit Fee 150,000 150,000

- Other 217,864 210,000

Exchange Rate Fluctuation ( Net ) - 12,251,322

Directors Sitting Fee 46,000 32,000

Rates & Taxes 6,527,247 3,787,051

Insurance 2,558,156 3,114,524

Communication Expenses 11,093,565 9,515,962

Printing & Stationery 1,872,472 1,409,844

Travelling & Conveyance 35,868,901 41,178,015

Rent and utilities 13,440,557 9,749,489

Advertisement & Publicity 14,031,257 18,458,131

Dealers commission 616,622 733,485

Packing & Forwarding 13,177,134 10,500,438

Prior Period Adjustments ( Net ) 2,733,973 26,718

Sundry Balances Written Off 17,152 -

Bad debts written off ( Net ) 25,109,715 7,617,287

Other Administrative Charges 62,856,289 50,989,641

Loss on Sale/write off of Fixed Assets (Net) 579,679 268,388

Provision for doubtful debts /advances 2,630,991 -

Exchange Rate Difference arises on Conversion 13,500,419 (9,134,867)——————— ———————1,963,756,925 2,097,244,540

Add / Less Decrease / Increase in Stocks :Add : Opening Stock :

Work In Process 19,234,253 20,420,911Finished Goods 31,338,941 21,642,943

Less : Closing Stock:Work in Process 20,450,841 19,234,253Finished Goods 132,216,236 31,338,941

——————— ———————1,861,663,042 2,088,735,200——————— ———————

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED YEAR ENDED31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

58

SCHEDULE -14 FINANCIAL CHARGES

Interest on

- Debentures and other fixed period Loans 2,316,484 6,570,356

- Others 27,931,631 29,159,622

Bank Charges and commission 7,245,814 11,907,203——————— ———————

37,493,929 47,637,181——————— ———————

SCHEDULE – 15 SIGNIFICANT ACCOUNTING POLICIES

1 . BASIS OF CONSOLIDATION

The consolidated financial statements relate to Shyam Telecom Limited (the company) and its subsidiary companies.

A . BASIS OF ACCOUNTING

i. The financial statements of the subsidiary company used in the consolidation are drawn up to the same reporting date as ofthe Company i.e. year ended March 31, 2009.

ii. The financial statements of the Company and subsidiary company have been prepared in accordance with the AccountingStandards.

B . PRINCIPLES OF CONSOLIDATION

The consolidated financial statements have been prepared on the following basis:

i. The financial statements of the Company and its subsidiary companies have been combined on a Line-by-line basis by addingtogether like items of assets, liabilities, Income & expenses. The intra-group balances and intra-group transactions andunrealized profits or losses are fully eliminated.

ii. As far as possible, the consolidated financial statements are prepared using uniform accounting policies for like transactionsand other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company’sseparate financial statements.

iii. The excess of cost to the Company of its investments in the subsidiary companies over its share of the equity of the subsidiarycompanies, at the dates on which the investments in the subsidiary companies are made, is recognized as ‘goodwill’ being anasset in the consolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on thedate of investment, is in excess of cost of investment of the Company, it is recognized as ‘capital reserve’ and shown under thehead ‘Reserves and Surplus’, in the consolidate financial statements.

iv. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minorityshareholders at the dates on which investments are made by the Company in the subsidiary companies and further movementsin their share in the equity, subsequent to the dates of investments.

v. The difference between the proceeds from disposal of investment in a subsidiary and the carrying amount of its assets lessliability as of the date of disposal is recognized in the consolidated statement of profit & loss account as the profit or loss on

disposal of investment in subsidiary.

C . INFORMATION ON SUBSIDIARY COMPANIES

The following subsidiary companies are considered in the preparation of consolidated financial statements:

Name of the Company Country of Incorporation % of voting power held As at March 31, 2009

Shyam Telecom Inc. USA 100

2 . BASIS FOR PREPARATION OF ACCOUNTS

The Financial Statements have been prepared under historical cost convention on accrual basis in accordance with generally

accepted accounting principles and applicable Accounting Standards and the provisions of Companies Act, 1956.

3 . FIXED ASSETS

Fixed Assets are stated at cost, net of VAT/ CENVAT, less accumulated depreciation. All costs including borrowing costs till

commencement of commercial production and adjustment arising from exchange rate variations relating to borrowings attributableto the fixed assets are capitalized. Capital expenditure on assets not owned by company is reflected in capital work in progressaccount till the period of completion and thereafter in the fixed assets. Machinery spares that can be used only in connection with

an item of fixed asset and their use is expected to be irregular are capitalized. Replacement of such spares is charged to revenue.

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED YEAR ENDED31-Mar-2009 31-Mar-2008

(Rs . ) (Rs.)

59

4 . EXPENDITURE INCURRED DURING THE CONSTRUCTION PERIOD

Expenditure directly relating to construction activity including trial run production expenses (net of income, if any) is capitalized.Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent towhich the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure (includingborrowing costs) incurred during the construction period which is not related to the construction activity nor is incidentalthereto, is charged to the Profit & Loss Account.

5 . DEPRECIATION

Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in Schedule XIV to theCompanies Act, 1956. Individual assets costing Rs.5000 or less are depreciated in full in the year of purchase. Leasehold land forlease period below 90 years is amortised over the period of lease from the date of commencement of commercial operations

6 . INTANGIBLE ASSETS

In accordance with the Accounting Standard (AS) 26 relating to intangible assets, all costs incurred on technical know-how /license fee relating to production process are charged to revenue in the year of incurrence. Costs incurred on technical know-how / license fee relating to process design / plants / facilities are capitalized at the time of capitalization of the said plant / facilityand amortized on pro-rata basis over a period of five years.

Computer Software is capitalised on the date of installation and is amortised over a period of 3 years.

7 . IMPAIRMENT

Carrying amount of cash generating units / assets is reviewed for impairment. Impairment, if any, is recognized where the carryingamount exceeds the recoverable amount being the higher of net realizable price and value in use

8 . INVESTMENTS

Investments are classified into current and long-term investments. Current investments are stated at the lower of cost andquoted/ fair value. Long term investments are stated at cost less any provision for permanent diminution in value.

9 . INVENTORY VALUATION

Inventories are valued at lower of cost or net realizable value except scrap which is valued at net realizable value. The cost isdetermined by using first-in-first-out (FIFO) method. Finished goods and work-in progress include costs of conversion and othercosts incurred in bringing the inventories to their present location and condition.

Excise duty on closing stock of finished goods and scrap are accounted for on the basis of payments made in respect of goodscleared as also provision made for goods lying in the factory and included in the value of such stocks

10 . FOREIGN CURRENCY TRANSACTIONS

I. Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the date of thetransaction.

II. Monetary items denominated in foreign currencies at the year end are translated at the year end rates. Premium in respect offoreign exchange contract is recognized over the life of the contract.

III. Non-monetary foreign currency items are carried at cost.

IV. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the profitand loss account.

V. Foreign Subsidiary is integral in nature. All Income and expenses of such Subsidiary are translated at the monthly average rateof exchange prevailing during the year except depreciation which is calculated on historical cost of assets. All Non-Monetaryassets are translated at historical rates and monetary assets and liabilities are translated at the closing rate on the Balance

Sheet date. Share capital is translated at historical rates. The resulting exchange difference charged to profit & loss account.

11 . REVENUE RECOGNITION

Sales are inclusive of excise duty, service tax and net of sales tax. Export sales are net of ocean freight and insurance.

Revenue in respect of long-term turnkey works contracts is recognized under percentage of completion method, subject to such

contracts having progressed to a reasonable extent.

12 . INCOME ON INVESTMENTS

Dividend on shares/units is accounted for, as and when the right to receive the same is established.

13 . BORROWING COST

Borrowing costs that are attributable to the acquisition or the construction of qualifying assets are capitalized as part of the costof such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All otherborrowing costs are charged to revenue in the year in which they are incurred.

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

60

14 . LEASES

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified asoperating leases. Annual lease payments are recognized as an expense on straight-line basis and in accordance with the respectivelease agreements.

Assets acquired under leases where company has substantially all the risks and rewards of ownership are classified as financelease. Assets acquired under the finance lease are capitalized and corresponding lease liability is recorded at an amount equal tothe fair value of the leased asset at the inception of the lease or present value of minimum lease payment, whichever is lower.

15 . PRODUCT WARRANTY EXPENSES

Liability for Warranties is recognized at the time the claim is accepted. The necessary provisions are made with respect towarranties claimed and accepted, which are received up to the end of one month from the close of the year.

16 . EMPLOYEES BENEFITS

i . Short term employee benefit are recognized as an expenses at the undiscounted amount in the profit and loss account of theyear in which related service is rendered.

i i . The company has defined contribution plans for post-retirement benefit, namely Employee Provident Fund Scheme administeredthrough Provident Fund Commissioner and company contribution are charged to revenue every year.

i i i . Company contribution to state plans namely Employees State Insurance Fund & Employee Welfare Fund are charge torevenue every year.

iv. The company has defined benefit plan namely Leave Encashment / Compensated absence and Gratuity, the liability for whichis determined on the basis of an actuarial valuation at the end of the year. Gratuity Trust is administrated through Life InsuranceCorporation of India (LIC).

v. Termination benefits are recognized as an expenses immediately.

vi. Gain or Loss arising out of actuarial valuation are recognized immediately in the profit & loss account as income or expenses

17 . CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted for at the time ofacceptance.

18 . TAXATION

Provision for current income tax is made after taking credit for allowances and exemptions. In case of matters under appeal, dueto disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

In accordance with the Accounting Standard 22-Accounting for Taxes on income, the deferred tax for timing differences betweenthe book & tax profit for the period is accounted for using the tax rates and the tax laws that have been enacted or substantivelyenacted as of the balance sheet date.

Deferred tax assets arising from temporary timing difference are recognized to the extent there is virtual certainty that the asset

will be realized in future.

19 . GOVERNMENT GRANTS

Government grant in the nature of promoter’s contribution is treated as capital receipt and credited to investment subsidyaccount.

Grant in the nature of revenue subsidy is treated as revenue receipt and credited to profit and loss account

20 . PROVISION AND CONTINGENT LIABILITIES

Show cause notices issued by various government authorities are not considered as obligation. When the demand notice are

raised against such show cause notice and are disputed by the company then these are classified as possible obligations.

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result

of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but aredisclosed in notes.

21 . PROPOSED DIVIDEND

Dividend as proposed by Board of Directors is provided for in the books of account, pending approval at the Annual GeneralMeeting

22. CENVAT / VAT

CENVAT/ VAT claimed on capital assets are credited to assets / capital work in progress account. CENVAT/ VAT on purchase ofraw materials and other materials are deducted from the cost of such materials.

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

61

SCHEDULE - 16 NOTES TO ACCOUNTS

1 Contingent liabil ities :

i) Claim against the company not acknowledged as debt 108.13 108.13

ii) Outstanding Guarantee Issued by Banks 276.49 -

iii) Letter of Credits issued by the Banks(Agst. which Goods have not been despatched) 1,532.32 -

2 Estimated amount of contracts remaining to be executed oncapital account (net of advances). 133.45 -

3 Bad debts debited to accounts include :

Debit balances written off 254.00 77.40

Credit balances written off 2.90 1.23————— —————

Net 251.10 76.17————— —————

4 Earnings per share (Basic and Diluted) :

Opening Number of Shares 11,270,000 11,270,000

Closing Number of Shares 11,270,000 11,270,000

Weighted Average number of shares outstanding 11,270,000 11,270,000

Profit /(Loss)after Tax before extra ordinary items (Rs. In Lacs) (267.42) 418.28

Profit/ (Loss )after Tax after extra ordinary items (Rs. In Lacs) (211.15) 418.28

Basic & Diluted Earning Per Share ( Rs. )

- Before extra ordinary items (2.37) 3.71

- After extra ordinary items (1.87) 3.71

5 DEFERRED INCOME TAX (Rs. in Lacs)

The deferred tax liability at the year end comprise As at 31-03-2009 As at 31-03-2008of the following :

Deferred Tax Liability on account of;

Timing difference between book & Tax Depreciation 733.65 733.65 785.86 785.86

Deferred Tax assets on account of;

Disallowance under Section 43B 48.57 7.18

Others 33.89 82.46 128.27 135.45

Net deferred tax liabil ity 651.19 650.41

6 RELATED PARTY INFORMATION RELATIONSHIP

a) Key Management Personnel : Mr. K. N. Mehrotra, Mr. Rajiv Mehrotra, Mr Alok Tondon and Mr. Ajay Khanna,Mr. B.A. Majmudar [Previous year Mr K.N.Mehrotra, Mr Alok Tondon]

b) Enterprises over which Key Management Personnel and relatives are able to exercise significant influence: Shyam Antenna

Electronics Ltd., Intercity Cable System Pvt. Ltd, Shyam Communication Systems, Shyam Basic Infrastructures Projects Pvt.Ltd, Shyam Telecom Systems Pvt. Ltd, A.T. Invofin India Pvt Ltd, Cell cap Invofin India Pvt Ltd, Intell Invofin India Pvt Ltd, Shyamdigital satellite Communication Pvt Ltd, Sistema Shyam TeleServices Limited,Ubico Networks Pvt.Ltd.

Note : Related party relationship is as identified by the Company and relied upon by the auditors.

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

(Rs. in Lacs)

YEAR ENDED YEAR ENDED

31-Mar-2009 31-Mar-2008

62

Transactions with the above related parties are as follows:(Rs in Lacs)

PARTICULARS Key Management Enterprises over Grand TotalPersonne l which they

have significantin f luence

1 Sale of Products/Services - 1 ,901 .43 1 ,901 .43

- 205.63 205.63

2 Sale of Investments/Land - 77 .25 77.25

- - -

3 Assignment of Key Man Insurance Policy 200.00 - 200.00

200.00 - 200.00

4 Interest Provided - 149.15 149.15

- 145.34 145.34

5 Rent Agreements (Paid) 1 .20 41 .41 42.61

1.20 38.40 39.60

6 Loan Taken - 1 ,155 .00 1 ,155 .00

- 425.00 425.00

7 Repayment of Loan - 73 .85 73.85

- 1,298.00 1,298.00

Out standings ;

8 Receivab les - 327.40 327.40

- 147.83 147.83

9 Payab les - 2 ,978 .16 2 ,978 .16

- 660.29 660.29

1 0 Loans - 2 ,353 .65 2 ,353 .65

- 1,272.50 1,272.50

7 Operating Leases

a ) Where the company is a lessee

Operating Lease :

The Company ( Shyam Telecom Inc.) takes on lease office space, under various operating leases ranging from onemonth to five years.

Future lease receipts under operating leases are as follows:

(Rs in Lacs)

March 31,2009 March 31,2008

Payable not later than one year 12.28 0.98

Later than one year but not later than five years 11.77 -

later than five years - -—————— ——————

Tota l 24 .05 0 .98—————— ——————

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

63

8 SEGMENT INFORMATION FOR THE YEAR ENDED ON 31ST MARCH, 2009

The Company and its subsidiaries operations predominantly relate to providing Telecommunication and information technologyservices . The company has considered business segment as the primary segment and geographical segment as secondarysegment for disclosure.The segments have been identified taking into account the nature of the products, the deffering risk andreturns, the organisation structure and internal reporting system . The subsidiary ( Shyam Telecom,Inc. USA ) caters the needsof American market and other countries Viz,latin America,Canada etc. based on this secondary segment is identified asGeographical Segment . The Telecom products & Services segment comprise of manufacturing and services in the relatedarea.Turnkey Projects and trading services segment includes the turnkey Projects and Trading in Telecom Products. SoftwareProducts & services segment includes the services in the area incuding software and Information Technology related andInfomation technology enabled services.

Revenue & expenditure which relates to enterprises as a whole and are not attributable to segments are included in unallocableexpenditure ( Net of unallocable income ) . Assets used in the Company’s business or liabilities contracted have not beenidentified to any of the reportable segment except basic telephony services and internet services , as all the assets and servicesare used interchangeably between segments, The Company believes that it is currently not practicable to provide segmentdisclosure relating to total assets and liabilities since a meaningful segregation of available data is onerous except basictelephony services.

Business Segments ( Primary) (Rs in Lacs)

Segment Reporting Te lecom Turnkey Projects Un i f i ed Investment Una l locab le Tota lP roduc t s and Trading te l ephony

a n d Serv icesServ ices

Segment Revenue

Gross Sales / Income From Operations 7 , 0 5 8 . 2 7 1 2 , 1 9 9 . 3 6 - 2 . 8 5 - 1 9 , 2 6 0 . 4 86,082.61 15,892.86 - 609.73 - 22,585.20

Less : Inter / Intra Segment Sales and services 5 1 6 . 7 8 - - - - 5 1 6 . 7 8324.89 - - - - 324.89

Total Revenue 6 , 5 4 1 . 4 9 1 2 , 1 9 9 . 3 6 - 2 . 8 5 - 1 8 , 7 4 3 . 7 05,757.72 15,892.86 - 609.73 - 22,260.31

Segment Results

(Profit (Loss) before Depreciation (Except directly 3 3 2 . 0 8 1 9 0 . 0 4 - 2 . 8 5 - 5 2 4 . 9 7attributed), Amortisation, Interest, Tax andunallocable overheads) 1,257.04 156.61 - 609.73 - 2,023.38

Less : Depreciation & Amortisation - - - - 3 3 8 . 1 3 3 3 8 . 1 3 - - - - 323.70 323.70

Interest & Financial Charges - - - - 3 7 4 . 9 4 3 7 4 . 9 4 - - - - 476.37 476.37

Other un-allocable Expenditure ( Net of un-allocable Income) - - - - ( 3 9 . 1 7 ) ( 3 9 . 1 7 ) - - - - 353.05 353.05

Profit( Loss) Before Tax - - - - - ( 1 4 8 . 9 3 ) - - - - - 870.26

Taxes - - - - - 6 2 . 2 2 - - - - - 451.98

Net profit (Loss) after taxes - - - - - ( 2 1 1 . 1 5 ) - - - - - 418.28

9 In compliance with the accounting standards 15 (revised 2005) “Employee Benefits” The company has got the employeebenefits evaluated from actuarial valuer.

The Company has calculated the various benefits provided to employees as under:

A . Provident Fund

During the year the Company has recognized Rs.49.31 lacs (Previous year Rs. 49.13 Lacs) in the Profit and Loss account.

B . State Plans

Employer’s contribution to Employee State insurance and to Welfare Fund

During the year the Company has recognised Rs. 4.65 lacs (Previous year Rs. 5.74 Lacs) in the Profit and Loss account.

C . Defined Benefit Plans

a) Leave Encashment/ Compensated Absence

b) Contribution to Gratuity Fund - Employee’s Gratuity Fund.

In accordance with Accounting Standard 15 (revised 2005), the actuarial valuation carried out in respect of the aforesaiddefined benefit plans is based on the following assumption.

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

64

i ) Actuarial Assumptions Current Year Previous Year

Leave Employee Leave EmployeeEncashment/ Gratu i ty Encashment/ Gratu i ty

Compensated Fund Compensated FundAbsence Absence

Discount Rate (per annum) 7.50% 7.50% 8.00% 8.00%

Rate of increase in compensation levels 5.50% 5.50% 5.50% 5.50%

Rate of return on plan assets - 8.50%/9.00% - 8.00%

(Rs in Lacs) (Rs in Lacs) (Rs in Lacs) (Rs in Lacs)

i i ) Change in the obligation during theyear ended 31st March, 2009

Present value obligation as at 31st March, 2008 42.61 83.64 46.57 58.70

Impact of Transition provision of AS-15 - - - 6.03

Interest cost 3.36 6.69 3.73 5.18

Past Service cost - - - -

Current service cost 18.87 12.12 7.22 11.65

Curtailment cost - - - -

Settlement cost - - - -

Benefits Paid (5.19) (13.53) (10.22) (11.60)

Actuarial (gain)/ loss on Obligations 28.71 (6.36) (4.69) 13.68

Present value obligation as at 31st March, 2009 88.36 82.56 42.61 83.64

Receivable from other company’s fund - (4.76) - (4.76)

Net Present value obligation as at 31st March, 2009 88.36 77.80 42.61 78.88

i i i ) Change in fair value plan Assets

Fair value of Plan Assets as at 31st March, 2008 - 29.99 - 24.21

Expected return on Plan Assets - 2.40 - 1.94

Contributions - 7.72 - 15.22

Benefits Paid - (13.52) - (11.60)

Actuarial gain/ (loss) on Obligations - (0.23) - 0.22

Fair value of Plan Assets as at 31st March, 2009 - 26.36 - 29.99

i v ) Reconciliation of Present value of DefinedBenefit obligation and Fair value of Assets

Present value obligation as at 31st March, 2009 88.36 77.80 42.60 78.88

Fair value of Plan Assets as at 31st March, 2009 - 26.36 - 29.99

Funded Status (88.36) (51.44) (42.60) (48.89)

Present value of un-funded obligation asat 31st March, 2009 - - - -

Un-recognized Actuarial (gains)/ losses - 0.20 - 0.25

Un-funded Net Asset/ (Liability) recognised inBalance Sheet. (88.36) (51.44) (42.60) (48.89)

v ) Expenses recognised in Profit andLoss Account

Current service cost 18.87 12.12 7.22 11.65

Past Service cost - - - -

Interest cost 3.36 6.69 3.73 5.18

Expected return on Plan Assets - (2.40) - (1.94)

Curtailment cost - - - -

Settlement cost - - - -

Net Actuarial (gain)/ loss recognised during the year 28.71 (6.13) (4.69) 13.46

Received / Receivable from other company’s fund - 4.76 - (8.69)

Net Expense recognised in Profit and Loss Account 50.94 15.04 6.26 19.66

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

65

1 0 Some of the personal accounts are subject to adjustments / reconciliation / confirmation .

1 1 In the opinion of Board of Directors Current Assets, Loans and Advances have a value on realisation in ordinary course ofbusiness at least equal to the amount at which they are stated in the Balance Sheet and provision for all liabilities have been madein the Accounts, which has been relied upon by the auditors.

1 2 Figures pertaining to the holding company or subsidiaries have been reclassified wherever necessary to bring them in line forpreparation of consolidated financial statements.

1 3 Previous year figure have been regrouped / reclassified wherever considered necessary.

As per our report of even date attached

For MEHRA GOEL & CO.CHARTERED ACCOUNTANTS

R.K MEHRA RAJIV MEHROTRA AJAY KHANNA ALOK TANDONPartner Chairman & Managing Director Managing Director Managing DirectorM. No. 6102

PLACE : New Delhi UMESH GARG DHARMENDER DHINGRA

DATED : 7th August, 2009 Chief Financial Officer V.P.( Legal) & Company Secretary

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

66

Notice is hereby given that the Sixteenth Annual GeneralMeeting of the Members of SHYAM TELECOM LIMITEDwill be held at “Hotel Pink Pearl”, 10th Mile, Mahapura, AjmerRoad, Jaipur- 302026 (Rajasthan), on Friday, 25th September 2009,at 10:00 A.M. to transact he following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Balance Sheetas at 31st March 2009 and Profit and Loss Account for theperiod ended on that date together with the Directors’ andAuditors’ Report thereon.

2. To appoint a Director in place of Mr. Ajay Khanna, whoretires by rotation and being eligible, offers himself forreappointment.

3. To appoint a Director in place of Mr. Achintya Karati, whoretires by rotation and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr. Ravikant Jaipuria, whoretires by rotation and being eligible, offers himself for re-appointment.

5. To re-appoint M/s. Mehra Goel & Co., CharteredAccountants, as Auditors to hold office from the conclusionof this Annual General Meeting till the conclusion of nextAnnual General Meeting and authorize the Audit Committeeof the Board / Board of Directors to fix their remuneration.

SPECIAL BUSINESS

6. To consider, and if thought fit, to pass the followingresolution, with or without modification(s), as anORDINARY RESOLUTION:

“RESOLVED THAT Mr. P.K. Bhatia whose term of Officeas an Additional Director of the Company expires at this

Annual General Meeting and in respect of whom theCompany has received a notice under section 257 of the

Companies Act, 1956, for the Office of Director, be and ishereby appointed as a Director of the Company whoseperiod of office will be liable to determination for

retirement by rotation.”

7. To consider, and if thought fit, to pass the followingresolution, with or without modification(s), as an

ORDINARY RESOLUTION:

“RESOLVED THAT Mr. C.S. Malhotra whose term ofOffice as an Additional Director of the Company expires at

this Annual General Meeting and in respect of whom theCompany has received a notice under section 257 of theCompanies Act, 1956, for the Office of Director be and ishereby appointed as a Director of the Company whoseperiod of office will be liable to determination for

retirement by rotation.”

8. To consider and if thought fit, to pass the followingresolution, with or without modification(s), as an

ORDINARY RESOLUTION :

“RESOLVED THAT pursuant to the provisions of Section269 read with Schedule XIII of the Companies Act, 1956and other applicable provisions of the Companies Act, 1956,if any, Mr. Ajay Khanna, Managing Director of the Company,be & is hereby reappointed as the Managing Director of theCompany, for a period of five years, with effect from 1st May,2009.

RESOLVED FURTHER THAT Mr. Ajay Khanna, ManagingDirector, be and hereby shall be responsible for themanagement and handling of day to day affairs of theCompany and to perform all other duties, that the Boardmay delegate to Mr. Ajay Khanna, Managing Director, fromtime to time.

RSOLVED FURTHER THAT Mr. Ajay Khanna, ManagingDirector shall not be paid any remuneration including sittingfees, if any, payable for attending the Board Meetings/Committee Meetings.”

9. To consider and if thought fit, to pass the followingresolution, with or without modification(s), as anORDINARY RESOLUTION :

“RESOLVED THAT pursuant to the provisions of Section269 read with Schedule XIII of the Companies Act, 1956and other applicable provisions of the Companies Act, 1956,if any, Mr. Alok Tandon, Managing Director of the Company,be & is hereby reappointed as the Managing Director of theCompany, for a period of five years, with effect from 1st May,2009.

RESOLVED FURTHER THAT Mr. Alok Tandon, ManagingDirector, be and hereby shall be responsible for themanagement and handling of day to day affairs of theCompany and to perform all other duties, that the Boardmay delegate to Mr. Alok Tandon, Managing Director, fromtime to time.

RSOLVED FURTHER THAT Mr. Alok Tandon, ManagingDirector shall not be paid any remuneration including sitting

fees, if any, payable for attending the Board Meetings/Committee Meetings.”

By Order of the Board of DirectorsFor Shyam Telecom Limited

Sd/ -Place : New Delhi DHARMENDER DHINGRADated: 7th August, 2009 V.P. (Legal) & Company Secretary

Registered Office :B2-D, Shiv Marg, Bani Park

Jaipur-302016

NOTICE OF THE SIXTEENTH ANNUAL GENERAL MEETINGTIME: 10:00A.M.

DAY & DATE: FRIDAY, THE 25TH SEPTEMBER 2009. VENUE: “HOTEL PINK PEARL”, 10TH MILE, MAHAPURA, AJMER ROAD, JAIPUR – 302026 (RAJASTHAN)

67

NOTES: -

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE

MEETING IS ENTITLED TO APPOINT A PROXY TO

ATTEND AND VOTE, ON A POLL, INSTEAD OF HIMSELF/

HERSELF AND SUCH PROXY NEED NOT BE A MEMBER

OF THE COMPANY.

An instrument appointing a proxy should be duly completed,

stamped & signed, and must be sent so as to reach the

Company’s Registered Office not less than 48 hours before

the time scheduled for the commencement of the Meeting.

2. Please bring the Admission Slip duly filled-in and hand over

the same at the entrance of the Meeting Hall.

3. The Register of Members and Share Transfer Books of the

Company will remain closed from 21st September 2009 to

25th September 2009. (Both days inclusive).

4. Members desirous of getting any information from the

Company are requested to send their queries to the

Company at its Registered Office well in advance so that

the same may reach at least 7 days before the date of the

Meeting to enable the management to keep the required

information, readily available at the Meeting.

5. As a measure of economy, members are requested to bring

their copy of the Annual Report to the meeting.

6. Members are requested to immediately intimate the change

of their address, if any, along with pin-code numbers with

the Registered Office of the Company quoting their Folio

Numbers and members holding shares in electronic form

may inform the same to their Depository Participants.

7. Information u/s 205A read with the Companies Unpaid

Dividend (Transfer to General Revenue Account of the

Central Government) Rules 1978, as amended is given

below:

� Pursuant to Section 205 of the Companies Act, 1956,

all unclaimed/unpaid dividends upto the financial year

ended 31.03.1995 have been transferred to the

General Revenue Account of the Central Government,

Shareholders who have not yet encashed their

dividend warrants for the said period are requested

to claim the amount from the Registrar of Companies,

Rajasthan, 132 Vijay Nagar Part II, Kortarpura Railway

Crossing, Jaipur (RAJ) by submitting an application in

the prescribed Form.

� Consequent upon the amendment of Section 205A,

of the Companies Act, 1956 and introduction of

Section 205C by the Companies (Amendment) Act,

1999 the amount of dividend for the subsequent years

i.e. from financial year ended 31.03.96 and onwards,

remaining un-paid or unclaimed for a period seven

years from the date of transfer to Unpaid Dividend

Account of the Company has been transferred to the

Investor Education and Protection Fund (IEPF) set up

by the Government of India and no payments shall be

made in respect of any such claims.

� The unclaimed/unpaid dividend for the year ended

31.03.2001 has also been transferred to the Investor

Education and Protection Fund.

8. Brief resume and other requisite information of

Mr. Ajay Khanna, Mr. Achintya Karati, Mr. Ravikant Jaipuria,

Mr. P.K. Bhatia and Mr. C.S. Malhotra are given in the Report

of Corporate Governance, as required under Clause 49 of

the Listing Agreement, in a separate section. Further, all

the five Directors have filed Form No. ‘DD-A’ with the

Company as required by the Companies (Disqualification

of Directors under Section 274(1)(g) of the Companies

Act, 1956) Rules, 2003 and have confirmed that they are

not disqualified for appointment as Directors of the

Company.

9. The Shares of the Company are at present listed on

following Stock Exchanges viz. Bombay Stock Exchange and

National Stock Exchange. Listing Fees to all the Stock

Exchanges had been paid up to 31st March 2010.

10. Explanatory Statements pertaining to Special Business, i.e.

Item No. 6 to 9 are annexed herewith.

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT

(Pursuant to Section 173 of the Companies Act, 1956)

ITEM NO. 6

INFORMATION REQUIRED TO BE FURNISHEDUNDER THE LISTING AGREEMENT.

Name : Mr. Praveen Kumar Bhatia

Age : 55 years

Qual i f i cat ions : B.A.(Hons) Economics, FCA

No. of Shares held

in the Company : -

Expert i se : His brief profile has been

mentioned in the CorporateGovernance Report 2009.

68

Other Directorships:

Name of the Company Pos i t ion

1. Alacrity Overseas Pvt. Ltd. Director

2. Ankit Sales Pvt. Ltd. Director

3. Spick & Span Securities Pvt. Ltd. Director

4. Trident Finvest Ltd. Director

5. Kumra Bhatia & Consultants Private Limited Director

Mr. P.K. Bhatia was appointed as an Additional Independent

Director in the Board Meeting held on 23rd October 2008. Since

his office as an Additional Director terminates at the date of

Sixteenth Annual General Meeting, his appointment as Director,

liable to retire by rotation, is being recommended for the

approval of shareholders.

The Company has already received relevant notice from a

member pursuant to Section 257 of The Companies Act, 1956.

None of the directors are interested, except the Director being

re-appointed in the above resolution.

Accordingly, the Board recommends the resolution for

members’ approval.

ITEM NO. 7

INFORMATION REQUIRED TO BE FURNISHED

UNDER THE LISTING AGREEMENT.

Name : Mr. C.S. Malhotra

Age : 78 years

Qual i f i cat ions : M.A., DBM., MBA

No. of Shares held

in the Company : _

Expert i se : His brief profile has been

mentioned in the Corporate

Governance Report 2009.

Mr. C.S. Malhotra was appointed as an Additional Independent

Director in the Board Meeting held on 20th January, 2009. Since

his office as an Additional Director terminates at the date of

Sixteenth Annual General Meeting, his appointment as Director,

liable to retire by rotation, is being recommended for the

approval of shareholders.

The Company has already received relevant notice from a

member pursuant to Section 257 of The Companies Act, 1956.

None of the directors are interested, except the Director being

re-appointed in the above resolution.

Accordingly, the Board recommends the resolution for

members’ approval.

ITEM NO. 8 & 9

Mr. Ajay Khanna & Mr. Alok Tandon were appointed as Managing

Directors of the Company w.e.f. 1st May, 2004 and hence their

tenure of five years expired on 30th April, 2009. As the Company

has strided new heights year by year under their able guidance,

experience and leadership, it was deemed appropriate to

reappoint them as Managing Directors for next five years. Hence,

they were reappointed as Managing Directors of the Company

w.e.f. 1st May, 2009.

None of the directors are interested except Mr. Arun Khanna

who is relative of Mr. Ajay Khanna and the Directors being re-

appointed in the above resolutions.

Accordingly, the Board recommends the resolution for

members’ approval.

By ORDER of the Board of DirectorsFor Shyam Telecom Limited

Sd/ -Place: New Delhi. DHARMENDER DHINGRADated: 7th August, 2009 Vice President (Legal)

& Company Secretary

Registered Office:B2-D, Shiv Marg, Bani Park,Jaipur-302016

ATTENDANCE SLIP

SHYSHYSHYSHYSHYAM AM AM AM AM TELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDRegistered Office: B-2D, Shiv Marg, Bani Park, Jaipur-302016, Rajasthan, India.

16th Annual General Meeting

Please complete this Attendance Slip and hand it over at the entrance of the Meeting Hall.

D.P.Id*

Client Id*

L.F. No.

No. of Shares held :

NAME OF THE SHAREHOLDER / PROXY ______________________________________________________________

ADDRESS _______________________________________________________________________________________

I hereby record my presence at the 16th ANNUAL GENERAL MEETING of the Company held on Friday, the

25th September, 2009 at 10.00 A.M. at “HOTEL PINK PEARL” 10th Mile, Mahapura, Ajmer Road, Jaipur-302026, Rajasthan.

* Applicable for holding in electronic form. SIGNATURE OF THE SHAREHOLDER/PROXY

------------------------------------------------------------------------------------------------------------------------------------------------------

SHYSHYSHYSHYSHYAM AM AM AM AM TELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDTELECOM LIMITEDRegistered Office: B-2D, Shiv Marg, Bani Park, Jaipur-302016, Rajasthan, India.

16th Annual General Meeting

D.P.Id*

Client Id*

L.F. No.

No. of Shares held :

I/We_____________________________________________________________________being a member / members

of Shyam Telecom Limited hereby appoint________________________________________________________________

of ______________________________________________________________________________________________

or failing him______________________________________________________________________________________

of________________________________________________________________________________________________

as my/our proxy to vote for me/us and on my/our behalf at the 16th ANNUAL GENERAL MEETING of the Company to

be held on Friday, the 25th September, 2009 at 10.00 A.M. at “HOTEL PINK PEARL” 10th Mile, Mahapura, Ajmer Road,

Jaipur-302026, Rajasthan. at any adjournment thereof.

Signed this _____________________________________________ day of ___________________________2009

* Applicable for holding in electronic form.

Note : The proxy must be returned so as to reach the Registered Office of the Company not less than 48 hours before the

time for holding the aforesaid meeting. The proxy need not be a member of the Company.

PROXY

Affix a

1.00 Rupee

Revenue

Stamp

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